King County Hospital District 4 and Overlake Hospital have backed off from a deal to sell Snoqualmie Valley Hospital and its clinics to the Bellevue company.

Negotiations were made public this summer and discussed in private sessions this fall, as well as at a public hearing on Oct. 2. The deadline for a decision on affiliation had been pushed to March, but last Thursday, the district announced that the hospital will stay independent.

Commissioner Joan Young read a statement about the decision at the district’s Thursday, Nov. 6, board meeting.

After months of evaluation and discussion, “leaders of both organizations mutually decided to remain independent but closely aligned, and to continue collaborative efforts to serve the health care needs of the Snoqualmie Valley and surrounding communities,” the statement read.

Now, the district will focus on opening its new hospital, on its own, next March.

CEO Rodger McCollum told the Record that the pullback was a mutual decision.

“It really came down to each of our respective hospitals’ assessment of the future of critical access hospital licensure,” he stated in an e-mailed response to questions from the Record.

Both organizations had looked at the future of the federal Critical Access program. Snoqualmie Valley Hospital is a Critical Access hospital, meaning that it gets reimbursed by Medicaid for certain costs. Some in the health care industry wonder whether the federal program will continue in years to come.

“Overlake Hospital and their consultants took, not inappropriately, the opinion that they had to plan for changes in the regulations around Critical Access hospitals on a shorter timeline than we have,” McCollum stated. “This is essentially trying to predict the future in a highly fluid health care environment. The less predictable and more fluid it is, the higher the risk in taking on a new hospital for Overlake. Thus, they upped the ask for a subsidy to offset the risk to the point that we decided it would be too much to ask of our community.”

“We are comfortable in the critical access world, it is totally foreign and new for them,” McCollum added. “So the mutual decision was that it was best for both hospitals to operate independently but at the same time they have firmly committed to assisting us to be as successful as possible.” This could mean more working together, between the two hospitals.

That district and Overlake also appear to have had differences in the length of the proposed lease. According to Commissioner Dariel Norris, the district and its developer wanted a longer, 10-year lease on the new hospital by Overlake, but the Bellevue organization preferred a shorter commitment.

“I am a little disappointed,” said Norris. “To me, Overlake was the hospital in the neighborhood. It’s a familiar name for the community.”

“We are talking about hiring someone to scout for a possible good-fit partnership,” she told the Record. “That’s common right now for the small critical care hospitals such as ours. At the same time, we have an attitude of ‘We can do this.’”

While the district may still seek new affiliation, McCollum expressed confidence in the hospital’s ability to continue alone.

“We are very comfortable, in fact very highly energized to operate independently,” he stated, answering written questions from the Record.  “After all, this was the original plan, and it is based on very solid projections.  Having said that, the future of hospitals in a rapidly changing environment require that all of us continue to assess future options.”

McCollum said the fall-through won’t affect the district’s services.

“We will be opening the new hospital in the spring, on time and with the same services, but with the ability to expand our volumes,” the administrator stated. “This will be the most beautiful building in the Valley and will be very welcoming for the public.  It will also give us the facility we need to consider expanding services in the future, such as a more robust specialty care offering.”

District 4 is in the late stages of construction of a new Snoqualmie Valley Hospital on Snoqualmie Ridge. The Snoqualmie Tribe purchased the existing Meadowbrook campus, and moved its administration center there this fall.

The district has about $40 million in back debt and will be assuming an additional $38 million to build the new hospital, slated for completion in March.

• You can learn more about the Snoqualmie Valley Hospital at www.snoqualmiehospital.org.