PeaceHealth would bear two-thirds of the cost of building a so-called “integrated medical center” on San Juan Island in a contract that has been negotiated with public 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, local philanthropy 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 public hospital district of having to take on bonded indebtedness. The reason: Concerns that if the contract between PeaceHealth and hospital district were terminated, the hospital district would be left with debt.

The San Juan County Public Hospital District No. 1 Commission, which oversees Inter Island Medical Center and San Juan Island EMS, discussed the proposed contract at its public meeting Thursday. The next step, according to Cable: “a full-blown campaign to get the community informed,” followed by contract approval by hospital district commissioners, Whatcom Region PeaceHealth, and 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 an integrated medical center on San Juan Island. It’s called 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. By comparison, Inter Island Medical Center is essentially an outpatient clinic.

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 an integrated medical center is needed on the island. It will take the state Health Department about nine months to make that determination, Cable said.

Upon receiving the certificate of need, the hospital committee would request one-third of pledged philanthropic contributions in order to fund design, permitting and planning of the integrated medical center. By this time, PeaceHealth may have purchased an integrated medical center site; two sites are under consideration, Cable said.

Proponents hope construction will begin in 2011, with the integrated medical center opening in 2012.

The San Juan Community Hospital Committee is a private group that is advocating the construction of an integrated medical center to replace Inter Island Medical Center, which proponents say is aging and is too small to accommodate islanders’ needs. Proponents say an integrated medical center would provide many medical services for which islanders must now travel to the mainland.

Government insurers reimburse treatment at Inter Island Medical Center at the same rate as a doctor’s visit. Administrator Beth Gieger has said that an integrated medical center would receive greater reimbursement for services.

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

Other details that were discussed Thursday:

— The contract between PeaceHealth and the hospital district would be for 50 years and would be renewable.

— PeaceHealth would own the integrated medical center and would have full operational and financial responsibility, including financial liability.

— PeaceHealth expects the integrated medical center to break even in three years and be profitable after that. Profits generated locally would be invested in on-island medical care, including equipment.

— PeaceHealth would establish a governing board to oversee the integrated medical center. 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.

— Governing board meetings would not be required to be public, Commission Chairwoman Lenore Bayuk said. However, the governing board would make regular reports to the hospital district commission, but would be responsible to Whatcom Region PeaceHealth.

— Hospital district employees would become PeaceHealth employees when the integrated medical center is operational.

— The hospital district 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 Inter Island Medical Center property would be sold to pay for a new EMS building, to be built by PeaceHealth adjacent to the new integrated medical center. The hospital district would own the EMS building and the helipad.

Newsletter expected to be mailed today
To inform islanders about the proposal, hospital district commissioners will make themselves available to the public on an informal basis to answer questions, Bayuk said. And a newsletter was expected to go out in the mail to island residents today.

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

Inpatient surgeries would still be referred to mainland hospitals. 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 on-island: Outpatient surgery, chemotherapy, cardiology, diagnostics and imaging, gastroenterology, oncology, rheumatology, and treatment for body injuries and neurological degenerative disorders.

Patients could stay in the integrated 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.