Jefferson Healthcare hospital may drop bond request

Commissioners considering self-funding medical center project

PORT TOWNSEND — Jefferson County voters may not be asked after all to support a bond in November’s general election that would help pay for Jefferson Healthcare’s medical center campus expansion and modernization project.

Instead, Jefferson Healthcare commissioners could decide to entirely self-fund a much scaled-down version of the project when they meet this coming Wednesday and vote on what, if any, bond measure, will appear on the ballot. The Jefferson County filing deadline is Aug. 2.

Jefferson Healthcare CEO Mike Glenn laid out what he called a “do it our own approach” to commissioners at a special session Wednesday that would enable the hospital to finance the project without going to the community for financial support. It was the third and final special session focused on the campus expansion and modernization project.

As it now stands, Jefferson Healthcare plans to pay for construction with cash reserves, Jefferson Healthcare Foundation contributions, debt capacity, state and federal grants, and a bond of anywhere from $30 million to $50 million.

The initial $160 million price tag for the project, which Glenn called “shocking,” had been whittled down to $125 million when he presented it to the commissioners on July 13, and currently stands in the $90 million to $100 million range.

Commissioners were receptive to Glenn’s idea that they consider a plan that would not require a bond measure, even if that meant significantly changing the scale and scope of the project.

Among Glenn’s suggestions for cost reductions were moving the offices and administrative services from a building constructed in 1965 and scheduled for demolition into a new building that could be constructed for far less than if it were part of the hospital complex; strategically expanding space for high-demand services such as dermatology, medical oncology and obstetrics and gynecology; and designing the ambulatory surgery center to accommodate both outpatient and inpatient procedures.

Among the sacrifices of the “do it our own approach” would be giving up room for growth at the medical center, primarily in the form of a 18,0000-square foot empty “shell” floor. Creating capacity for growth might have to occur off the medical center campus, particularly for offices and administrative support, Glenn said.

The issue of space — and the likelihood of running out of it — was critical, Glenn said, based on past experience and the anticipated demand for services over the next 10 years.

“When we built the ESSB building (Emergency & Specialty Services Building in 2016), you didn’t hear many people saying it was too small. Most of the feedback was that it’s too big and do you really need all that space?” Glenn said. “Sixteen months into opening up that building every nook and cranny was full.”

Commissioner Marie Dressler said she was concerned that a plan that did not address the current need for space and accommodate future growth could have a negative effect on healthcare delivery.

“We need to take care of our patients and utilize the great providers that we have but if we’re constrained by space it’s obviously our responsibility to do something about it,” Dressler said. “It’s about how much to do and how much it will cost.”

Commissioner Bruce McComas said he was willing to look at solutions that recognized the skyrocketing construction costs but still met present and future healthcare service needs without going to the public for assistance in a financially straitened climate.

“We’re running out of space for any kind of growth for the services that we already provide and we need to look at all options to meet those needs,” McComas said. “The ideal thing would be if we didn’t have to ask for a bond.”

Commissioners asked Glenn to prepare a breakdown of costs for design elements of the project that would disappear if Jefferson Healthcare funded it without public support, as well as cost for a project that included a bond.

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Reporter Paula.Hunt can be reached at Paula.Hunt@soundpublishing.com

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