Inland Northwest Health Services, the big Spokane-based nonprofit, is riding a growth wave that has been weakened only modestly by the countercurrents of recession and the swirling distractions of its two financially ailing hospital-system owners.

The 1,042-employee organization posted record revenue of $147.6 million last year, up 13 percent from the year before, and says it's running ahead of a budgeted 8 percent increase this year, with strong longer-term prospects for additional growth.

It's buying six floors of the downtown office tower where its headquarters are located (see separate story page A6), awaiting the delivery of three new aircraft and two ambulances it has ordered to update and expand its critical-care transport services, and recently bought a 22,800-square-foot hangar it had been leasing at Felts Field. The aircraft, ambulance, and hangar purchases totaled about $14.6 million.

Separately, INHS is continuing to expand a nationally recognized electronic medical-records network it operates and is working on individual projects of that type with new hospital and physician group clients in states from Wyoming to Florida.

Also, it's angling to play a key role in a possible statewide expansion of consumer-directed online health record banks like those currently being created through three grant-funded pilot programs, one of which it's overseeing. Further, it's exploring the commercial viability of a Visa credit or debit card that doubles as a personal health-record storage device.

Even as it pursues those endeavors, it says, it has been able to slash its debt—to $4.4 million last year, down from $16.3 million in 2004 and $31.7 million in 1999.

"We've really done a good job of managing our debt," says CEO Tom Fritz. "When I got here (in 1998), there were a lot of financial problems. Everything was in the red." Now, the organization has a $3 million line of credit it hasn't yet felt the need to tap, he says, and all of its operations are in the black and doing well.

INHS, formed collaboratively in 1994 by Spokane's two major hospital operators to merge a group of formerly competitive, but often money-losing health services, operates St. Luke's Rehabilitation Institute, the electronic medical-records system, and the Northwest MedStar air-ambulance service. It also operates the Northwest TeleHealth video-conferencing network and the Community Health Education & Resources (CHER) information and screening resource center and provides other ancillary services.

It's owned jointly now by nonprofit Providence Health Care, of Spokane, which operates Providence Sacred Heart Medical Center & Children's Hospital and Providence Holy Family Hospital here, and large for-profit hospital chain Community Health Systems Inc. (CHS), of Franklin, Tenn., which operates Deaconess Medical Center and Valley Hospital & Medical Center.

In contrast with the flourishing INHS, both Providence and CHS have been dealing with some financial setbacks recently. Last week, Providence announced that it's cutting a total of 19 management jobs at Sacred Heart and Holy Family "in the first of what could be ongoing reductions" due to shrinking revenues, and Deaconess said it plans to cut about 90 positions across various departments for the same reason.

Fritz says INHS has a hiring freeze in place, implemented largely to show "responsible management" at a time of continuing economic uncertainty, but likely will add some employees by year's end due partly to continuing growth in its contract operations. Its work force is slightly smaller than it was a year ago, but is up sharply from 844 in 2002 and 466 the year it was founded.

For its Northwest MedStar operation, INHS last year ordered three single-engine, two-patient-capacity turboprop planes made by Switzerland-based Pilatus Aircraft Ltd. and expects to take delivery of them in June, July, and October. Those planes will replace three older King Air planes, two of which it owns and one that it leases, Fritz says.

Though the new planes cost several million dollars each, they are 40 percent less expensive to operate than the planes they'll replace and have other advantages such as more patient space and technology and safety features, INHS says. Two of them will be based at Felts Field, and one will be based in the Tri-Cities, as was the case with the King Airs, Fritz says.

The two GMC 4600 ambulances, with chassis boxes built by Chehalis, Wash.-based Braun Northwest Inc., will be the first that INHS has owned, Fritz says. It will use them for ground shuttle services and for longer-distance transports when weather conditions rule out flying. INHS also owns and operates three Eurocopter helicopters that it will pay off in June, he says.

INHS' electronic medical-records network has added a number of new clients over the last year, he says. Overall, it serves more than 4,000 physicians in 38 hospitals and medical facilities and 450 clinics and doctors' offices, including all of the Spokane-area hospitals.

INHS was awarded a $583,000 grant by the Washington state Health Authority last fall to launch a pilot project—one of three in the state—that will involve setting up an Internet-based health-record bank for patients. It still is in the early stages of recruiting about 5,000 users for that project, the main goal of which is to allow individuals to maintain a complete copy of their personal health record, but Fritz is convinced it has strong value and hopes to ensure INHS has a central role if and when the online health-record bank concept is expanded statewide.

The system here, called 1HealthRecord, enables patients to register for the database through an Internet-based application called Google Health and then upload and manage certain health data from INHS' electronic medical-records system.

The Visa "smart card" that INHS is exploring together with Visa and other partners is something that it potentially could begin co-marketing in the near future, Fritz says. The personal health information embedded on the card might benefit people who fall ill and require medical attention while away from Spokane or the area where they normally receive health services, such as "snowbirds" who spend part of the year in the Southwest, he says.

Though financially healthy, INHS is having to deal with the same soaring cost factors and reimbursement shortfall issues that its hospital system owners are experiencing. It said its write-offs due to patient inability to pay and inadequate Medicare and Medicaid reimbursements totaled $29.2 million last year, up from $16.2 million in 2004 and $12.5 million in 1999.

Fritz is bullish about INHS' outlook, though, partly because of a federal government policy push to expand greatly the use of electronic medical records as one way to improve the country's health-care system, which he figures could translate into considerable additional business for the Spokane organization.

The federal economic stimulus package allots about $59 billion toward the improvement of health care, including $19 billion to implement new health-information technology, he says. About $17 billion of that $19 billion will be in the form of bonuses to health-care providers, he adds, and the other $2 billion will be for increasing the adoption of electronic medical-records systems.

"That is where we hope to be a player," he says. "I think the stimulus money opens up a whole lot of other opportunities for us." That stimulus funding starts in 2011 and runs through 2016, but is front-loaded, with nearly 70 percent of the funding coming in the first few years.

Part of the federal focus is on creating electronic medical record products or systems that have "interoperability," meaning they're compatible with those of other providers and ultimately could be certified as such, he says.

Fritz sits on a national board called the Certification Commission for Healthcare Information Technology that is formulating those standards, and says INHS is positioned to be "one of the first certified networks in the U.S. for interoperability," which also could translate into additional revenue for the nonprofit in the years to come.

Overall, he says, "We think we're doing the right things," and, over the next five or six years, are "going to be well-positioned for significant success in all of our business lines."