Public Hospital Districts: Been There, Done That

— by Susan McBain, Orcas Issues reporter —

People who have been involved in existing Public Hospital Districts (PHDs) in Washington were the focus of the Dec. 18 Town Hall on establishment of a PHD on Orcas. The four guests gave short presentations on their experience and then answered many questions from the audience.

The meeting began with brief remarks by Patty Miller and Art Lange, members of the Coalition for Orcas Health Care (COHC), about its core positions:

• Everyone on Orcas Island should have access to primary and urgent care.
• All medical practices should be eligible to receive assistance.
• The district will focus only on primary and urgent care needs initially, in order to keep the levy rate as low as possible.
• The individuals we elect as commissioners are critical to the district’s success.

Lange pointed out that rural primary health care nationwide needs additional support to be sustainable. Generous donors have kept the doors of Orcas medical facilities open to date, but that source is unpredictable and not guaranteed. Should one or both of the current practices be forced to close, Lange said, “Who else would come here to run a practice without some sort of financial guarantee?”

The first of the guest presenters was Ben Lindekugel, Executive Director of the nonprofit Association of Washington Public Hospital Districts (AWPHD), who talked about the variety of districts in size, funding, and function. Most are in rural areas; some have hospitals, some have clinics or EMS services, and one has a nursing home. Most have created PHDs in order to survive; they generally receive 4–5% of their funding from taxes, just enough to let them break even. Although about 70 rural hospitals nationwide have closed this year, none has closed in Washington, partly because of the state’s legislation authorizing establishment of PHDs (RCW Title 70, Chapter 70.44). Districts that have worked the best, in Lindekugel’s opinion, have been “the ones that elected really good commissioners” and supported them in their work.

Next, Sandy Robertson, Superintendent of the Mason County PHD#2, discussed formation of that district to provide primary and urgent care in the north part of the county. She described the services her district contracts for, the ways it keeps costs low, and its efforts to be open, informative, and responsive to the public.

Finally, Christa Campbell and Becky Presley are two of the commissioners elected for Lopez Island’s PHD, approved in 2016. Their district’s busy first year was devoted to assessing the community’s medical needs, determining which medical institution best met those needs (they have contracted with UW Medicine), arranging loans for the transition period before public funds become available in 2018, and establishing contracts for services. They have set their initial levy rate at $0.75 per $1000 of assessed valuation, but Campbell noted that the rate may drop once the loans are paid off.

A summary of the answers to audience questions:

• The district commissioners are the decision makers for the district, so their ability to work together to make good decisions is vital for the district’s success. Differing viewpoints and backgrounds can be a plus as long as the commissioners can collaborate effectively. “They don’t have to be best friends, but they shouldn’t all think the same,” said Campbell, and Lindekugel added, “Axe-to-grind politics usually don’t work.” The commission chair needs to be assertive but also able to listen and to focus the discussion on reaching conclusions. Presley noted that commissioners have fiduciary responsibilities and that they operate under legal regulations and open meeting laws. Commissioners should know their purpose, perform due diligence, and be open, honest and accessible.
• The powers of PHD commissioners are rather extensive; they are listed in RCW 70.44.060. The commissioners can establish contractual requirements for providers and evaluate how well providers meet those requirements; however, they do not take a direct role in any provider’s operations. COHC members stated that patient satisfaction, quality of care, and outcomes are important, and the COHC hopes those would be established as part of the contract.
• The AWPHD is a great resource for information, including sharing of best practices across districts. Lindekugel noted that conflicts of interest don’t seem to have been a problem for most districts.
• A successful district is one where “the doors stay open and feedback is good,” said Robertson, and Lindekugel added that over time, a healthier community should be the result. Commissioners should measure public satisfaction and support and should set benchmarks for progress over time.
• If voters approve establishment of the district and elect commissioners in April 2018, the commissioners are responsible for conducting an assessment of community needs and developing a budget by Nov. 15. The levy rate will be based on that budget; funds will become available in April or May of 2019. The Orcas Medical Foundation (OMF), owner of the building in which UW Medicine Orcas Island operates, is trying to raise funds to cover the period until public funding is available. Research on the needed amount and length of a bridge loan is under way, and more information should be available at the next Town Hall meeting in January.
• Administrative expenses vary greatly among districts. Several people asked about the possibility of sharing expenses and superintendent responsibilities with the Lopez district, San Juan district, or both. The RCWs allow interlocal agreements, and those possibilities may be explored in the future.
• Campbell answered several questions about the Lopez district’s first year. The district set up capacity to borrow up to $600,000 for transition funding. It obtained legal advice from Foster Pepper, a Seattle law firm that works with PHDs. The biggest issue Campbell faced was reassuring the community that commissioners would make the best possible decisions even though hard numbers were not available at the time.
• One person asked about the ability to house patients overnight. Lindekugel said the AWPHD is working with Washington state agencies to address this problem but that requirements for such facilities make them very expensive.
• Another asked about district funding for new providers. Any provider would be able to apply for funds, but budgets are set a year in advance, so new providers would need to wait a year to receive funds.

The next Town Hall will be held from 5:30 to 7 p.m. on Wednesday, Jan. 24, and will focus on the economics of an Orcas PHD. The first of two candidate forums is expected to be scheduled in late February/early March, and the March 14 Town Hall on March 14 will also be a candidate forum. Watch for announcement of locations.