Empire's Cuts

by JACOB H. FRIES & r & & r & & lt;span class= & quot;dropcap & quot; & I & lt;/span & t was a "landmark day," the chairman of Empire Health Services said in June, announcing that the faltering company had signed an intent-to-sell deal with for-profit giant Community Health Services.

The chairman predicted brief negotiations and a final agreement in weeks. The sale would save Empire from bankruptcy and ultimately modernize its two hospitals, Deaconess Medical Center and Valley Hospital and Medical Center. Yes, a red-letter day all around.

Nine months later, the deal is still awaiting approval from state regulators. Empire officials say they are hemorrhaging money, following a $7 million loss in 2007. The state's approval is now expected in late summer, at the earliest. To stabilize the situation, Empire officials announced earlier this month the layoff of 130 employees -- a large percentage of them lower-paid nursing assistants -- effective March 12.

Why is the deal taking so long to close? And does the holdup say anything about the merits of the sale?

Empire officials say the delayed timetable is only a reflection of the complexity and rarity of such a deal: If the state allows Community Health to buy Empire, it will be only the second time in Washington's history that a nonprofit hospital system is converted to a for-profit business. "It's just because the process is really unprecedented," Empire spokeswoman Christine Varela says of the delays.

The state Department of Health and Attorney General's office are currently reviewing the sale proposal to make sure it is complete before scheduling public hearings and assessing the proposal's merits.

The layoffs, plus some other reshuffling, were necessary to put Empire in the black, Varela says, and the reduction in nursing assistants matches reduced patient numbers, which have fallen by 3 percent since last year. Patient care will not be impacted, Empire officials have repeatedly said.

Varela says Community Health had no role in the decision, adding that while Empire officials don't anticipate any more cuts this year, they aren't making any promises.

Last week, Service Employees International Union, which represents many of the laid-off workers, scheduled a press conference "to highlight the devastating impact these caregiver cuts will have." They ended up canceling it after Empire agreed to meet with the union and delay layoffs by a week.

"Our members, in particular registered nurses, are telling us this is really bad for patients," says Chris Barton, secretary treasurer of SEIU 1199NW. Barton says Empire employees are also skeptical of what Community Health might do to make the hospitals profitable. "There are a lot of mixed feelings about it," she says.

The fact Empire pushed back the effective date of the cutbacks does not mean they are being reconsidered, Varela says. "My understanding is that they are still absolutely moving forward with these cuts," she says.