Demand for health-care services should remain strong here in the coming year, but the outlook for that sector is clouded somewhat by potential government funding cuts. Also unclear are the financial implications of Franklin, Tenn.-based Community Health Systems Inc.'s looming acquisition of Rockwood Clinic, which operates 32 medical facilities.

"We see continued growth in the health-care sector, both on the inpatient and outpatient side," says Kevin Walstrom, chief financial officer for Providence Health Care, the Inland Northwest's largest health-care system. Because of anticipated state and possibly federal funding cuts due to budget constrictions, though, he says, "The waters are a bit murky."

The Providence network includes 10 hospitals and organizations here that together employ about 8,500 people. It operates Providence Sacred Heart Medical Center & Children's Hospital and Providence Holy Family Hospital.

Providence is budgeting for a roughly 2 percent increase in both patient volume and revenues next year, Walstrom says, adding that this year it has seen its inpatient volume rise 1 percent, and outpatient volume jump more than 5 percent.

Sacred Heart said a year ago that it expected to kick off a five-year capital investment spending program this year that would include a new cancer center and doctors' building and would add 173 licensed beds to the 623-bed hospital, plus another nine unlicensed beds.

Plans for the $175 million project were dealt a setback, though, when the Washington state Department of Health approved a certificate of need application for 21 intermediate-care beds, but rejected Sacred Heart's request for another 152 acute-care beds due to a lack of demonstrated community need. Sacred Heart appealed that decision and has been discussing the matter with state officials.

Meanwhile, William Gilbert, the new CEO at Deaconess Medical Center, which along with Valley Hospital & Medical Center is owned by CHS, told the Journal in a recent interview that hospital admissions have been flat this year, but that he expects them to increase in the future. He also says he's looking forward to solidifying Deaconess' relationship with Rockwood Clinic—which for a long time has had closer ties to Sacred Heart—to provide integrated health-care services. Deaconess currently has about 1,600 employees, down from 1,650 a year ago.

Since CHS took over operations at Deaconess, it has spent $17 million on capital improvements as part of a commitment to invest $100 million in improvements within five years, and Gilbert says it currently is developing priorities for where to direct the next expenditures.

Another large health-care employer here, Pathology Associates Medical Laboratories, has said it likely will add more workers here, after its parent sold a 25 percent stake in the Spokane for-profit company to a big Denver-based Catholic hospital group for $37.1million. It currently employs about 1,300 people, including 800 in Spokane.