Aging Infrastructure Pushes Three Rivers to Seek Bond Approval

Voters have a tough choice to make this November whether to support Three Rivers Hospital or ask them to go back to the drawing board to come up with something better.

Three Rivers is seeking a 30 year levy of 78 cents per $1,000 of assessed property value in Okanogan Douglas Hospital District 1, dba Three Rivers Hospital. The district includes the Methow Valley, Pateros, Brewster, Bridgeport and Mansfield.

The levy would raise $45 million for the 76-year-old hospital for essential infrastructure such as plumbing, electrical, a new boiler and generator, as well as renovate operating rooms and patient care areas.

Three Rivers CEO Scott Graham said paying for emergency breakdowns is already costing the hospital time and money. He cited a 1958 water heater that broke recently that provided 180 degree temperature for laundry, kitchen and surgery, forcing the hospital to pay $20,000 for a new water heater that they are still waiting for.

“Rather than continuing to pour money into emergency fixes, this renovation allows us to invest in modern, long lasting systems that reduce long term operating costs,” said Graham, adding that their reimbursement rate would also increase because of the new facilities, a win for the district.

A $75 million bond levy proposed two years ago that would have renovated the entire hospital received only 43% of the vote. This is the hospital’s second attempt, paring the cost down by $30 million and only focusing on essential infrastructure and patient care areas. It needs 60% of the vote to pass.

Three River Hospital panelists included Scott Graham, CEO of Three Rivers Hospital; Mike Pruett, Chair of the Board of Commissioners; and Dr. Ty Witt, Chief Medical Officer.

Okanogan Healthcare Planning Group, which opposes the bond measure, includes Peter Morgan, retired hospital administrator; David Clement, retired physician; and Peter Bauer, retired physician.

To Consolidate or Not Consolidate

Witt said the contractor believes the new infrastructure would last the next 100 years. The Okanogan Healthcare Planning Group, which is made up residents in the Methow Valley, says passing the levy would preclude discussion of consolidating hospitals to save costs and improve care. Witt responded consolidation would not work for a county the size of Okanogan.

Clement pointed to the consolidation of obstetrics in 2020 to only one hospital in the county- Mid-Valley Hospital. Witt countered that Mid-Valley doctors are not happy about that move because women have to travel long distances for routine appointments and some have babies in the ambulance or at home. Witt said some patients are moving in with family or friends closer to Chelan or Wenatchee as their due date approaches, thereby further reducing the number of OB-GYN patients in Okanogan County.

Witt said the timing to receive critical care is essential. Strokes require a CT scan to administer proper medication, and time is of the essence. Heart attacks, appendicitis, broken bones and respiratory illnesses, especially for children, are situations where the patient needs to be stabilized quickly.

Witt said the pass to Omak isn’t always available.

“If we didn’t have that hospital in Brewster, I think we would really lose the quality of care that we’re currently providing.”

Peter Morgan, a retired hospital administrator, said three hospitals for 43,000 residents is not sustainable.

“The [hospital] districts have too few patients to support a vibrant, healthy hospital and too few residents to afford rebuilding the aging infrastructure built by the federal government seventy years ago,” said Morgan.

He pointed out that Mid-Valley needs a new building as well and “the county can’t afford and doesn’t need both to be full service hospitals.”

“The problem is that if this bond passes, the money will be spent and the opportunity will be lost,” said Morgan.

Pruett pointed to examples in Washington State where hospital districts’ attempts to consolidate failed and led to lawsuits “because of the division that it created within the respective communities and trying to pull those resources was much harder to do than it looked on paper.”

He said Three Rivers partners with other hospitals to share resources and complement services rather than compete.

Pruett acknowledged efficiencies that could be gained through consolidation, “but there could be loss of care and even lives if people have to travel additional distances.”

Financial Challenges

Graham said Three Rivers has navigated challenges before and survived by “staying nimble, fiscally responsible, and steadily improving our position over the last decade, but there are limits to how far we can go within an aging infrastructure,” citing it as a barrier to recruitment, efficiency, and compliance.

“We cope with the same problems as large hospitals, just on a smaller scale,” said Graham, citing lower insurance reimbursements, challenges with retaining hospital staff, and new regulations each year that add to healthcare costs.

Graham said the hospital has improved its position from “a negative 100 days of cash to nearly 60 days of positive cash on hand.” Witt said the hospital went from $4 million in debt ten years ago to having a reserve almost that much.

“We are on a trajectory of improvement and success, not failure,” said Witt, adding that Three Rivers isn’t at risk of failing any more than another hospital. If the federal government eliminates the critical access program that serves rural hospitals, then all rural hospitals would be at risk of failing.

Pruett said the hospital has weathered many political and financial challenges before.

“We stay focused on solutions, adapting, as we always have, to respond to changes. That’s how we’ve come so far with our fiscal status today and the remodel will help shore that up even more,” he said.

The planning group said things are too uncertain to ask voters for a 30 year bond of this size.

“Supporting this bond is a bet in the long term viability of the current business model, in spite of clear threats to funding,” said Bauer. “We’re not comfortable making that bet at this time.”

The planning group would like to have an urgent care center instead of a hospital in Brewster. Witt said a stand alone urgent care clinic is not economically feasible because it is too expensive to maintain coverage 24/7 without providing other services.

“Simply put, if we don’t want a hospital in Brewster, then we can close it, but we can’t have just an emergency room,” said Witt.

Effects of Higher ACA Premiums and Lower Medicaid Enrollment

The planning group pointed to an uncertain financial future given recent changes to Medicaid that will make it more difficult for eligible citizens to keep their coverage, as well as changes to the Affordable Care Act that would raise premiums unless Congress acts to extend federal subsidies (one of the primary reasons for the current federal government shut down.)

According to the planning group, Medicaid insures up to 40% of Okanogan County residents. The One Big Beautiful Bill, which created new paperwork requirements for Medicaid enrollees, is widely expected to decrease Medicaid enrollment. This could result in the hospital seeing an increase in costs related to unreimbursed care.

Graham told MVE the hospital might have to hire patient care managers to help people complete their required Medicaid paperwork.

The planning group also pointed to a report by the Kaiser Family Foundation, which provides independent healthcare research, that rated Three Rivers as “highly vulnerable” as it relates to cash on hand, including reserves.

By law, the bond has to be used for construction. It cannot be used to help with hospital finances. If the bond passes and the hospital were to close, property owners would be on the hook for the remainder of the 30 year bond.

Three Rivers countered that the hospital is in much better shape than it was ten years ago and that all hospitals, even city hospitals, have had financial pressures.

Beth Zborowski, spokesperson for Washington State Hospital Association who attended the forum, said more hospitals are in precarious shape, even on the west side, because of unreimbursed care. The larger population is not a benefit to the hospitals financially because there is more unreimbursed care, according to Zborowski.

The planning group pointed out that commercial insurance makes up the cost differential for Medicaid, which does not cover the full cost of a hospital visit. If less people purchase commercial insurance in the private marketplace through the Affordable Care Act (or “Obamacare”) due to increased premiums, that not only puts further financial pressure on hospitals but increases the rolls of the uninsured.

Recruitment

Clement, a retired physician who worked in Alaska and Maine, said it is hard for rural hospitals to recruit doctors, nurses and technicians because they usually look for places with enough patients to grow their skills.

“Recruiting will be easier and result in better staff for a hospital that does four to eight surgeries or deliveries in a day, not just one a day, and has five or ten inpatients at the same time, not just one or two. I believe consolidating duplicative hospital services in Okanogan County will improve recruitment and retention of providers,” said Clement.

Witt countered that people need the “duplicative” services in each of the hospital areas.

“It’s really a question not so much about recruitment to me, but do we want a hospital in Brewster or not?” said Witt. “I didn’t come here to get experience. I brought my experience here, and that’s really the kind of doctors that we’re trying to recruit.”

Witt said an aging building is also contributing to recruitment issues.

“They won’t come to an older building that’s failing. Neither do patients, actually. So our volumes and our numbers will improve and our recruitment will get easier for both nurses and providers as we can upgrade and keep up with the quality of medical technology.”

The planning group said a renovation could reduce operational costs and might be able to attract more patients, but cited capital investment in North Valley Hospital in Tonasket, which they said did not result in increased utilization.

To view a video of the entire forum, visit Twisp Valley Grange YouTube page.

For a Q&A with leaders of Three Rivers, visit here.