As discussed in the section above, public hospital districts belong to the family of special purpose districts. Thus, they are governmental entities created by statute and operating under all applicable constitutional, statutory and regulatory provisions of the State of Washington and the United States.

Public hospital districts are organized under chapter 70.44 of the Revised Code of Washington (RCW). This statute defines their purpose, powers and limitations. If there is a primary focus to this manual, it is to explain in a detailed manner the powers conferred upon public hospital districts by this statute as well as the limitations on these powers. RCW 70.44 is set forth in its entirety in the Appendix.

While RCW 70.44 is the primary source of powers and limitations for public hospital districts, it is by no means the comprehensive source of powers and limitations. For one, there are numerous laws found in other sections of the Revised Code of Washington (RCW), which apply to local governments like public hospital districts. As mentioned above, statutory provisions affecting public hospital districts are scattered throughout the Revised Code of Washington (RCW).

Many of the statutory provisions affecting public hospital districts are not directly referenced in RCW 70.44. Many of these provisions flow directly from the fact that public hospital districts, as municipal corporations, are subject to the same limitations applicable to all governmental entities. For example, public hospital districts, like all municipal corporations, are subject to the Open Public Meetings Act, Chapter 42.30 RCW. Thus, all meetings of the governing body of a public hospital district are required to be open to the public. Similarly, public hospital districts are required to comply with the public record provisions (RCW 42.17.250) of the Code. Officers of public hospital districts are prohibited from engaging in activities that result in conflicts of interests. RCW 42.23.030 prohibits a municipal officer from being “beneficially interested, directly or indirectly, in any contract which may be made, through or under the supervision of such officer, in whole or in part, or which may be made for the benefit of his office ....”

Not all statutory provisions impose limitations. Some statutes authorize an expansion of powers and provide opportunities for public hospital districts. One important example is the Inter-local Cooperation Act, chapter 39.34 RCW. This statute allows two or more municipal corporations to join together in cooperative action and to jointly finance these ventures.

A final source of the law for public hospital districts under state law lies in the provisions of the constitution of the State of Washington. As discussed in the introduction, constitutions are the over-riding statements of law affecting a government and its citizens. The constitution places limits on hospital district powers. An example of Washington State Constitutional provisions of concern to public hospital districts is Article VIII, section 7, of the state constitution, which prohibits counties, cities, towns and municipal corporations from giving any money or property or loaning their money or credit to any individual, association, company or corporation, directly or indirectly, except for the necessary support of the poor and infirm, or from becoming the owner of any stock or bonds in any association, company, or corporation. The implications of this constitutional provision on hospital district activities is of great importance. Another constitutional provision is Article VII, section 1, which requires that all taxes be levied and collected for “public purposes only.”

Washington’s statutes and Constitution have also been shaped over the years by court opinions (state and federal) that clarify, or in some cases confuse, these provisions. Interpretation of constitutional, statutory and regulatory provisions by case law is a definitive source of the law. As is true with all municipal corporations, the courts are very strict in interpreting the powers of public hospital districts so as to ensure that they do not engage in activities that the legislature did not clearly intend to authorize. (See the discussion in “Special Purpose Districts: Powers and Limitations.”)

Opinions by the Attorney General of the State of Washington also help define the boundaries of state law. Such opinions are viewed as persuasive or as helpful authority, but are not binding upon courts. There are both formal and informal opinions issued by the Attorney General (AG). A formal opinion is signed by the AG and is binding on the AG’s office and other Washington agencies, such as the State Auditor’s Office. An informal opinion is the individual opinion of an Assistant Attorney General and has not been reviewed by the Attorney General. Thus, it does not have the same binding effect on Washington agencies as a formal opinion.

Obviously, a hospital operated by a public hospital district, like any hospital, must comply with the many local, state and federal requirements related to operating a hospital. For example, hospital districts that operate hospitals must comply with state licensing regulations, safety standards, zoning laws, federal Medicare standards, and a host of other regulatory requirements. As mentioned in the introduction to this manual, the purview of this manual is limited to those requirements that apply to a hospital district because of its unique status as a governmental entity.

A brief mention of federal law (and its refinement by case law) completes this introductory discussion of sources of the law relating to public hospital districts. An example of federal legislation impacting public hospital districts are the various laws relating to antitrust and the exemptions for public entities. For example, local governmental entities, such as public hospital districts, are generally exempt from damages under the federal antitrust laws by virtue of the provisions of the Local Government Antitrust Act of 1984 (15 U.S.C. sec. 34).

As the examples above illustrate, public hospital districts derive their powers, duties and limitations from a number of provisions of the state and federal constitutions, statutes, and regulations. The remainder of this chapter gives primary attention to the provisions of the public hospital statute itself, Chapter 70.44 RCW. The scope of powers, duties and limitations as provided for in this statute are examined in detail. Then, the procedures for forming, changing and dissolving districts are spelled out.

The vast majority of PHDs are located in areas considered to be “rural” in character, emphasizing the importance of public hospital districts in meeting the challenges facing rural health care.

Public hospital districts operate nearly half of the entities licensed as acute care hospitals In Washington. The vast majority of the other hospitals are operated as nonprofit corporations, with a handful owned and operated by private corporations on a for-profit or proprietary basis.

In many cases, public hospital district hospitals and nonprofit hospitals may appear very similar. Both may be focused on community service with “profits” being applied not to pay investors but to enhanced community services, upgrade facilities, or subsidize care for persons unable to pay the full costs of service. The major difference is that Washington state law requires public hospital districts to maintain this focus by requiring the public election of board members (nonprofit members are normally appointed) and imposing strict legal restrictions on the use of funds for certain purposes. Also, as a municipal corporation, many of the documents and proceedings of a public hospital district are open to close public scrutiny through public records and open public meetings laws, while nonprofit activities are monitored in a much more general fashion through state and federal review activities. The process for establishing a public hospital district is also much more rigorous than for a nonprofit hospital, as detailed later in this chapter.

In exchange for complying with these procedural requirements, hospital districts are able to access the benefits associated with being a governmental entity, such as access to tax revenues and the power to condemn property.