If the Olympic Medical Center board of commissioners approves a letter of intent with a health care system to establish the framework for a partnership, it will be with one of 10 organizations that signed mutual confidentiality and non-disclosure agreements with the public hospital.
While OMC representatives have said remaining independent continues to be an option, public attention has focused on which health care organizations it has been in discussions with since the board announced a search for a potential partner on Dec. 4, 2024.
Documents obtained under the state Public Records Act show the following organizations signed NDAs with OMC, indicating their interest in an affiliation and agreeing to provide a proposal with financial information, business plans and strategies for what was known internally as “Project Driftwood”:
• CommonSpirit Health, Chicago, a national nonprofit Catholic healthcare organization.
• Confluence Health, Wenatchee, an independent, nonprofit healthcare organization serving north central Washington.
• Jefferson Healthcare, Port Townsend, a Jefferson County public hospital district.
• LifePoint, Brentwood, Tenn., a national for-profit hospital company owned by private equity firm Apollo Global Management.
• MultiCare Health System, Tacoma, a nonprofit health care organization in Washington, Oregon and Idaho.
• Providence Swedish, Renton, a nonprofit health care organization, part of Providence St. Joseph Health, a nonprofit Catholic healthcare organization in the western United States.
• Quorum Health, Brentwood, Tenn., a for-profit health care company owned by private equity firms GoldenTree Asset Management and Davidson Kempner Capital Management.
• ScionHealth/Kindred Healthcare, Louisville, Kent., a for-profit hospital chain owned by private equity firm Apollo Global Management.
• UW Medicine, Seattle, a nonprofit health care system in Washington state.
• Valley Medical Center, Renton, a nonprofit health care organization in Washington state.
Financial losses
OMC has not released the names of organizations with whom it has been considering a partnership. Only Jefferson Healthcare, as reported in the Port Townsend Leader and confirmed by Peninsula Daily News, has been mentioned as being involved in discussions.
Like rural hospitals across the state and country, OMC has been losing money. It posted operating losses of $17.7 million in 2022 and $28 million in 2023. It anticipates losing money this year, although it did report positive revenue in a draft of its first quarter 2025 finances thanks to hospital Safety Net Assessment Program support.
CEO Darryl Wolfe has said OMC is being squeezed from all sides.
While the cost of labor, pharmaceuticals, equipment and commonplace expenses like water and electricity are rising and outpacing inflation, it is OMC’s payer mix that is the problem. Government payers like Medicare and Medicaid that don’t fully reimburse the hospital for what it costs to deliver care have been its biggest obstacle to financial security.
OMC’s efforts to trim expenses and reduce its reliance on locums tenens and temporary staff have not made a meaningful enough dent in improving its bottom line. A voter-approved levy lid lift in 2024 almost doubled what OMC previously collected annually to about $12 million.
While helpful, the levy did not solve the hospital’s overriding challenges.
Its contract with Juniper Advisory directs the Chicago-based mergers and acquisitions consulting firm with expertise in the hospital industry to assist it with “research, development, and implementation of long-term strategic partnerships,” according to the letter of agreement.
OMC agreed to pay Juniper $20,000 a month for its services.
Choosing a path
Among OMCs stated objectives in the seeking of a partnership were ensuring its long-term financial stability, maintaining and expanding its services, strengthening its ability to invest in its facilities, programs and people, and supporting its commitment to meeting the needs of the community.
In addition to electing to remain an independent public hospital, OMC also could choose to transform itself from a critical care hospital to a critical access hospital like Jefferson Healthcare. That designation would enable it to be reimbursed by Medicare for the actual cost of care, not the 82 percent of the cost it currently receives as a critical care hospital.
Becoming an acute care hospital also would involve a significant reconfiguration of its operations, among them shrinking from a 67-bed hospital to one with no more than 25 inpatient beds, and having to meet an annual average in-patient length of stay of 96 hours or less.
If the board chooses a path that would result in a significant change in OMC’s situation — like entering a partnership — the hospital might be required to apply for a Certificate of Need from the state Department of Health, depending on the nature of the agreement.
For example, MultiCare received a Certificate of Need when it acquired an ownership interest in Capital Medical Center in 2021. The merger between MultiCare Health System and Overlake Medical Center & Clinics in 2024, on the other hand, did not require one.
The state Office of the Attorney General also would need to be notified if it was part of a proposed merger, acquisition or affiliation.
