The state Department of Health has denied an application jointly submitted by Providence St. Peter Hospital and BHC Fairfax Hospital to open an 85-bed psychiatric hospital in Thurston County, according to a copy of the decision sent to both parties and The Olympian on Thursday.
The application, known as a certificate of need, is required when a medical provider proposes a new, or change to existing, service.
The state denied the application for Olympia Behavioral Health psychiatric hospital in the following areas: financial feasibility, structure and process of care, and cost containment.
The state’s decision can be appealed. The certificate of need manager for the Department of Health, Janis Sigman, could not be reached Thursday.
“We are highly disappointed by this decision,” Providence and Fairfax Behavioral Health said in a joint statement. “We know that we are the right community partner for this project. Providence and Fairfax have proven track records in Thurston County and throughout Washington.”
Providence and Fairfax said they are “evaluating all legal options moving forward.”
In its decision, the state, in one instance, took issue with the lack of details provided by Providence St. Peter Hospital in purchased services it would provide to Olympia Behavioral Health. Such purchased services cover “pharmacy, lab, ambulance, radiology, linen, medical records, patient accounts, plant operations and grounds maintenance.”
“With the inconsistencies identified above, or lack of response to the department’s questions, the department cannot conclude the projected financial revenue expense information provided in the application is reliable,” the decision reads.
A competing group, US HealthVest of New York, has received certificate of need approval from the state to open a 75-bed mental health hospital in the county. That application was submitted and approved by the state last year, followed by one submitted in June by Providence and Fairfax, one of the largest operators of in-patient psychiatric services in the state. The state was expected to make a decision on the Olympia Behavioral Health application in January, but it ultimately took until April.
Providence and Faifax appealed the state’s approval of the HealthVest application, but the status of the appeal was not immediately known Thursday.
Both applicants prefer to have their hospitals in Lacey. Providence would build new at 3100 Marvin Road Northeast, while US HealthVest wants to be in the Woodland Square Loop area of the city in a former state office building.
HealthVest officials have submitted an essential public facilities application to the city of Lacey, which requires a conditional use permit. To get a conditional use permit means an automatic apperance before the city’s hearings examiner, said Rick Walk, community and economic development department director for Lacey. That hearing is set for May 17. Before that, city staff will release a report and make recommendations about the project. That is expected around May 5, Walk said.
In a recent appearance before The Olympian editorial board, Dr. Richard Kresch, president and chief executive of US HealthVest, told the board the state has approved a 75-bed facility, but they are asking for additional beds because they have the room.
He expects the building renovations to cost $18 million-$22 million. When complete, it is expected to employ 200. The average patient stay is expected to be eight days, he said.
David Schaffert, Thurston County Chamber of Commerce president and chief executive, who attended the editorial board meeting, said a “fully functioning community” needs this kind of social infrastructure.