KGH makes Southridge hospital deal

By Michelle Dupler, Tri-City HeraldApril 21, 2012 

The excitement of seeing five years of work come to fruition has kept Kennewick General Hospital CEO Glen Marshall from sleeping lately.

"I'd go to bed at 12 and wake up at 1 thinking about things we needed to start doing," he told the Herald on Friday.

He also pointed out how many more gray hairs he has now compared to when the Kennewick Public Hospital District began looking for funding for a $112 million new hospital in the Southridge area.

"My hair was black and I had a lot more of it," Marshall joked.

Marshall anticipates those sleepless nights are at an end -- but maybe not the march of gray -- as construction begins on the new hospital after all of those years of waiting.

The hospital district board on Friday unanimously approved an agreement with Wisconsin-based C.D. Smith Construction Inc. to build the 168,000-square-foot hospital and lease the building to the hospital district, which will retain the hospital license and continue to own everything that makes up the hospital's day-to-day operations.

Marshall told the Herald the district will pay rent of about $800,000 a month and has an option to buy the building after 10 years. The lease term is 30 years.

C.D. Smith is set to start work at the site -- just off of Highway 395 on the south edge of Kennewick -- as soon as Monday, and Marshall said the new hospital should be open in less than two years.

The license for KGH is for 101 beds, and it still will be limited to 101 between its two hospitals. The Southridge hospital will have 74 beds -- all in private rooms -- and increase the size of the emergency department and intensive care units compared to the existing hospital on Auburn Street in Kennewick.

The district will keep 27 beds in operation at the 60-year-old Auburn Street hospital for pediatric care and obstetrics, as well as an urgent care center.

"This is just a great thing for our community and our hospital," Marshall said. "We're excited this day finally got here and is done. Now the real work starts."

The construction is expected to create 250 construction jobs and bring $5 million in sales tax money to Kennewick's coffers.

KGH board member Wanda Briggs told the Herald that C.D. Smith has talked to local subcontractors and estimates about 80 percent of the construction jobs created will go to Tri-Citians.

Marshall said the arrangement to have C.D. Smith own the building and lease it to the hospital district allows the district to invest its money in physicians and medical services rather than bricks and mortar.

"This allows us to get our building done and is something we can afford," he said.

Board President Jim Mefford said the new hospital will allow KGH room to grow with the Tri-City population, and he noted the financing plan doesn't ask residents of the hospital district for any tax increases.

"We got strong orders from the community with our bond measure that they want a hospital, but don't want tax dollars to pay for it," Mefford said.

In 2007, the district considered a financing plan that would have used bonds to pay for the hospital, and asked voters to approve a 37-year levy.

The levy asked voters living in the district -- which stretches beyond Kennewick and includes Finley, Plymouth, south Richland and points in between -- to pay an extra 42 cents in property tax for every $1,000 their property is worth, or $42 for a $100,000 home.

The measure failed 65 percent to 35 percent.

The hospital district then pursued financing through the federal Department of Housing and Urban Development, but abandoned that plan in January 2011 after HUD asked the district to consolidate its operations to one campus instead of leaving some beds in operation at the downtown hospital.

The next step was to go to the private sector -- a process that culminated in Friday's announcement.

The hospital district has a foundation permit for the land at Southridge that can allow work to start immediately, but it must apply to the state to amend its certificate of need to reflect the new funding plan.

Any hospital needs a certificate of need from the state before it can expand. The process includes an application in which hospitals present data justifying their need, and a public hearing when supporters and opponents can testify if more beds are needed in a community.

The hospital district was granted a certificate of need in 2010, but it negotiated with the state Department of Health to ask for an amendment once the financing for the new hospital was finished, Marshall said.

He expects that paperwork to be submitted to the state in the next few days.

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