Jim Barnhart, CEO for PeaceHealth’s Siuslaw Region, has been named to lead the planning and development of the proposed critical access hospital and integrated medical center on San Juan Island.

Barnhart will report to Nancy Steiger, CEO of the PeaceHealth Whatcom Region, which includes St. Joseph Hospital in Bellingham and PeaceHealth Medical Group. He will begin working in this new role part-time on July 1 while transitioning from his responsibilities at Peace Harbor. He will assume his San Juan Island-based duties full-time in July 2010.

PeaceHealth is a non-profit healthcare system that operates St. Joseph Hospital in Bellingham, as well as other healthcare facilities in Alaska, Oregon and Washington. PeaceHealth hopes to open the San Juan Island hospital in summer 2012.

The San Juan County Public Hospital Commission, which operates Inter Island Medical Center and San Juan EMS, voted 5-0 March 18 to give PeaceHealth authority to build and operate a hospital on San Juan Island for 50 years. The commission assigned governance of the hospital to a governing board to be appointed by PeaceHealth; the governing board takes over when the hospital opens and Inter Island Medical Center closes.

PeaceHealth would receive more than $1 million a year — about $60 million over the life of the contract — in local property tax revenues to subsidize health care.

In light of declining Medicare reimbursements for fee-for-service clinics – service at IIMC is reimbursed at a doctor’s visit rate – and the fact that islanders must travel to the mainland for many services, commissioners said they saw no alternative to the PeaceHealth agreement other than to raise property taxes.

According to the contract approved in March, PeaceHealth will bear two-thirds of the cost of buying land for and building the hospital, estimated at $29.8 million. One-third of the cost will be raised philanthropically by the San Juan Community Hospital Committee.

Property taxes now paid to the hospital district will be passed on to PeaceHealth to subsidize healthcare services.

PeaceHealth will build an EMS facility at the new hospital and sell it to the hospital district, which will presumably use proceeds from the current Inter Island Medical Center property. PeaceHealth will be responsible for all financial liability of the hospital.

But the hospital project has many steps to take before construction begins.

PeaceHealth has requested a certificate of need from the state, certifying that a hospital is needed on the island. Upon receiving the certificate of need, the San Juan Community Hospital Committee — which advocated for the hospital — will request one-third of pledged philanthropic contributions in order to fund the design, permitting and planning of the hospital. By this time, PeaceHealth may have purchased a 10- to 11-acre site for the hospital. One source said the sites are located near Friday Harbor Airport.

PeaceHealth will seek to get the site annexed into the Town of Friday Harbor (a hospital must be connected to municipal water and wastewater systems). Then, the site will be developed. According to the contract, annexation is expected to occur by September 2010.

Proponents hope construction will begin in 2011, with the hospital opening in 2012. The day the hospital opens, Inter Island Medical Center will close. The hospital district commission will continue to be directly responsible for the operation of San Juan Island EMS.

Proponents say the hospital will provide many medical services for which islanders must now travel to the mainland. They say it will bring 24/7 medical care to the island, will replace an aging facility, and will yield better Medicare reimbursements for services.

Dr. J. Michael Edwards, a hospital district commissioner and co-chairman of the San Juan Community Hospital Committee, has said maintaining the current level of clinic-based service wouldn’t be possible without increasing taxes. And with projected declines in Medicare reimbursements for fee-for-service clinics, the situation will get worse, Edwards said.

PeaceHealth expects the new hospital will break even in three years and be profitable after that. Profits generated locally will be invested in on-island medical care, including equipment.

While the contract refers to the proposed hospital as a “Combined Clinic and Hospital Facility,” proponents say it will actually be an “integrated medical center” because it will integrate a variety of services at one site: inpatient care, outpatient care, diagnostic services, and emergency medical care.

Services that will be provided on-island: Outpatient surgery, chemotherapy, cardiology, diagnostics and imaging, gastroenterology, oncology, rheumatology, and treatment for body injuries and neurological degenerative disorders.

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

Inpatient surgeries will still be referred to mainland hospitals. Heart attack and stroke patients will still be taken to mainland hospitals. Babies will still be born on the mainland.

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

“Jim was the clear choice to lead the implementation of PeaceHealth’s newest Critical Access Hospital, given the success he’s had guiding Peace Harbor Hospital since its opening in 1989,” PeaceHealth stated in a message to all of its hospitals.

Lenore Bayuk, chairwoman of the San Juan County Public Hospital District Commission, said in a press release, “Jim’s extensive experience and achievements in leading a PeaceHealth Critical Access Hospital and serving a community much like ours will be invaluable assets in the planning and implementation of the new Integrated Medical Center. We are pleased to welcome Jim to the San Juan community.”

Barnhart said of his responsibilities on San Juan Island, “The workload for this new assignment will be light for the next several months and then begin to pick up in spring 2010. By this time next year, the new hospital project will require full-time attention and I’ll have to resign as the Siuslaw Region CEO and chief mission officer. Beginning this summer, Mel Pyne, senior vice president and CEO (of) PeaceHealth Oregon Region, will work closely with the Siuslaw region governing board in transition planning and to determine the selection process for a new CEO/CMO for the Siuslaw region.”