MultiCare Health System and Overlake Medical Center & Clinics signed an affiliation agreement Tuesday, the hospital systems announced.

Overlake and its clinics will become the flagship of Tacoma-based MultiCare’s new North Sound region, which will include King and Snohomish counties.

"This affiliation will enable both of our organizations to grow and thrive," Jason Thompson, chair of Overlake Medical Center & Clinics Board of Trustees, said in a joint news release. "Overlake is an exceptional organization, and this affiliation will allow us to sustain and strengthen our 64-year commitment of providing care to our community."

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The affiliation will include a significant capital investment in the region by both organizations, which the companies say will improve access to clinical care. The health systems plan to grow Overlake’s services in the North Sound. 

Overlake will retain its name and logo, as well as its leadership team, board of trustees, medical staff structure and its foundation.

"For more than six decades, Overlake Medical Center & Clinics has served the Eastside and Puget Sound communities, and I am confident that this is the right next step for our health system," Michael Marsh, president and CEO of Overlake, said in the release. "In fact, one of our reasons for pursuing an affiliation with MultiCare was to ensure the ongoing fulfillment of our mission for decades to come. As we move forward, we will be led by our guiding principles that keep patient care and the local community at the forefront."

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The transaction is expected to close during the second half of 2024, pending regulatory approval.

Representatives from the health systems were not immediately available to comment Tuesday afternoon.

Bellevue-based Overlake has grappled with financial difficulties in recent years. At a Bellevue Chamber event in January 2023, its CEO told the audience that Overlake has been struggling financially due in part to the the nationwide nursing shortage and low reimbursement rates. He called the situation “catastrophic” and “unsustainable.”

Two months later, Overlake laid off 30 staff members in its human resources, information technology and finance departments. At the time, the organization employed 3,500 people systemwide. The health system comprises a 349-bed hospital and a network of clinics throughout the area.

MultiCare is one of the state's largest employers, with nearly 20,400 employees in Washington and a network of 12 hospitals and more than 300 primary, urgent, pediatric and specialty care locations across three states.