November 3 Elections to Board of Hospital District #1


September 26, 2015 by islandersvoice1

IMG_6698 (2)The week of October 12, San Juan County voters will receive their mail-in ballots for the November 3, 2015 general election. Arguably the most important races on the ballot for the voters of San Juan Island and other adjacent islands are the three separate races to elect three new commissioners to the five-member board of San Juan County Public Hospital District #1 (the District), a junior taxing district of San Juan County.

There are several reasons why these three District races are important, including that the election of three new commissioners has the potential to change the direction of the board to the benefit of the public it serves, particularly as it relates to the perceived flaws in the existing Subsidy Agreement between the District and PeaceHealth whereby the District subsidizes the operations of the new Peace Island Medical Center (PIMC). Another reason is that new and stronger leadership is required if the renewal of the District’s existing tax levy expiring on 12/31/16 that funds emergency medical services is to be approved by voters in November 2016 after similar renewals were rejected by voters in both 2013 and 2014.

As some voters may not be familiar with the elections, we provide below essential details on the elections, the District, and PIMC, the hospital we support with our tax dollars via one of the district’s two tax levies.

In a separate editorial on October 3, the San Juan County Democrats (SJCDs) will discuss their endorsements of Monica Harrington and Bill Williams for two of the three District positions in the November 3 election. No other candidate asked for an endorsement. There will also be an interview with Monica.

One of the most important issues considered by the SJCDs in deciding whom to endorse is the position of the candidates with regard to the claim by some that the District’s entry into the Subsidy Agrement is in violation of state law. More on this issue next week.

But first, the background. Hopefully we will see you back here next week to read about the endorsements and the interview.

Election Specifics
In the November 3 general election, voters of San Juan and nearby islands will elect three new commissioners to the board of San Juan County Public Hospital District #1 (the District). All voters of the District can vote in all three races. As the board has five members, all unpaid, the three new commissioners have the potential to change the direction of the board and as a result improve the provision of health care in the District.

There are two candidates for each of the three commissioner positions, none of whom are incumbents: Commissioner #2: Barbara Sharp and Michelle Loftus; Commissioner #3: Monica Harrington and Jenny Ledford; and Commissioner #5: Bill Williams and Bill Hancock. The newly elected commissioners will take office in January 2016.

The three races are non-partisan, meaning that the ballot does not indicate the candidates’ affiliation with any political party. Nevertheless, there is no prohibition on endorsements by any party.

The two incumbents, Michael Edwards and Mark Schwinge, are not up for reelection.

Voting for the three positions is limited to registered voters of District #1, which consists of the following islands: San Juan, Brown, Henry, Johns, Pearl, Spieden, and Stuart. Voting in the State of Washington is exclusively by mail. Ballots will be mailed to registered voters the week of October 12.

Hospital District #1
The District, a junior taxing district of San Juan County, was established in 1989 under the provisions of legislation passed in 1945 by the Washington State legislature that governs all Public Hospital Districts (PHDs) in the state. Washington State RCW 70.44 codifies this legislation. Under this ordinance, PHDs can either own and operate hospitals and other medical facilities, or they can contract with and fund services through third parties, which is the case with the District by means of its Subsidy Agreement with PeaceHealth discussed below.

Under RCW 70.44, “… the board and individual commissioners are responsible for overseeing the hospital district’s policies and organization with respect to the operation of the district, including the delivery of quality patient care. In fulfilling its obligation, the board’s role is to adopt the necessary general policies to achieve these ends and to delegate the day-to-day operational responsibility with respect to these policies to the district administrator.”

Under the guidelines of the Association of Washington Public Hospital Districts, the role of a public hospital district is “to provide hospital services and other health care services for the residents of such districts and other persons.”

The District was established to ensure a secure base of funding to support the delivery of essential health care services on San Juan Island and adjacent islands. This support has been facilitated by three tax levies:

1. For hospital operations – Two levies, including a “permanent levy” with no expiration and a “levy lift” levy that will expire on 12/31/15 and will not be renewed. In 2015, the total of the two levies was $0.601 per $1,000 of assessed value, generating $1,654,906 in tax revenues. The permanent levy was originally approved by voters to support the operations of Inter Island Medical Center (IIMC). With the closing of IIMC in 2012 and the next-day opening of Peace Island Medical Center (PIMC), up to 97% of these tax funds are now paid to PeaceHealth to subsidize services at PIMC by means of the Subsidy Agreement.

2. For emergency medical and medvac services (EMS) – In 2015, the levy was $0.350 per $1,000 of assessed value, generating $963,744 in tax revenues. Originally approved by voters in 2010 for six years, with expiration on 12/31/16. A vote to approve renewal is expected to be on the November 2016 ballot. Two previous votes to renew were rejected by voters in 2013 and 2014. Requires 60% majority for approval. If the levy is not approved, EMS would cease to exist in the district unless another funding source is obtained.

The District has no direct operations of its own other than EMS. Its administrative staff consists of one person, its Finance Director. EMS operations employs 9 full-time, paid staff, plus 31 volunteers who receive a stipend per service call.

The District has no direct oversight over the operations of PIMC. Instead, the hospital has its own board of directors appointed by PeaceHealth. The authority of the District over PIMC is limited to enforcement of the terms of the Subsidy Agreement. PIMC is also subject to state and federal law.

The District does not have legal staff and is not represented by the county prosecuting attorney. Any legal expenses are its exclusive responsibility.

General expenses are paid for out of the 3% of the hospital levy that is not passed through to PeaceHealth under the Subsidy Agreement. This 3% is approximately $50,000 per year.

Peace Island Medical Center
PIMC is an existing hospital in Friday Harbor that opened on 11/26/12. It is owned and operated by PeaceHealth, a Catholic health care ministry. PeaceHealth and all other Catholic Health care ministries operate subject to the moral authority of the local Catholic bishop and follow the Ethical and Religious Directives for Catholic Health Care.

The hospital has its own full-time staff. It also provides medical services by visiting staff from its affiliate St. Joseph Hospital in Bellingham, and it leases space to third parties who also provide some services. The services of independent third parties are not funded or subsidized by the District.

The origin of PIMC goes back to the late 2000s when the existing Inter Island Medical Center (IIMC) in Friday Harbor, funded by the District through the tax levy described above, was facing ongoing funding problems threatening its existence. At that time a small group of San Juan Islanders spearheaded an effort to develop a new hospital on San Juan Island. The promise of the new hospital was that it would offer expanded services compared to IIMC and would qualify for higher state and federal government reimbursement rates, making it more financially viable than its predecessor.

The developers successfully raised $10 million from private donors to help with the construction of the new hospital and adjacent EMS building. PeaceHealth agreed to build and operate the new hospital, spending approximately $20 million of its own money, so long as it received an exclusive subsidy of approximately $1.5 million annually in inflation-adjusted funds for a 50-year period.

The agreement was documented by means of the Subsidy Agreement (the SA) dated 5/6/09 between the District and PeaceHealth, as amended in October 2010 and March 2012. The contract was enacted WITHOUT A PUBLIC VOTE. In PIMC’s first full year of operations in 2013, the subsidy payment was $1,483,082, with the amount increasing each year thereafter by the growth rate of the hospital-only portion of the Consumer Price Index. In 2015, the amount paid by the District increased to $1,654,906. On an inflation-adjusted basis, this means the District will pay approximately $82,000,000 in today’s dollars to PeaceHealth over the life of the contract.

The District’s sole source of funds for these subsidy payments is the tax levy discussed above which originally supported IIMC. Under the SA, the amount of this annual payment is limited to no more than 97% of the annual proceeds from this levy, with the difference of at least 3% retained by the District to cover its administrative expenses. The SA provides that the annual payment to PeaceHealth will decline in 2016 by the same amount as the decline in the District’s tax revenues resulting from the expiration of the levy lift levy mentioned above.

Under the SA, PeaceHealth has the obligation to provide only those services that are consistent with its mission and values. The contract provides no mechanism for effective, ongoing oversight of our tax dollars by the hospital district commissioners.

It is a matter of debate whether or not the developers made an adequate search for an owner/operator and negotiated an agreement with PeaceHealth that is in the best interests of the citizens of the District. It did not conduct an open Request for Proposal Process as has been done in nearby public hospital taxing districts. Several candidates for the board do not believe it did. Their reasons for believing so will be discussed in the editorial on October 3, as will the claim that the SA violates state law.

Since PIMC opened, some important services have been added, including chemotherapy services for cancer patients, and expanded imaging services. Unfortunately, some key services previously provided at IIMC are no longer supported, and some important services are expressly forbidden.

Among the services PeaceHealth has chosen not to provide are certain reproductive health services, including ongoing prenatal care services. Other providers offer these services, but because they are independent of PeaceHealth, they receive no subsidy from the District.

Similarly, PeaceHealth has chosen not to participate in Death with Dignity. It not only forbids its physicians from actively participating, it also forbids them from referring patients directly to entities such as Compassion & Choices that can help patients exercise their rights under the law.

PeaceHealth, a nonprofit health care corporation headquartered in Vancouver, WA, is owned by the Sisters of St. Joseph of Peace, an affiliate of the Catholic Church. According to PeaceHealth’s website, “in March 1997 the system Board of Trustees received the status as a Pontifical Private Juridic Person. This ensures the continuation of the healing ministry as a Catholic health system under lay leadership to the communities in which we serve.”

Peace Health owns and operates nine hospitals in Washington, Oregon, and Alaska, including PIMC in Friday Harbor and St. Joseph Hospital in Bellingham.

Please return October 3 to read the endorsements by the San Juan County Democrats of two candidates to the District board.

One thought on “November 3 Elections to Board of Hospital District #1

  1. David Meiland says:

    This has become a very divisive issue in our community, but somehow it seems that few want to frankly discuss the constitutional issue caused by the Catholic Church’s role in defining care options at a publicly-funded hospital. Fortunately, I think we have candidates running who recognize the issue and will work diligently to improve the situation.


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