The Kennewick Public Hospital District is two days away from a ground-breaking celebration on its new Southridge hospital, but there remain "i"s to be dotted and "t"s to be crossed in getting the project approved by the state.
Although the district won approval for the project from the state's Certificate of Need Program in 2010, a change in the way the district is paying for construction means the state wants to take a second look.
Any hospital needs a certificate of need from the state before it can expand, or in the case of KGH, build a new hospital. The process includes an application in which hospitals present information justifying their need, and a public hearing when supporters and opponents can testify if more beds are needed in a community.
Janis Sigman, Certificate of Need Program manager, told the Herald that part of the evaluation includes looking at whether a project is financially viable, and the state needs to look at the new financing terms for the Southridge hospital to re-assess its viability.
"We have no idea what the financing costs are with the new arrangement," Sigman said. "We don't know what any of the financing terms are. We know they are not doing the type of project presented in the original application."
KGH put the state on notice in a March 19 letter that it planned to amend its certificate of need to reflect a change in financing.
In the original application that the state approved in 2010, KGH planned to finance the $112 million, 74-bed hospital with a loan from the federal Department of Housing and Urban Development.
But KGH officials abandoned that plan in January 2011 after HUD asked the district to consolidate its operations to one campus instead of leaving some beds at the downtown hospital on Auburn Street, as hospital officials wanted to do.
Their next step was to go to the private sector -- a process that culminated in unanimous approval by the hospital district board on April 20 to enter into an agreement with Wisconsin-based C.D. Smith Construction to build the 168,000-square-foot hospital and lease the building to the hospital district.
Under that arrangement, the hospital district will retain the hospital license and continue to own everything that makes up the hospital's day-to-day operations.
The plan calls for the hospital district to pay rent of about $800,000 a month, with an option to buy the building after 10 years. The lease term is 30 years.
KGH's March 19 letter to the state indicates no change in any other part of the Southridge plan other than the financing.
A series of letters and emails between KGH and the Certificate of Need Program shows that Sigman asked KGH to file its amended certificate of need application by April 30 so the amendment could be approved before KGH's existing certificate of need expires in September. The emails were provided to the Herald by Kadlec Regional Medical Center, which had the documents as part of a pending appeal of a state decision awarding beds to Kadlec.
Sigman told the Herald a review of an amended application typically takes about five months and needs to be completed before the certificate expires or KGH may have to start over again.
A May 1 email from Sigman to a consultant working for KGH said that without the amendment, any work at the Southridge site doesn't have state approval.
But Sigman told the Herald the state is working with KGH to get the amendment done.
"We certainly would like to have Kennewick get their application in as rapidly as possible so we can review the proposal," she said.
Chuck Barnes, KGH's executive director of support services, told the Herald that the hospital disagrees with Sigman's position that the project is unapproved, but plans to file the amended certificate of need application within the next two weeks.
"We are in the process of putting it together," Barnes said.
And KGH officials are confident enough they will get approval that the builder has completed excavation for a daylight basement on the property and is preparing to pour foundations for the hospital. The city of Kennewick issued a building permit for the hospital foundation earlier this spring.
"The project has commenced, no doubt about it," Barnes said.
The groundbreaking ceremony is 5 to 7 p.m. Friday at the Southridge site. Speakers include Kennewick Mayor Steve Young, State Sen. Jerome Delvin, R-Richland, Bill Lampson and Tom Baker Sr. of C.D. Smith Construction Inc.
A reception with refreshments follows the groundbreaking. Parking is available at the Southridge Sports Complex and Plaza Way Shopping Center. A shuttle will provide transportation to the site.
-- Michelle Dupler: 582-1543; firstname.lastname@example.org