FROM WHERE I'M SITTING...By jeff mero, executive director

Since 1965, Medicaid has provided (among other things) a framework for thinking about what basic health care should include. Added to the Social Security amendments creating Medicare (almost as an afterthought, if we can believe those on the scene at the time), the program that cost $1 billion in 1966 cost taxpayers $309 billion in 2004. The Congressional Budget Office predicts federal Medicaid spending will grow by 8 percent a year for the next 10 years.

Now, eyeing a spiraling deficit, the Bush Administration wants to find ways to limit the federal government's financial exposure. The President's plan would cut federal contributions by $60 billion over the next ten years, which sounds like a lot unless you are looking at the $2.8 trillion (almost $3,000 billion) the feds will still spend on this program between now and 2015.

While there are lots of different bells and whistles being discussed in DC, the ones most near and dear to those who are looking to limit federal spending will end the open-ended federal funds matching program. The federal government supplies the majority of Medicaid spending through the Federal Medical Assistance Percentage (FMAP). The match is completely open-ended: whatever a state chooses to spend, the feds are obligated to pay their percentage share. This has led to a variety of creative programs at the state level, and so long as the match is open-ended, that creativity seems bound to continue.

The Rural Healthcare Quality Network (RHQN) will welcome new director Jackie Huck on March 7th. Jackie comes to the statewide RHQN from the Community Health Plan of Washington (CHPW). Before her work at CHPW, Jackie worked with Qualis Healthcare. Jackie fills the day-to-day leadership role that has been nearly vacant since Elizabeth Floersheim decided she did not wish to be the RHQN's Executive Director last September. Jackie joins Myron Bloom, the RHQN's Medical Director, and Brad Vollegraaf who has been supporting Dr. Bloom and will support Jackie.

AWPHD responds to a proposal to eliminate the taxing authority of public hospital districts (PHDs). Senators Mary Margaret Haugen (D-Camano Island) and Linda Evans-Palette (R-Wenatchee) are co-sponsoring Senate Bill 5700. This bill would eliminate the statutory authority of PHDs to levy regular property taxes and create a statewide property tax of $.20/$1,000 of assessed value. PHDs that collect regular levy income as of December 31 would be made whole from the statewide tax proceeds. That income is subject to the 101% limit, but on a statewide basis. Those districts where the value of new construction and improvements to property is lower than the state average will get a boost; those with new construction and improvements that exceed the state average will get less than they would if they were still able to levy at the district level. The bill does not affect the capacity of districts to ask voters to approve special levies or bonding authority.

The new property tax would generate just over $200 million in the two years that begin July 1, 2005. It would cost about $38 million to pay the districts what they are owed from existing regular levies. The state Department of Health would be charged with determining how to split the remaining $163 million between public health services and hospital emergency room (ER) subsidies.

In a "normal" legislative session (never imagined I'd use normal to describe the legislative process!) a proposal to create a statewide property tax to fund public health and ER subsidies would have seemed beyond serious thought. With legislators beginning to understand just how big a hole $2.7 billion is, we had best pay close attention, and we are.

SNAPSHOTS

The Legislature is approaching its first milestones for the session and PHDs appear to be in a good position regarding policy bills. March 2 marks the final day for reading in most committee reports in the house of origin; March 7 is the final day for reading in Senate Ways and Means and House fiscal committee reports; and March 16 is the final day to consider bills in their house of origin.

Senate Bill (SB) 5146, AWPHD's bill to allow district commissioners to meet in executive session to discuss quality improvement activities, should be up for a full Senate vote soon. House Bill (HB) 1341 and House Joint Resolution (HJR) 4202, which together would enable the larger PHDs in urban-suburban areas to have the same investment opportunities as non-public hospitals, sit in the House Rules Committee, awaiting a "pull" so they can move to the House floor for a vote. These latter pieces of legislation face a larger hurdle than AWPHD's quality improvement bill: HJR 4202, which takes a state constitutional amendment to the voters in November, must be approved by at least two-thirds of the House; without it, HB 1341 is doomed.

Another bill that AWPHD is following with interest is SB 5333. If enacted, this bill would enable PHDs and other taxing districts to have regular property tax levy lid lifts for generally up to six consecutive years. Currently, only counties, cities, and towns can go for a lift of more than one year. Also being tracked is HB 1578, which would allow the imposition of special/excess levies for as long as six consecutive years, depending on the purpose of the levy. Implementation of this bill would require a state constitutional amendment, embodied in HJR 4206. (Jeff Mero already discussed the impacts of SB 5700 in "From Where I'm Sitting.")

As you're well aware, legislative success is measured not only by what goes forward in the Legislature, but also by what gets blocked. Thus far, AWPHD lobbyists Lisa Thatcher and Len McComb-working solo and in conjunction with other lobbyists-have done masterful jobs of amending bills or keeping them bottled up in committee.

One of the legislative attacks they skillfully parried: requiring hospitals that receive any funding from the state capital budget for "major facility projects" to comply with complex and expensive "green" construction standards. Hospitals were exempted from the bill. Another thrust they turned aside: altering the "hierarchy" of junior taxing districts so certain regional fire protection authorities and fire protection districts would be the last to have their tax rates reduced or eliminated should the combined rates of the junior districts exceed the legal limit. (Currently, PHDs are in the last "tier" to be reduced or eliminated.) This bill was killed in committee.

The outcome of several other bills-opposed by coalitions of governmental entities to which AWPHD has thrown its support-is still uncertain. These include seemingly innocuous public works bills that actually would skew the competitive bid process towards contractors, as well as changes to the Public Records Act that could open a Pandora's box for the larger governmental bodies.

While the budget fights have publicly taken a back seat to the policy bills, you can expect them to bubble up to the surface around the middle of March. By that time the State's economist will have announced his economic forecast and the Governor will be relying heavily on his revenue projections for her budget proposals. However, there's already been lots of behind-the-scenes jockeying with regard to money and Len McComb, supported by AWPHD staff, has been in the thick of it. But if history holds true, it won't be until the session begins to wind down that we'll begin to have a better understanding how the money will be distributed.

The PHD Project Review Board is seeking to fill a vacancy resulting from the resignation of Sandy Buchanan, the facilities manager at Lincoln County PHD #3 (Lincoln Hospital, Davenport). The Board, which is appointed by the governor, approves a PHD's use of the General Contractor/Construction Manager (GC/CM) procedure for large public works.

Sandy's seat is "reserved" for a representative of a PHD that has annual revenues equal to or less than $15 million. In addition, the appointee must have experience in public works or commercial construction. The Board meets at least four times a year in Olympia. Although Board members aren't compensated or reimbursed for travel expenses, the Board is important to PHDs. As Sandy noted in her letter of resignation to the Governor, " I firmly believe that the GC/CM choice for construction is much needed [by PHDs] and is in the public's best interest."

If you're interested in applying for this seat, an on-line application form can be found at: http://www.governor.wa.gov/boards/default.htm. Applications should be submitted no later than March 28th.

If you have questions about the Board and its responsibilities, please contact Dick Goldsmith at richardg@awphd.org (206-216-2528). Or talk with Jim Paapke, director of facilities management at Olympic Medical Center in Port Angeles (Clallam County PHD # 2), about what it's like to serve on the Board. Jim, who holds the Board's seat for PHDs with annual revenues in excess of $15 million, can be reached at 360-417-7148.

Please note: The PHD Project Review Board's March 7th meeting has been canceled. The next scheduled meeting is June 6th.

In last month's In Focus, we promised a more detailed recap of the PHD Project Review Board's actions at its January 31st meeting. At that time, the Board approved the GC/CM procedure for Island Hospital, Anacortes (Skagit County PHD #2 ) and North Valley Hospital in Tonasket (Okanogan County PHD #2). Unfortunately, the Board turned down the application of Klickitat Valley Health Services (KVHS) in Goldendale (Klickitat County PHD #1).

For districts that are considering the GC/CM procedure, there are lessons to be learned from these Board determinations. RCW 39.10.061(3) states that a GC/CM should be selected "early in the life of public works projects, and in most situations no later than the completion of schematic design." The Board concluded, however, that KVHS's plans for a two-level 18,000 square foot addition were not sufficiently developed for the Board to ascertain whether the project met at least one of the statutory requirements for approval: the project involves complex scheduling requirements; the project involves construction at an existing facility that must continue to operate during construction (with the underlying implication that construction would be disruptive to those operations); or that involvement of the GC/CM during the design stage is critical to the success of the project.

Island Hospital was able to show that its 50,000 square foot addition and its 27,500 square foot renovation would meet all three requirements. Its representatives pointed out that much of the hospital expansion would occur adjacent to and require integration with existing operational areas and infrastructure systems. They also noted that there was no vacant space in which to temporarily move existing activities. In addition, they raised a novel aspect of the GC/CM process-a PHD's ability to award elements of the contract to local businesses. For example, bid packages could be structured, if the district's commissioners so desired, with limits on the distance between the project site and a contractor's or subcontractor's home base.

Although North Valley Hospital's 37,000 square foot addition wouldn't impact existing operations, its representatives persuaded the Board that involvement of the GC/CM during the design stage was critical to the success of the project. Among the reasons cited were the district was at its maximum indebtedness and only had $10.1 million for the project; it was important to get qualified contractors and subcontractors; and GC/CM expertise was needed to help phase construction.

North Valley's representatives also discussed the hospital's ability to obtain cost-based reimbursement as a Critical Access Hospital and how a delay in the anticipated opening of the addition in January 2007 would impact its cash flow and expansion of its operations. If the excavation and the footings were not completed before November 25, 2005, the onset of winter would delay these activities until March 2006, putting the project six months behind schedule.

The Board-as it had done previously-paid particular attention to whether each district had staff or outside consultants who had GC/CM experience in either the public or private sectors. Had Island Hospital and North Valley Hospital lacked this expertise, the Board probably would not have approved their applications.

The Office of Community and Rural Health (OCHR) in the state Department of Health has been a good partner with AWPHD's members and we'd like to return the favor: OCRH has asked us to publicize its search for a Rural Quality Improvement Program Manager. This person will be the designated senior Health Services Consultant specialist on rural hospital patient safety and quality improvement issues. This is a full-time, permanent position, based in Tumwater. A complete job description is available from Bev Court (beverly.court@doh.wa.gov, 360-236-2809).

Don't forget Antitrust Issues for Hospitals--AWPHD's March 15th webcast with Douglas Ross, a nationally-known antitrust litigator in the Seattle office of Davis Wright Tremaine LLP. For more information on how to connect to this program, e-mail Wendy Ray (wendyr@awphd.org).

PEOPLE AND PLACES

A February 23rd public forum on the crisis in health care funding was a collaborative effort between Valley Medical Center in Renton (King County PHD #1) and Service Employees International Union (SEIU) 1199 NW. Governor Christine Gregoire was the featured speaker; Len McComb, and Ellie Menzies, the lobbyist for SEIU's Washington State Council, provided background information on what brought us to this point and what's likely to happen.

SEIU 1199 NW members also have thrown their support behind Valley Medical Center's April 26th levy proposition-a measure that would increase the hospital's levy rate from $.09 to $.59/$1,000 of assessed value, raise about $12 million, and be dedicated to emergency services. Union members, including those who are not hospital employees, are getting out voters by volunteering at SEIU's state of the art mobile phone bank. The levy would "keep available high quality emergency medical services" for the residents of Southeast King County. The district's emergency response plan, developed in partnership with area fire district leaders, includes recruiting, equipping, and educating first-responders such as emergency medical technicians.

We'd like to welcome Douglas County PHD #2 as the newest member of AWPHD. Tom Petersen is the superintendent of this district, which runs the Waterville Clinic. This brings AWPHD's membership to 52 PHDs.

And congratulations to the newest PHD in the State-Point Roberts, Washington. Almost 80 percent of the voters in the February 8th election approved the creation of the district, which will be run by three at-large commissioners. Without the tax revenues that could be generated by a district, the community's only health care facility, the Aydon Wellness Clinic, would have had to shut its doors. And if that happened, Point Roberts residents were facing four border crossings to make a round-trip visit to the closest U.S. health care facility. (Once the district is up and running we also hope to welcome them into the AWPHD fold.)

UPCOMING EVENTS

Hospital Quality Initiative: Preparing for Public Reporting Webcast
March 3 - 12:00 noon • Webcast
Contact: Danielle Kean (206)577-1826

AWPHD Board Meeting
March 14 - 10:00 a.m. • AWPHD Offices
Contact: Wendy Ray (206)216-2516

AWPHD Antitrust Webcast
March 15 - noon • Webcast
Contact: Wendy Ray (206)216-2516

RHQN Board Meeting
March 16 - 10:00 a.m. • Conference Call
Contact: Brad Vollegraaf (206)216-2550

WSHA Winter Board Retreat
March 17-18 - Fairmont Olympic Hotel, Seattle
Contact: Lisa Rusk (206)577-1852

WWRHCC Member Meeting
March 23 • Red Lion Hotel at the Park, Spokane
Contact: Elizabeth Floersheim (206)577-1851

Regional CAH Conference
March 23 • Red Lion Hotel at the Park, Spokane
Contact: Cathi Lamoreux (509)358-7640

NW Regional Health Conference
March 24-25 • Red Lion Hotel at the Park, Spokane
Contact: Cathi Lamoreux (509)358-7640

RHQN Board Meeting
April 8 - 10:00 a.m. • Conference Call
Contact: Brad Vollegraaf (206)216-2550

WSHA Executive Committee Meeting
April 15 - 12:00 noon • WSHA Office, Seattle
Contact: Lisa Rusk (206)577-1852

WWRHCC Member Meeting
April 22 • Enumclaw Community Hospital, Enumclaw
Contact: Elizabeth Floersheim (206)577-1851

Items for the March In Focus should be sent to Dick Goldsmith at richardg@awphd.org by Friday, March 25.

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