CEO answers readers’ questions about hospital operations, construction bond

Gary Bostrom, the chief executive officer of Adams County Public Hospital District No. 2, has the task of serving as the “answer guy” for the district when it comes to the proposed $10 million general obligation bond needed to construct a new hospital.

Washington campaign/election laws prohibit Bostrom from asking voters to vote in favor of the bond. However, he is allowed to present facts, figures and information about the bond and the district’s need.

On many occasions during the past few months Bostrom met with community groups in Lind, Ritzville and Washtucna. He has also met one-on-one with residents, as he maintains an open door policy as the district’s top administrator.

Renovating or replacing the existing 60-year-old facility has been studied, deliberated upon and debated by various versions of the district’s board of commissioners for more than 10 years.

For 10 years prior to that, the district’s previous administrations had been attempting to build a nest egg that could be used to replace the hospital, which some classified as outdated 20 years ago.

Bostrom, who has served as the CEO for the past year, and the current roster of district commissioners have collectively agreed that a new hospital is needed in order to ensure the ability to provide healthcare services to area residents during the coming years.

The proposed $10 million bond, paid over 30 years by taxpayers, has sparked numerous questions about the profitability of the hospital district, whether or not a new structure is actually needed and how the district will become financially viable in the future.

Since announcing plans to seek voter support for a bond, Bostrom has made attempts to respond to questions from citizens in a timely manner.

The CEO also intends to field questions during an open house on Tuesday, July 16, from 4 to 7 p.m. at East Adams Rural Hospital. He will be joined by a the consulting architect and the bonding agent.

Readers have submitted a variety of questions to The Journal during the past six weeks. After gathering the questions into a single list, they were presented to Bostrom on June 28. The following is his responses to 28 questions:

1. What steps will be taken to address cash flow and profits to ensure the financial viability of the new hospital? We have moved from using Coast to Coast last year and hiring our own locum providers, hiring our local physicians, combined management positions and reduced other expenses. The last eight months through April since we have reduced expenses and are averaging a $13,000 per month loss compared to the previous eight month period average of $114,534 loss per month. We have implemented bar coding that should capture more revenue. We are continuing to review expenses and looking at ways to enhance revenue.

2. Is the hospital district’s current patient volume, hospital and clinic, large enough to generate a positive annual revenue flow? The current patient volumes are not large enough to generate a positive bottom line and that is why we have been reducing expenses in many ways. With the addition of a full-time physician on staff these numbers should become positive. With a new physician they will need to build a practice and that could take several months to obtain full appreciation of adding that provider.

3. If not, how much of an increase in business is necessary in order to make the new hospital profitable? If that is realistic and why? We would need an additional 10 percent increase in revenue. That is realistic because when we have providers here on a regular schedule, patients who chose that provider will build confidence in our facility and return when they need our services. We have doctors that are here on a regular schedule and are building a patient base but their regular schedule may be only one day per week. We would like to have a doctor in the clinic four to five days per week. We have PA-Cs here now daily.

4. How will a new hospital accomplish such increases in volume? A new facility would enhance the impression of modern healthcare, advance technology and pride in the workplace. This should improve employee satisfaction, thus improving patient satisfaction. The perception of a new facility has been estimated to increase volume by at least 30 percent. I have seen a greater percentage in other facilities our size.

5. Some say the communities will be “without” a hospital in five years’ time if a new one is not constructed. Is that true or false? Please explain. If nothing was done to either correct the problems by building or remodeling, I believe that is correct. If we remodeled and included physical therapy and the business office in the facility, the cost would be comparable to building a new facility. The problem with remodeling this facility is as one of our state’s surveyor’s commented, “this building has exceeded its useful life.”

6. What would it cost to specifically address the state mandated code issues in the existing hospital? One estimate we have is $815,200 for the electrical and sprinkler system. The problem is the unknown issues. When we address the code issues, we are likely to discover other core issues that could bring the kind of repairs that will bring substantial additional costs. We have so many facility issues with the current building; phone system, security, call system, elevator, roof and helipad, just to name a few. One of the big issues is if we go into walls for electrical or sprinklers, we most likely will be looking at asbestos abatement with a high price tag for removal.

7. When will the public know exactly what the $10 million bond will be able to construct? We have selected the land to place the new hospital/clinic and have preliminary drawings to show the public. These are only preliminary drawings not the final. We will not be able to hire an architect until the results of the vote regarding the bond. If the bond succeeds then we will begin the process of putting out to bid for this building and having final drawings.

8. What will be done with the existing hospital if a new one is constructed? If a new facility is constructed this building will be demolished, which is included in the new construction cost.

9. Please address Resolution 13-03, Section 7 in a manner that the general public can understand. This section is to assure if a hospital/clinic cannot be built there is an escape clause for the taxpayers. This bond cannot by state law be used for any other purpose than to build a hospital/clinic. That was my simple explanation. The following in what we receive from our bond attorney, which is a long version:

“There are some within the community who believe that Section 7 of Resolution No. 13-03 (i.e., the resolution submitting the bonds to the voters) grants authority to the Commission to do whatever they want with the 10 million dollars. However, this view is inconsistent with State law. The District’s bond Attorney, Jim McNeill of Foster Pepper PLLC, noted that “f the voters approve the bonds, State Law would preclude the Commission from changing the actual project approved by the voters. In other words, the District may not use the bond proceeds for whatever they want. Instead, the District is required by law to use the proceeds from the bonds to construct and equip a new hospital and clinic to replace the existing East Adams Rural Hospital. Section 7 of the Resolution No. 13-03 was included in the resolution to allow certain minor deviations in the project to accommodate unexpected circumstances. For example, unexpected circumstances might arise where the anticipated location or design of the new hospital and clinic must be altered because of environmental concerns or certain changes in the federal or state licensing or certification requirements. State law, however, would prevent the Commission from relying on Section 7 to do whatever they want with the proceeds of the bonds.”

10. Can you provide a side-by-side estimated cost comparison for the proposed site? Not at this time. We are waiting on only one or two items that are outside our control to get cost estimates. We will be producing a side-by-side cost comparison as soon as we find out the exact dollar number for the late comers fee, which we were assured would be minimal. We just do not have the total dollar figure yet, but that is why the building committee stated we had chosen a primary site Highway 261 and a secondary site on Weber Road. That way if the costs become greater than anticipated on the Highway 261 site we have the ability to move to Weber Road. The building committee felt it was their fiduciary responsibility to make this decision.

11. Why isn’t the purchase price for the Weber Road property more clear? That is because the current owners of the property have not been able to obtain an appraisal to put a value on that property.

12. Is there one or two options with the existing facility if the bond measure fails? If this bond levy fails we could go back to the taxpayers with two different options. We could rerun the requested levy or we could obtain new estimates on bringing this facility completely up to code, which would most likely be a total remodel with meeting or exceeding the cost of building a new facility.

13. If the bond fails in August what will the state of Washington require in the interim between August and any future bond/levy election efforts? I apologize because I do not know the answer to that question. So far just having a concrete plan of building a new hospital/clinic has satisfied them. I believe they just want assurance that we are addressing the problems.

14. At the existing facility, renovation is estimated at under $2 million with an additional $4.5 million in new construction. Is that accurate? Pretty close, you have some good numbers but not all of the numbers. The cost of expansion to include physical therapy, business office, administration, patient rooms and etc. is 4.5 million in new construction. Estimated cost of immediate repairs $815,200; renovate existing facility $1,932,000; incidentals/furnishings $2,000,000; and helicopter access $100,000; for a total of $9,347,200. Those are KDF’s estimates based on what they looked at over four years ago. The proposed new facility cost is estimated at $11,797,500 and will include all of the issues that would be addressed in a remodel. The new facility costs are easier for them to estimate because they have current cost experience.

15. What is the estimated annual savings in utility bill expenses between the existing facility and new construction? The number I heard was at least $30,000 annually.

16. How long before the hospital district is able to demonstrate profitability in a 12 month period? I anticipate we may be able to do that within the next fiscal year because we have moved a lot closer to that if you look at responses to questions 1, 2, 3 and 4.

17. Why isn’t the district seeking government grants to offset the cost of new construction? We have already been talking to a grant writing group that has grant money so we would not have to pay for the service. The difficulty is they do not know of any grants that could help in our current project. If anyone knows of government grants that could help us please let one of our building committee, board members or myself know about that grant.

18. How many patient rooms will be in the hospital and how many exam rooms in the clinic? The plans to date show six patient rooms with double occupancy. The clinic shows 12 exam rooms.

19. Is a therapy pool included in the new hospital? Why or why not? There is not a therapy pool included in the new hospital because we are building to replace the current facility and keep costs down. The therapy pool would be a great future addition and we are building the facility to be able to add structure if needed at a later date. There may be grant monies available in the future for wellness center type services, but unfortunately we are not aware of funds available for this service at this time.

20. Is the new boiler at the existing hospital capable of being moved to a new facility? Is the new facility designed to accommodate that? Yes it is capable of being moved to the new facility and was purchased with the assurance it could be moved. It would have to be dismantled to be moved. The new facility would be designed to accommodate that move.

21. What will be done to ensure a new facility is maintained properly? (this citizen believes the existing facility has been neglected). The plan is to budget for the maintaining of the facility. The board monitors and approves the budget on an annual basis.

22. Why a hospital/clinic versus and urgent care/trauma center? Urgent care is an extension of clinic hours. Urgent care is first come, first served. If you show up with a life-threatening condition, they will do an assessment and send you where you should have gone in the first place, which is the Emergency Room at the hospital. They will call an ambulance and have you transported. Did you also know that MedStar does not land at urgent care centers? They only land at hospitals. On another note, ambulances will not stop at an Urgent Care center, they will only pick you up there. Urgent care is the delivery of ambulatory care in a facility dedicated to the delivery of medical care outside of a hospital emergency department, usually on an unscheduled, walk-in basis. Urgent care centers are primarily used to treat patients who have an injury or illness that requires immediate care but is not serious enough to warrant a visit to an emergency department. Often urgent care centers are not open on a continuous basis, unlike a hospital emergency department, which would be open at all times.

23. Many have stated that the additional tax burden will be prohibitive. How do you address that? The estimated annual cost per $100,000 of assessed value is estimated to be $92 to $93 per year, which will change as interest rates move until the bond is issued. If you have assessed property valued at $50,000, it should cost you $46 to $46.40 per year. If you have assessed property valued at $200,000, it should cost you $184 to $186 per year. The bondsman will have detailed estimates at the July 16 open house.

24. What services will be a part of a new hospital that will address the needs of younger patients/families? We are currently and will continue to do well child checks, sports physicals, oral health, Washington child profile for immunizations, health fair helmets and safe sitter.

25. You have said the community will need to recruit a new doctor. How hard is that to achieve? Is a brand new hospital all it will take? My understanding is the average time to recruit a new doctor is approximately four years. A brand new hospital will make it a lot easier to recruit a new doctor as well as other health care professionals. A brand new hospital is not all it takes but it helps a great deal when recruiting. We are currently in contract negotiations with Dr. Valerie Eckley to begin working in our clinic four days per week. More information will be coming soon.

26. Is this the best approach? Why? Are there other viable options? We believe building a new facility is the best approach. The reason why is that if we remodel it will take care of the surface issues, but will not address that it is an old building with a face lift.

There is also no assurance that the costs of remodeling will not be greater than building new.

As far as viable options, I believe I addressed that.

27. Credibility is a routine sticking point for citizens. Transparency is another. Billing system complaints are decades long. What steps are being taken to address these three areas? I am sorry I do not understand the question of credibility. We have had public meetings in three communities and have put our minutes from meetings on our website. We are trying to be as transparent with Facebook, our website and the newspaper. We have discussed many issues at our monthly board meetings. I know we have had some billing issues and in an attempt to resolve several of those issues, we have made an agreement with Inland Imaging to take over that process.

I visited with three other facilities in this state that use their services and the only negative that I heard is they had some complaints because patients were expected to pay their bill. One of those facilities was at 45 days of gross accounts receivable and we are in excess of 100 days.

28. What expanded/specific details can citizens expect to find at the open house on July 16? The architect firm that drew up the preliminary plans, the bond attorney and I will be available to answer questions and we will have a physical model and drawings for you to see. It will be from 4 to 7 p.m.