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Providence Medical Park will open without disputed operating rooms


The new $44 million Providence Medical Park in Spokane Valley will have to open without its four operating rooms amid a fight with competitor Valley Hospital over whether the outpatient surgery suites are even needed. As a result, Providence has had to change tactics; now its lawyers are trying to convince regulators that Spokane is ready for more operating rooms rather than attempting to win an exemption from the state’s certificate of need process.

Providence could get a decision by June at the earliest. But depending on the outcome and its competitor’s appetite for appeals, the battle could continue for months.

The controversy involves only the same-day surgery aspect of the Providence facility east of Sullivan Road and north of Interstate 90 along Desmet Court.

Rockwood Health System, owner of Valley Hospital, issued a formal statement Monday regarding its rival’s project: “Spokane County has more than adequate operating room capacity and as such, there is simply no need for the additional surgical space proposed by Providence. Multimillion-dollar investments have been made at Valley and Deaconess Hospitals to improve inpatient and outpatient surgical capacity and resources since 2008. … These facilities have sufficient capacity to meet our community’s surgical needs in the future.”

Aside from its operating rooms, the rest of the new Providence facility is not subject to dispute and will open for patients on Monday. The services are extensive: an urgent care center; a new branch of Providence Heart Institute, featuring cardiologists and diagnostic tests; orthopedics; vascular imaging; gastroenterology including colonoscopies; a medical laboratory; dozens of offices and examination rooms for family doctors, internists and specialties such as neurology; a complete Inland Imaging center offering MRIs and other advanced machines; a Rite Aid pharmacy; a conference center and a Thomas Hammer coffee shop.

Adjoining the 132,000-square-foot complex are numerous vacant lots – freshly graded, numbered and ready for the construction of spinoff facilities.

According to Providence, the medical park represents the latest trend in medicine: reduce costs by delivering outpatient care and minimal-incision surgery in one-stop locations closer to where people live – away from central hospitals whose emergency departments, intensive care units and 24/7 staff operate at the industry’s highest costs.

The Providence project follows investments, on a smaller scale, by Rockwood: The existing Valley Hospital invested $17 million several years ago in an expansion that added facilities for outpatient surgery, oncology and radiation as well as an enlarged emergency department. Valley’s outpatient surgeries helped strengthen the smaller hospital’s fortunes.

Rockwood now operates six urgent care centers; Providence operates two, plus the new one that opens Monday.

In August 2012 as Providence prepared to break ground for its new Valley satellite, it applied for an exemption from the state’s certificate of need law. The 1979 statute has a stated goal of controlling medical costs by requiring new facilities to be scrutinized for duplication and market demand. It has been cited for decades in Spokane-area disputes ranging from a 1980s arms race in imaging machines to increases in the number of hospital beds.

A staff of five state employees runs the certificate of need program, overseeing 98 hospitals and 25,000 physicians.

Private day-surgery centers can be subject to the need law, depending on how they’re owned. Since the law’s enactment, cost and billing headaches have driven small physician offices to close; now, many doctors work as employees for large hospital systems like Providence and Rockwood. Providence now employs 500 Spokane-area physicians and practitioners while Rockwood employs 300.

In March 2013, the state approved the Providence request to exempt its Valley project from the certificate of need law. Three weeks later, Valley Hospital appealed, arguing that the new facility’s 27 surgeons were not a separate, private group but rather were “corporate employees of Providence.”

As construction of the Providence facility continued, the dispute was scheduled for a hearing. On Dec. 31, the state changed its position, filing a motion in support of Valley Hospital, arguing the exemption was unwarranted and seeking an order for Providence to obtain a certificate of need.

Six weeks before the state made that change of position public, and 14 months after construction began, Providence filed an application for a certificate of need.

On Feb. 20 a state health law judge, John Kuntz, ruled in Valley Hospital’s favor. The exemption for day surgery centers operated by “private” physician groups was created in a Department of Health rule, Kuntz said, and is not even mentioned in the Legislature’s certificate of need law.

“Costs are controlled,” his decision said, “by ensuring better utilization of existing institutional health services and major medical equipment; those health care providers wishing to establish or expand facilities or acquire certain types of equipment are required to obtain a CN.” To interpret the law in any other way would “create an absurd result,” make the exemption for private surgery centers “meaningless” and “eviscerate the CN process,” he wrote.

Providence has appealed Kuntz’s decision.

But in addition, Providence submitted extensive documentation to support its new certificate of need request, including letters from physicians, business and civic leaders, economic development advocates and Valley residents. A public comment period closed last week. Valley Hospital submitted a rebuttal to the Providence application.

Scott O’Brien, chief strategy officer for Providence, said his organization anticipates a state decision in June and is “very optimistic” about the outcome based on the “outpouring of support” that it submitted to the state.

“We are focused on our patients, who seek care from Providence. We hear people clamoring for a lower-cost experience,” he said.

Asked about the effectiveness of the state’s certificate of need process, he said, “We kind of look at this as part of our landscape. We need to partner up with the Department of Health as part of our strategy.”

O’Brien said Providence sought the exemption first – rather than the certificate of need – because it would have provided the quickest way to bring new services to Spokane Valley.

Mary Kay Clunies-Ross, a spokeswoman for the Washington State Hospital Association, said the association has not been lobbying to change the certificate of need law or beef up its enforcement operation.

Some hospitals, she said, feel the process is expensive, convoluted and unpredictable, making it difficult for them to be “nimble” in response to the changing health care market.

On the other hand, she said, “It sometimes works to some of our members’ advantage to have a way of maintaining their market. … There are lots of good reasons why you would not want duplication in an area. It can make it hard for both organizations to survive and continue services in the future.”

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