The Olympic Medical Center board unanimously agreed Wednesday to purchase the property at 1120 Caroline Street in Port Angeles so that the hospital can expand its Lung Center. (Jesse Major/Peninsula Daily News)

The Olympic Medical Center board unanimously agreed Wednesday to purchase the property at 1120 Caroline Street in Port Angeles so that the hospital can expand its Lung Center. (Jesse Major/Peninsula Daily News)

OMC buying building to expand Lung Center

PORT ANGELES — Olympic Medical Center is purchasing property at 1120 Caroline St., to expand its Lung Center in the coming years.

Olympic Medical Center (OMC) commissioners unanimously approved the $230,000 property purchase without discussion during its meeting Wednesday.

CEO Eric Lewis said the additional property, which is immediately east of the Lung Center and physical therapy building, would allow the hospital to expand from six exam rooms in the Lung Center to 12 or 13.

The property is currently owned by Sequim Land 1, LLC.

It also provides a buffer between the hospital and the residential neighborhood.

Lewis said the board’s budget committee had discussed the proposal previously and that the full board discussed the purchase in executive session last month.

While the purchase allows for the expansion of services in Port Angeles, Lewis said the hospital might have gone a different route if the Centers for Medicare and Medicaid Services hadn’t slashed Medicare reimbursements for outpatient visits more than 250 yards from hospitals’ main campuses.

“It’s hard to know 100 percent for sure what the board would have done, but we may not have done it,” Lewis said. “If we hadn’t had $3.4 million in cuts and we didn’t need to expand near the hospital, we may have passed on this purchase. I can’t give you a for sure answer … but the reasons for it would not have been as compelling.”

Lewis said that at this point there are no firm construction plans for the property, but staff are working on capital requests now. The expansion will not be immediate.

There is currently a modular home and a garage on the property, he said.

“The lung center expansion will be in later years,” he said.

The federal Centers for Medicare and Medicaid Services (CMS) implemented the “site neutrality” rule in November, a move that cuts Medicare reimbursements by 60 percent at clinics that are more than 250 yards away from a hospital’s main campus.

The changes don’t affect Jefferson Healthcare in Port Townsend or Forks Community Hospital, which are designated as critical access hospitals.

The 60 percent cut is being phased in. This year the cut is only 30 percent, but CMS has officially proposed the 60 percent cut to be implemented next year.

OMC has postponed $15 million of planned construction and is facing an annual loss of revenue of about $3.4 million.

OMC stands to miss out on $47 million over the next decade if the rule sticks.

In anticipation of the cuts, OMC has moved as many services from the Eighth and Vine primary care clinic in Port Angeles to the Medical Office Building next to the hospital.

Lewis said the hospital had planned to continue expanding at the Sequim campus, which would have been a good fit for the extra exam rooms.

“We would have loved to have expanded in Sequim,” Lewis said. “We had the primary care clinic expansion of $5 million that the board had to defer. That probably would have made the purchase at 1120 Caroline St., less critical.”

Lewis said the ultimate goal is to provide enough services in Port Angeles and Sequim so that people don’t have to drive far distances.

OMC is a named plaintiff in a lawsuit against the federal government, asking a judge to reverse the government’s decision.

The lawsuit asks the court to declare the final rule exceeds CMS’ statutory authority and asks for preliminary and permanent injunctive relief preventing the government from enforcing the rule.

U.S. Rep. Derek Kilmer, who was born at OMC, has said the rule “makes absolutely no sense” in an area like Port Angeles. Kilmer — who represents the 6th Congressional District, which includes the North Olympic Peninsula — has worked to pass legislation that prevents the implementation of the rule.

The lawsuit has stalled as both sides wait for the judge to rule on how the case will move forward. Motions for summary judgment and to dismiss were filed in April.

Earlier this month lawyers for the hospital asked the judge for status conference, in light of CMS moving forward with planning more cuts for 2020.

“The good news is they didn’t propose any additional site neutral cuts,” Lewis said. “We did send a reminder to the judge in our lawsuit. Time is of the essence.”

Lewis said he expects the judge to rule sometime in the coming months, but anticipates that — no matter the ruling — the decision would be appealed and the case could move forward toward trial.


Reporter Jesse Major can be reached at 360-452-2345, ext. 56250, or at

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