By Gordon Weeks

Highline Medical Center in Burien, one of the few remaining independent hospitals in the state, is sizing up potential partners after suffering $16 million in losses in 2011.

The 50-year-old medical center's Board of Trustees in December set a June deadline to determine whether to form a strategic partnership with a larger medical organization, or remain independent, said Geri Fain, past chairwoman of the board.

It's a common practice for smaller hospitals to team with larger medical organizations, said Highline Medical Center CEO Mark Benedum.

Among Washington's 88 hospitals, only five remain independent: Highline, Harrison Memorial Hospital in Bremerton, Overlake Hospital Medical Center in Bellevue, Yakima Valley Memorial Hospital, and Kadlec Medical Center in the Tri-Cities, Benedum said.

Benedum said possible strategic partners for Highline include Swedish Medical Center in Seattle; Seattle-based Virginia Mason Medical Center; the University of Washington; Tacoma-based Multi-Care; and the Franciscans hospital network.

"In a very competitive market, support of a larger organization enhances the competitive position for a hospital our size," Benedum said. Teaming with a major medical organization would bring added health services to local residents, and combining electronic health records would help the medical center get better reimbursed for its services, he said.

In the meantime, the medical center announced it is laying off about 25 employees from its business office as it outsources its patient accounts and coding to an Atlanta-based company, Optum Insights. Optum Insights takes over March 19.

Optum Insights will have five employees at Highline Medical Center, some who may come from the ranks of the workers who are losing their jobs, Benedum said.

"That's up to the new company and the individuals," he said. "That's a decision we don't make."

The $16 million in losses in 2011 is in sharp contrast to the previous year, when the medical center posted a $2.5 million profit, Benedum said.

"The hospital is not bankrupt," he said. "But we can't continue to lose money at that rate."

Benedum said the losses can be attributed to cuts in both Medicare and Medicaid reimbursements; fewer patients; $20 million spent on installing an electronic records system; and the increasing number of uninsured and unemployed residents.

According to the 2010 U.S. Census Community Survey, Burien has the highest percentage of its population receiving Medicaid benefits in King, Pierce and Snohomish counties at 36.2 percent. Tukwila is number three at 33.4 percent, SeaTac is number four at 31 percent.

"We're looking for a commitment from a partner to serve a community that's not Issaquah or Bellevue," Benedum said.

The board formed a task force to evaluate potential partners. The group includes board representatives, and members of the administration and medical staff, said Fain.

The selection criteria "will identify the best way to support Highline's mission of improving the health of the community for many years to come," said Larry Bjork, current board chairman of the Highline Medical Center Board of Trustees. He added, "At this point in the evaluation process, it is too early to know what a partnership will look like because no two hospital affiliations are alike."

The outsourcing of some of the business office functions began in 2007 with the Medicare billing. The last remaining patient accounts and coding, for private insurance, will be handed over to Optimal Insights next month.

The move will reduce costs, and increase revenues that the medical center will collect from patients, Benedum said.

"They do a better job of it," he said. "They do it more efficiently and more effectively."

Benedum said he hopes the additional revenue collected by the company -- perhaps an extra $4 or $5 million a year -- and a partnership with a larger hospital will prevent the need for more layoffs at the medical center.

"We have a plan to get back on track," he said.