Washington state regulators to evaluate hospital affiliations based on service impact

March 1, 2014

Health care organizations concerned about implications


The Washington State Department of Health has revised its certificate of need and licensing rules to allow for the department to have increased involvement in the strategic moves of health care providers in the state and to require increased transparency when it comes to disclosing hospital policies around reproductive health, the end of life, and other areas. The state hospital association is mounting a legal challenge to the certificate of need rule change, but not the new licensing rules.

The revised rules say the state department of health can require a certificate of need for Washington health care providers entering into a broad range of affiliations. The department can deny a certificate of need if it determines that services will be reduced in the affiliation, according to Steven Saxe, director of the office of community health systems for the Washington State Department of Health.

The Washington State Hospital Association filed a lawsuit Feb. 13 asking the Thurston County Superior Court to invalidate the new certificate of need rules.

Mary Kay Clunies-Ross, the Washington State Hospital Association's vice president of communications and public affairs, said many of the association's 98 member hospitals are concerned that the department of health has overstepped its authority and that the certificate of need process could be used in the future to hamper some facilities' strategic moves in the state.

Dianna Kielian is interim system vice president of mission and sponsorship of PeaceHealth of Vancouver, Wash. — four of that system's nine hospitals are in Washington. She said, "Our concern is the (department of health's) process of setting up rules that are outside of what the legislative body established and how those new rules were determined. If this rule goes unchallenged, what's to say there won't be another change coming?"

In addition to her role with PeaceHealth, Kielian serves as senior vice president of mission for Tacoma, Wash.-based Franciscan Health System, which has eight Washington hospitals. That system supports the state hospital association lawsuit.

Providence Health & Services of Renton, Wash., which has nine hospitals in Washington, referred Catholic Health World to the Washington State Hospital Association for comment on the regulatory changes.

Broadened application
The reworking of the certificate of need and licensing rules came about in part because some activists and politicians and members of the public complained that it was not clear what services might be impacted or eliminated as a result of an affiliation between health care providers or a change of health facility ownership. The activists said health care providers receiving government funds, including through taxes and through reimbursement from government payers, should not restrict access to services — particularly, services involving women's reproductive health and physician-assisted suicide, which is legal in Washington.

In June 2013, Washington Gov. Jay Inslee directed the department of health to consider ways to address such concerns through the certificate of need process. States use the certificate of need process to prevent overbuilding and unnecessary duplication of medical facilities and services, which can drive up health care costs. The department drafted the expanded rules, secured public input, then revised and finalized the rules before filing them on Dec. 23.

Historically, certificate of need approval was required for construction or affiliations that change the ownership or bed count of a Washington facility or system. Saxe of the health department said the rules have been updated to ensure that "the certificate of need process isn't bypassed by using different terms for 'sale, purchase or lease' to describe a hospital control change.

"However, the certificate of need review itself did not change," he said. According to Saxe, when that department reviews a certificate of need application going forward it will continue to consider how the affiliation or merger will impact available health services. "If there are any reductions in services, the applicant would need to provide a description of how that service would still be provided in the community. We would have the option of denying a certificate of need, or approving (it) with conditions."

Slow going
The Washington State Hospital Association says in its lawsuit that the new rule "exceeds the department's statutory authority, was adopted without compliance with statutory rule-making procedures, and is arbitrary and capricious."

The hospital association said in the filing that legal precedent in the state established that the certificate of need process does not apply to mergers and similar affiliations; and it is outside of the health department's authority to now say it does apply (the association had said previously that this type of change should require legislative action).

The hospital association said in its lawsuit that requiring facilities to apply for a certificate of need for a broad range of affiliations could slow facilities down in efforts to enter into the types of partnerships that are becoming increasingly common under health care reform. The certificate of need process can be lengthy and costly for providers, the association said — the organization noted in a press release that each certificate of need application requires a $40,000 filing fee, and the certificate of need review takes months or years to complete.

Clunies-Ross noted that being able to merge or affiliate is particularly important for small hospitals: "The only way for them to maintain or expand services is through affiliation with a larger hospital system. Without affiliation some hospitals would have to close down service lines, or eventually close completely.

"The certificate of need process is unconcerned when a hospital's services shrink or disappear independently," she said.

Pending deals
Providence Health & Services currently has no announced affiliations that would be subject to the certificate of need process, its spokesperson said.

Franciscan Health System is in the process of affiliating with Regional Hospital, a long-term acute care hospital based at Highline Medical Center's Specialty Campus in Tukwila, Wash. The affiliation process began before the rule change — the state health department wants to proceed under the new rules, and Franciscan is complying.

PeaceHealth currently is involved in affiliation talks with several organizations. According to Tim Strickland, a PeaceHealth spokesperson, the system's proposed affiliations with Cascade Valley Hospital and Clinics of Arlington, Wash., and separately with Ocean Beach Hospital and Medical Clinics of Ilwaco, Wash., could be subject to the certificate of need process.

PeaceHealth's Kielian said that while it is not possible to know the motivation behind the licensing and certificate of need rules revision, she does not believe it is an effort to specifically target Catholic providers. She said she sees it as a reaction to public unease with the many mergers and affiliations happening now, and questions some community members have about how those moves will impact services.

PeaceHealth's position is that its mergers and affiliations strengthen struggling providers. "We focus on the positive" in dealing with questions about PeaceHealth's affiliations, said Kielian. "We never take away services (when we affiliate with facilities), we add services."

Licensing rules
The health department also amended licensing rules for hospitals, requiring by March 25 that facilities post — and provide to the health department — their policies on admission, nondiscrimination, end-of-life care and reproductive health services or face potential regulatory action.

Clunies-Ross said that many health care providers say they already post on their websites the disclosures required in the revised rules, so that is not a big concern for them. Previously though, hospitals were not required to set forth publicly their policies about reproductive health services.

Likewise Kielian said PeaceHealth will not need to make any changes to its practices to comply with the new posting requirements.

Health department requires policy posting

The Washington State Department of Health is requiring by March 25 that hospitals make public their policies on admission, nondiscrimination, end-of-life care and reproductive services. That department does not specify exactly what information should be in these policies or how it should be presented. The Washington State Hospital Association has issued guidelines on the type of information that may be warranted in each policy area. The association's guidance includes:

  • Admission policies would explain hospital admission processes including efforts during admission to ascertain whether patients have advanced directives; to let them know of financial assistance policies; to let them know their rights as patients; and to explain treatment protocols, financial practices and privacy practices to them.
  • Nondiscrimination policies would affirm hospitals' commitment to serve everyone who needs care.
  • End-of-life care policies would explain hospitals' protocols when it comes to advance directives, patients' rights to accept or refuse treatment, physician-assisted suicide and physician orders for life-sustaining treatments.
  • Reproductive health care policies would cover the hospital's stance on providing reproductive services. The state hospital association seems to indicate in the guidelines that the department likely will want to know about hospitals' stance on terminating pregnancies.

PeaceHealth says it is compliant with requirements

According to the Washington State Hospital Association, most of its members already are compliant with the new policy posting requirement from the Washington State health department.

That is the case for PeaceHealth, said Dianna Kielian, when asked by Catholic Health World. Kielian is interim system vice president of mission and sponsorship of the health system, which is based in Vancouver, Wash.

Kielian said PeaceHealth always has been transparent. She said it clearly spells out the services it does and does not provide. She said the system believes that policies described under the "PeaceHealth Statement of Common Values" and under "Our Catholic Identity" on peacehealth.org will satisfy the health department's rules.

"We very clearly state the bookends — what we will and won't do — and that we will not intentionally take a life from the moment of conception until the moment of natural death," said Kielian. She added that PeaceHealth's Statement of Common Values was influenced by the Ethical and Religious Directives for Catholic Health Care Services.

PeaceHealth's Statement of Common Values reads in part:

"Because we believe in the sacredness of life's journey from conception until natural death, direct abortion is not performed in any PeaceHealth-owned, operated or leased facilities. Regarding ectopic pregnancy, PeaceHealth employs the best practice standard of care to remove the pathological tissue that threatens the life of the mother."

"Any act done with the explicit intent of ending a patient's life may not be performed in PeaceHealth owned or leased facilities. A patient's decision to refrain from aggressive or curative treatment will be respected, even when such a decision may result in the person's death. Medicines capable of relieving pain and suffering may be given to a person even if such therapy may indirectly shorten the person's life."

"There may be unanticipated situations in which the appropriate application of our values requires clarification and discernment. In such situations, a collaborative dialogue will be used to reach resolution."

And PeaceHealth's information on its Catholic identity includes the following information:

"PeaceHealth does not permit abortion except to save the life of the mother. Contraceptive decisions are between the patient and the health care provider.

"Emergency contraception is provided to women who are victims of sexual assault.

"RU-486 is an abortifacient and is not dispensed at PeaceHealth.

"PeaceHealth provides high quality compassionate care at the end of life. Withdrawal of medical treatment (e.g., hydration and nutrition, ventilator, pacemakers, antibiotics, and blood products) is appropriate if it is non-beneficial in meeting the patient's goals.

"Physician-assisted suicide is prohibited. Physicians are prohibited from participation in the medical and psychiatric consultations on PeaceHealth time and in PeaceHealth facilities or any facility leased from PeaceHealth."



Copyright © 2014 by the Catholic Health Association of the United States
For reprint permission, contact Betty Crosby or call (314) 253-3477.

Copyright © 2014 by the Catholic Health Association of the United States

For reprint permission, contact Betty Crosby or call (314) 253-3490.