Kadlec overstepping with stance on Southridge

September 9, 2012 

Construction is under way on the new Kennewick General Hospital at Southridge, but that hasn't stopped the debate about whether or not it should be built.

Among the most vocal opponents of the facility is Kadlec Regional Medical Center, which weighed in recently with 84 pages outlining its objections to the project's funding.

The documents were submitted to the state's Certificate of Need Program, the entity that authorizes hospital expansions and must provide KGH with an amended certificate of need before it can put patients in the new facility.

Kadlec's main argument is that KGH entered into a "bad deal" with its financing plan for the new Southridge hospital.

As many of you remember, KGH -- a publicly owned hospital -- tried to get voter approval for a tax increase to pay for a new facility a few years back. When that failed, KGH looked at other funding options and moved forward with a plan to pay for the $112 million project with a federal loan. KGH received approval for the project from the state in 2010.

But the financing plans fell through, and KGH came up with yet another option, this time a public-private partnership of sorts that comes with a hefty monthly lease payment for the hospital.

KGH's hospital in downtown Kennewick is aging and dated. It's landlocked to the point where it cannot expand. Kadlec, on the other hand, continues to expand and absorb neighboring properties. It has shiny new rooms and an aggressive marketing campaign.

Kadlec isn't officially opposed to KGH building a new hospital at Southridge but still has found arguments against the project in every phase. To be fair, KGH also has taken shots at Kadlec from time to time.

But is it really Kadlec's place to question how another hospital is to be funded? There are a lot of very smart folks in management and on the KGH board of directors. We would not expect them to enter into a foolhardy financial plan.

Yes, KGH is using public money and that requires additional scrutiny. When that scrutiny comes from its chief competitor, it rings a bit hollow.

The numbers do look daunting. KGH entered into an agreement with an out-of-state contractor to build the 168,000-square-foot building and lease it to the hospital district for 30 years. The hospital will pay rent of $800,000 per month with an option to buy the building for $110 million after 10 years. It also will be KGH's financial burden to furnish the hospital and pay for its operation.

That's a whole lot of money. The contractor that will own the building has its bases covered. But it sure wouldn't be building a hospital if it didn't think KGH could pay to operate it. Hospitals are not a type of building you'd want to have to evict your tenant from and try to resell. The pool of buyers is limited.

We have been fans of public-private partnerships, and KGH found a creative solution to fulfill its need for a new facility. Does the financing seem odd for a hospital? Sure. But when was the last time a publicly funded hospital was built here? That would be 1952, when KGH opened its doors.

Two things are clear: KGH needs a new hospital. And something is being built at Southridge.

Now it's up to the state to decide whether it will issue an amended certificate of need.

Kadlec should let the state do its job and let KGH run its business.

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