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CHAPTER 24:
THE NEW NORTHWEST HOSPITAL
One change had begun at the same December 1974 meeting at which the board voted to hire Jim Hart. At that meeting, trustee John Larson announced the formation of a Northwest Hospital Foundation and thus, in a sense, the beginnings of corporate diversification.

The foundation was established to raise funds for capital and other major projects the hospital couldn't take on itself because of regulatory restrictions: any money the hospital raised itself had to be accounted for as hospital revenue and was therefore used to reduce rates.

This requirement severely limited the hospital's ability to get involved in such projects as the hospice or expanded speech and hearing services. However, Northwest could take these on as joint ventures with a foundation. The money raised by the foundation was completely separate from hospital operating funds.

The foundation foundered for several years for lack of a focus, according to Roger Jones, president of the foundation from 1980 to 1982 and a 15-year hospital trustee. "It was simply trying to get people to give it money. But there's no way you're going to have money without people giving for some purpose in which they're [interested]."

It was Fred Baker who suggested in 1977 that the foundation find a single project to get behind, "Something that is energizing and understandable," he told the board's foundation committee. Within a year, the committee had assembled a board of directors for the foundation and on October 4, 1977, the Northwest Hospital Foundation officially began, with George Kinnear as president, L. Chapin Henry III as vice president, John W. Larson as secretary, Peter Wick as treasurer, and some 30 of Seattle's leading citizens as trustees. The first major gift was from the hospital's auxiliary, which donated $27,900.

The projects the foundation has supported have brought much-needed medical care to thousands of people and recognition to Northwest. Its first project was Hospice Northwest.

The hospice movement had begun in England in 1967 with St. Christopher's Hospice. The first hospice in the United States appeared in New Haven, Connecticut, with outpatient services in 1974 and inpatient facilities in 1979.

The concept was simple: provide a safe, comfortable place for terminally ill patients where their symptoms can be controlled and they can die with dignity. Physicians and nurses were trained to save lives; they often felt helpless faced with the patient for whom no more could be done. A hospice would be a place for these people to get palliative, not therapeutic, care.

Hospice also meant care for families. Just as the patient goes through emotional stages from denial to acceptance, so does the family. And they need help coping with medication, the patient's behavior, social services, spiritual needs, financial matters, and, at the end, grief.

The idea was not new to Northwest. In 1971, the hospital had begun a series of in-services for the nursing staff on death and dying that, Kloshe Kumtuks reported, "should lead to more compassionate and effective means of ministering to terminally ill patients and their families."

In 1979, Northwest introduced its pilot hospice program, which provided outpatient consultation to terminally ill patients and their families. When it opened its inpatient unit in the Progressive Care Center in 1985, Northwest became the first hospital-based hospice service in Seattle to have separate inpatient facilities.

The foundation has continued to support the hospice and the Speech and Hearing Center. The "Easy Street" rehabilitation center is another foundation project.

Establishing a foundation was a minor change compared to what was to come, however. For in 1979, Northwest Hospital began a restructuring that would put it in the forefront of hospital organization and management.

In his 1978 year-end report to the trustees, Jim Hart had written:

"I believe that before the end of 1979, the management of this Hospital will be prepared to present an entirely new organizational program for the entire corporation. I have little doubt that this could, and most likely will, be one of the most demanding and critical decisions the Governing board of this Hospital will ever make. It will require very innovative thinking, and certainly entail certain risks. I firmly believe that the economics of health care will change so drastically over the next decade, that hospitals which do not begin now to prepare an organization which has the flexibility to respond to increasing governmental controls and decreasing resources will lose their identity and their viability. We simply cannot allow ourselves to drift into an unthinking future."

Wrote Frosty Richardson, "This document, with its extraordinary foresight and clear thinking, should be framed and hung in the board room. Because of it, in the years to come, Northwest Hospital will still stand tall in the health field while others fail to survive."

As it turned out, it would be June of 1981 before Winnie Hageman's ad hoc committee on reorganization would present a new Northwest Hospital to the full board of trustees. However, the change was massive.

A new corporation, Health Resources Northwest (HRNW), was born. It was, and is today, the holding company for all other entities. At its inception, its board of trustees was responsible for the whole corporation and appointed directors of the subsidiary corporations. HRNW's first trustees were Fred Baker, Harold Cooper (vice chairman), Winnie Hageman (chairman), James Hart (president and CEO), George Holland, Robert Ihlanfeldt, Dr. Allan Johnson, and hospital Finance Director Larry Woodruff. As part of the reorganization, James Hornell, Executive Director of Northwest, took over day-to-day management of the hospital.

HRNW's subsidiaries are Northwest Hospital, which continues to be non-profit and Pacific Consolidated Services Corporation, which operates as a for-profit subsidiary, providing services such as the professional buildings, physical therapy, the sports medicine clinic, and so on. All monies from Northwest Hospital and Pacific Consolidated Services Corporation are reinvested in improving the health care services the hospital provides to the community.

It has become the norm for hospitals to set up such an organization, but when Northwest did it, "We were way out front," said Ms. Hageman. "I know we were the first hospital in this area to do that."

By 1985, the board was re-evaluating the organization. It was difficult, the trustees discovered, to find good trustees — that is, committed, concerned, and talented — for the subsidiary corporations, and the time commitment was tremendous: there were HRNW board meetings, subsidiary board meetings, committee meetings. It could amount to a part-time job.

With that in mind, the board called for a mini-retreat. Members of all the boards, including the foundation, were there. They talked about what they didn't like and what they did like about the current organization. They developed some basic organizational criteria. Then they sent the management of the hospital off to design a slimmer Northwest.

Management came back to the trustees with three options, each of which delegated more responsibility to management. The board adopted the "management model," the one providing the most delegation. "Management was surprised," said Ms. Hageman. "They didn't think we'd go that far."

But they did. The organization of the hospital today consists of one board of 17 trustees. There are no outside boards for the subsidiary corporations. Instead, these companies have boards made up of their top managers. The only "crossover" from the HRNW board to the hospital board is the chief of staff, who serves on both.

However, there are four standing committees whose members are HRNW board members. They are finance, strategic planning, governance (nominating, by-laws, board education, etc.), and quality assurance. Each committee is supported by one paid staff member who is not a member of the committee. (There is also an ethics committee, but this is not a standing committee of the board and includes physicians, employees and members from outside the hospital.)

Thus one board of trustees can integrate planning and policies for the entire organization. There are no "super" and "subordinate" boards.

Northwest's structure has become a model for others to follow. "It's been duplicated here and there around the country," said Ms. Hageman. But, she continued, "To have the structure we have and have it work, it involves a tremendous amount of trust between management and the board."

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