State again says 75-bed mental health hospital in Lacey can go forward. But what will Providence do?

The state Department of Health again has upheld its decision to award a certificate of need to a company called US HealthVest, which plans to bring a 75-bed mental health hospital to Lacey’s Woodland District, not far from Huntamer Park.

And that ruling means that Providence St. Peter Hospital and Fairfax Behavioral Health — two organizations that also want to bring a mental health hospital to Lacey — have exhausted the state’s administrative appeals process, said David Johnson, a spokesman for the health department.

If Providence and Fairfax, who have repeatedly appealed the state’s decision to award the certificate of need to US HealthVest, want to take any further action against the state, they will have to do so in Thurston County Superior Court, he said.

Whether Providence and Fairfax take that next step was not clear Wednesday.

“Our team is evaluating legal options and next steps,” Providence spokesman Chris Thomas said.

If not for the appeals, US HealthVest would be transforming a former state office building at 605 Woodland Square Loop SE into South Sound Behavioral Hospital, President and Chief Executive Richard Kresch said Wednesday.

He said the certificate of need, awarded to US HealthVest in July 2016, was appealed four times by Providence and Fairfax.

US HealthVest now operates four mental health hospitals, including Smokey Point Behavioral Health in Marysville.

Kresch said it is not unusual for mental health hospitals to experience some opposition, but the Lacey proposal has been a first.

“I’ve never been in a situation that has gone that far,” he said about the appeals process. “It’s the most extreme of any that we have encountered.”

Still, he said US HealthVest remains committed to bringing the hospital to Lacey.

“We’re not intending to walk away from this,” he said.

Providence and Fairfax also applied for a certificate of need for their mental health hospital, but it was rejected by the state. That decision, too, continues to be appealed, Providence spokeswoman Angela Maki said.

PIVOTAL UNRESOLVED ISSUE

Meanwhile, Kresch said they still await the Department of Health’s ruling on a “pivotal unresolved issue,” in which the state sought clarifying information about whether the hospital would be open to all mental health patients, including those needing involuntary treatment services.

Kresch said that issue was raised after US HealthVest applied to expand South Sound Behavioral Hospital by 40 beds to 115 beds. He declined to speculate on who raised that issue with the state.

In particular, the state wanted clarification after a city of Lacey conditional use permit — something the city required for the mental health hospital — appeared to set patient limitations.

Rick Walk, Lacey’s Community and Economic Development Director, sent a letter to US HealthVest, clarifying the city’s position.

A copy of that letter was shared with The Olympian.

“The final land-use conditions recommended by the Lacey Hearing Examiner and adopted by the City Council in approving the conditional use permit do not place restrictions on the hospital to fully serve the involuntary treatment patient population,” the city’s letter reads.

Kresch expects a decision from the state in January, he said. Health department spokesman Johnson confirmed that ruling is pending.

This story was originally published November 9, 2017 at 7:00 AM with the headline "State again says 75-bed mental health hospital in Lacey can go forward. But what will Providence do?."