Contract negotiations 'finalized' with PeaceHealth; San Juan hospital district commission discusses contract tonight

PeaceHealth would bear two-thirds of the cost of building a new hospital on San Juan Island in a contract that has been negotiated with hospital district officials and the independent San Juan Community Hospital Committee.

Initially, it was proposed that the construction costs — estimated at $29.8 million — be shared by PeaceHealth, hospital committee fund-raising and a hospital district bond. Under the proposed contract, the hospital committee would raise $10 million through philanthropy and PeaceHealth would bear the rest of the costs.

Hospital Committee co-chairman Tom Cable said PeaceHealth proposed alleviating the hospital district of having to assume bonded indebtedness. The reason: Concerns that if the contract between PeaceHealth and hospital district were terminated, the hospital district would be left with debt.

Contract negotiations have been finalized between PeaceHealth, San Juan County Public Hospital District No. 1 and the hospital committee. The hospital district commission is expected to discuss the contract’s status at its meeting tonight at 5:30 in the Frank Wilson EMS Building. The meeting is open to the public.

“We’ve finalized negotiating a contract with PeaceHealth,” Cable said Friday. “We’re at the point where we want to start bringing the community into the process.”

Cable said the next step is “a full-blown campaign to get the community informed,” followed by contract approval by the hospital district commissioners, approval by Whatcom Region PeaceHealth, and approval by the PeaceHealth system board.

“We’re targeting that to be done in March,” Cable said.

The contract would give PeaceHealth, a non-profit healthcare system that operates St. Joseph Hospital, the authority to operate a medical center on San Juan Island. Upon contract approval, PeaceHealth would notify the state Department of Health that it intends to request a certificate of need from the state, certifying that a community hospital is needed on the island. It would take the state Health Department about nine months to make that determination, Cable said.

Next, the hospital committee would request one-third of pledged philanthropic contributions to fund design, permitting and planning of the community hospital. By that time, PeaceHealth should have purchased a hospital site; two sites are under consideration, Cable said.

Proponents hope construction will begin in 2011, with the hospital opening in 2012.

The San Juan Community Hospital Committee is a private group that is advocating the construction of a new medical center to replace the current one, which proponents say is aging and is too small to accommodate islanders’ needs.

They say the new medical center would provide many medical services for which islanders must now travel to the mainland.

Inter Island Medical Center Administrator Beth Gieger has said that a hospital would receive greater reimbursement for services from Medicare than the current medical center, which is classified as a clinic.

Dr. J. Michael Edwards, a hospital district commissioner and co-chairman of the hospital committee, has said the current medical center is unsustainable, and that maintaining the current level of clinic-based service wouldn’t be possible without increasing taxes.

The situation is going to get worse, Edwards said in an earlier interview. “We’re facing a 16 percent Medicare fee-for-service reduction in 2009.”

According to a letter of intent approved by PeaceHealth and the hospital commission last summer:

— PeaceHealth would assume full operational and financial responsibility for the medical center, including financial liability.

— PeaceHealth would invest profits back into local medical services, including equipment.

— PeaceHealth would establish a governing board to oversee the hospital. The governing board would require a majority of its members to be residents of the hospital district. The governing board would not, however, include members of the hospital district commission.

— The hospital district would cooperate with PeaceHealth as it begins to work closely with San Juan Island’s existing clinic, Inter Island Medical Center. Hospital district employees would become employees of PeaceHealth.

— The hospital district commission would contribute the district's annual property tax levy to PeaceHealth to subsidize services. When the district's voter-approved property tax increase, known as a levy lid lift, expires in 2015, PeaceHealth would not require it to be renewed. PeaceHealth would also not request a property tax increase from islanders.

— The hospital district commission would continue to have direct authority over San Juan Island EMS, which is funded by a separate property tax levy.

The proposed medical center would be built on a 10- to 11-acre site yet to be acquired.

Inpatient surgery would not be performed at the new medical center. Heart attack and stroke patients would still be taken to mainland hospitals. Babies would still be born on the mainland. Services that would be provided: Outpatient surgery, chemotherapy, cardiology, diagnostics and imaging, gastroenterology, oncology, rheumatology, and treatment for body injuries and neurological degenerative disorders.

Patients could stay in the medical center for observation and short-term care after surgeries. There would be 10 hospital beds.

The medical center would be about 42,242 square feet, including 24,492 square feet of clinic space for doctors and specialists. Inpatient and outpatient space would comprise 14,250 square feet; the emergency department would comprise 3,500 square feet. The staff would grow from 25.3 full-time equivalents to 44.5.

PeaceHealth is a Bellevue-based non-profit healthcare system serving communities in Alaska, Washington and Oregon. Sponsored by the Sisters of St. Joseph of Peace, PeaceHealth has provided care to Northwest communities for more than a century. It owns St. Joseph Hospital in Bellingham.


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