Providence St. Peter Hospital needed more patient beds. Why did it take so long?

It’s been a bumpy few months at Providence St. Peter Hospital in Olympia. In addition to combating rodents in a cafeteria and kitchen, the hospital now braces itself for a possible nurses strike.

Amid those challenges, however, there’s also been good news: The state Department of Health recently approved the hospital’s plans to add 52 more patient beds, which the hospital would like to have in place by 2021 at an estimated cost of $34 million, state information shows.

A casual observer might wonder why the hospital, dealing with a growing, aging Thurston County population, a busy emergency room and seasonal influenza, has to work with the state at all to add more beds. But it does, through a longstanding state process called Certificate of Need.

And that process has generated quite a bit of frustration.

Although Medrice Coluccio, chief executive of Providence Health and Services, Southwest Washington, was not openly critical of Certificate of Need during a visit to Lacey City Council in September, she did point out that it took the hospital nearly two years to get its plan for more beds approved.

She attended the council work session to provide an overview of Providence in the region, as well as to thank the city for writing in support of its need for more beds. The Washington State Hospital Association, which advocates on behalf of hospitals in the state, has been looking into the Certificate of Need delays, Coluccio said that night.

Lacey City Councilman Lenny Greenstein views the Certificate of Need process more bluntly.

“The process is absurd, absolutely absurd,” said Greenstein, who is the city council’s representative to the Thurston County Medic One board.

Greenstein said after working nearly two years to get approval for more beds, Providence will now spend two more years to get those beds in place. And by then, if patient demand continues to grow (and it likely will, since the county is growing), the hospital will need even more than the 52 beds that have been approved.

That means the Certificate of Need process starts all over again.

“It makes no sense,” Greenstein said. He believes hospitals should be free to make their own business decisions.

Greenstein knows that when the hospital is full, patients with non-life-threatening injuries are sometimes transported out of the county to other hospitals. That’s not only a burden for the patient, it also means that Medic One unit is temporarily unavailable to respond to emergencies here, he said.

Frustrations about the lack of beds at Providence have shown up as letters to the editor in The Olympian as well.

“Having just spent a week there, let me tell you, it was definitely my worst experience at a hospital yet,” wrote William Roberts of Lacey on Sept. 20. “The ER was so backed up, I spent hours shuffled off to a back hallway with no attention whatsoever.”

Providence CEO Coluccio told the council she was aware of those frustrations.

“Our house is always full,” she said.

Certificate of Need

The Certificate of Need process has been state law since the late 1980s, but it originated as federal law in the 1970s. The federal government required hospitals to submit proposals and obtain approval for major capital projects or new technology from a state health planning agency, according to DOH information.

That evolved into Certificate of Need. The federal requirement was repealed in 1987, but 35 states still maintain some form of CON programs, including Washington state.

For a hospital wanting to add more beds, or build a new hospital, or add certain services, the process begins with a letter of intent, followed by the application. It has to make its case in four key areas, said Zosia Stanley, associate general counsel for the state Hospital Association.

Those areas: demonstrate need, show financial feasibility, provide appropriate care, and deliver it in a cost-efficient manner.

Stanley said the association was made aware of recent delays with the Certificate of Need process and relayed those concerns to the Department of Health which, she said, was “very receptive” to change.

DOH spokeswoman Jessica Baggett acknowledged the program has been understaffed.

“The department has responded by moving two staff members into the program, and we are very closely managing our workload to get on track with our decisions,” she said in an email.

To add more beds, Providence submitted its letter of intent in October 2017, followed by the application in April 2018. It received approval in June 2019, or about 13 months after the application was submitted.

If the DOH program were fully staffed, the Providence decision should have taken six to nine months, Baggett said.

State lawmakers did agree to waive the Certificate of Need program to move more quickly to provide beds for more mental health patients.

The two-year exemption from CON for mental health beds started in 2017 (through HB 1394, SB 5431) and was extended in 2019.

Thurston County’s competing hospitals

Sometimes delays in the Certificate of Need process are not created by staffing problems at DOH, but by the very hospitals involved in the process.

The process does solicit public comment. There also can be public hearings, and there is an appeals process if an affected party disagrees with the state’s decision regarding Certificate of Need.

DOH spokeswoman Baggett said Capital Medical Center in west Olympia questioned elements of Providence’s request for more beds, which resulted in Providence having to “respond with financial information that increased the work our analysts had to do to process this application.”

Capital Medical Center did not respond to The Olympian’s request for comment.

It wasn’t the first time Capital Medical Center or Providence questioned or opposed a local Certificate of Need application.

About a decade ago, Capital Medial Center sought CON approval to offer the artery-clearing procedure known as an angioplasty on an elective basis to patients. The hospital could already perform it in emergency situations, but for an elective procedure patients had to go to Providence.

And Providence wasn’t about to share that business.

“Sharing that business with Capital could lower St. Peter’s revenues by $1.5 million to $2 million annually, while Capital likely would gain that much,” The Olympian reported in December 2009.

Capital was granted CON approval and Providence appealed that decision.

Similarly, when U.S. HealthVest submitted a Certificate of Need plan to open South Sound Behavioral Hospital in Lacey, Providence opposed that plan because Providence and its partner, Fairfax Behavioral Health, also wanted to open a mental health hospital.

After the Governor’s Office and the state Attorney General’s Office got involved, the standoff ended and both mental health hospitals were approved. South Sound Behavioral Hospital is now open, while the Providence proposal is still in the works.

“We are eager to do what we would have liked to have done about a year ago or so,” said Dr. Richard Kresch, president and chief executive of U.S. HealthVest, in December 2017.

State Hospital Association’s Stanley acknowledged the CON process can bring out the “competitive” nature of hospitals, but she isn’t in favor of changing the appeals process.

She called it an appropriate “safety mechanism,” saying it helps to make sure the CON decisions are correct.

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Rolf has worked at The Olympian since August 2005. He covers breaking news, the city of Lacey and business for the paper. Rolf graduated from The Evergreen State College in 1990.