Health care district agrees on mediation

District calls on experts to build public support

MARBLETON – The Sublette County Rural Health Care District has until Oct. 25 to submit a letter requesting mediation over the USDA’s recent denial of a $25.5 million loan to fund the construction of a critical access hospital.

With the deadline looming, board chairman Scott Scherbel urged the board to make several crucial decisions to put the mediation process in motion.

Before the board made any motions, hired consultants made presentations in support of the board’s decision on Oct. 2 to contest the USDA’s loan denial through mediation and move forward with the construction of a critical access hospital. Brian Haapala, senior vice president at Dougherty Mortgage and Tony Pfaff, president of Cypress Healthcare, were on hand to respond to public questions, concerns and objections to the $28-million project.

Haapala said that he was at the meeting to “share key facts to help people understand why moving forward with mediation is the best option.” He stated that several independent consultants had pored over the project and came to the conclusion that the district’s $28-million proposal was “right on track.”

“The cost of mediation is worth fighting for,” he said. “I frankly do not understand why the USDA reached their decision to deny the loan in this case.” Haapala added that he “disagreed 100 percent” with the analysis by Lorraine Werner, the USDA’s

rural development program director, that the proposal was not “modest” in size. The USDA has funded many larger projects, he said.

Dougherty Mortgage has a lot of experience working with the USDA and rural communities to build health care infrastructure, he said.

A majority of rural counties rely on critical access hospitals to provide community health care needs, Haapala said. The federal government started designating critical access hospitals as a separate category in 1997, and more than 1,300 facilities were built during the next two decades.

“Many rural communities were skeptical at first,” Haapala said, “Yet 250 new critical access hospitals were built in recent years where communities went through the same process you are going through.”

Critical access hospitals provide revenue for a county through new services like imaging, rehabilitation, surgery and acute care rooms, Haapala said. He cited an in-house study revealing that a “vast majority of new rural critical access hospitals” were able to grow in services and revenue. The average revenue growth for a facility was 6.9 percent a year.

Approximately 40 percent of the cost to build and operate a critical access hospital comes from federal Medicare and Medicaid reimbursement, Haapala said. For example, if the costs to construct a critical access hospital stood at $17 million, Medicare/Medicaid reimbursement would cover $6.8 million, leaving entities like the Rural Health Care District liable for $10.2 million. The same principal also covered interest on a loan, he said.

The rural health care board’s proposed hospital is a perfect match for the health care needs and economic profile of Sublette County, Haapala said. Despite the fact that the county’s population has decreased, household income and employment rates in Sublette County are “above the 19th percentile” when compared to other rural counties, he added.

The population of people over 65 in Sublette County is growing faster than average, Haapala said, and this demographic uses health care at a rate that is three times higher than other populations. Sublette County also has a low level of uninsured people, and the distance to the nearest hospital is “above average.”

Haapala added that the rural health care board’s proposal was “validated” by “11 independent experts.” The list of supporters included St. John’s Medical Center in Jackson, a potential competitor to a critical access hospital in Sublette County.

Tony Pfaff told the assembly that during his tenure as president of Cypress Healthcare, he had successfully managed rural hospitals in the Rocky Mountain region “for decades.” Several of the hospitals under his leadership were in small communities in Montana similar in size and profile to Sublette County.

One of the newer hospitals Pfaff supervised was a 30,000-square-foot facility in a town with only 700 people. The largest hospital he managed was in Deer Lodge County, Mont., serving a population of about10,000. The hospital recently added a 6,000-square-foot wing to the existing 43,000-square-foot facility.

The proposed critical access hospital in Sublette County is estimated to cover 40,000 square feet, according to documents sent to the Examiner by Amanda Key, Rural Health Care District practice manager.

Pfaff stated that he believes pursuing mediation was “worth it” since a USDA loan offered the “cheapest funding options.”

“Sublette County is the most isolated community I’ve worked with,” Pfaff said. “I can’t believe the area doesn’t have a hospital. I wouldn’t be here if I didn’t think this proposal was feasible. If anything, you are undersizing your facility.”

Members of the public and rural health care board had the opportunity to raise questions and concerns during and after the presentations. Board trustee Wendy Boman expressed objection to both the mediation process and the proposed critical access hospital.

“Why spend so much time and money when the USDA has turned our proposals down twice?” she said “Let’s take a step back and look at other options.”

She added that the project lacked community support and she didn’t think that the mediation would go favorably for the board. Without USDA funds, the board would have to go through a private loan provider with interest rates of around 7 percent, adding an additional $800,000 to the cost of the project, Boman said. She urged the board to revisit the option of using the existing Pinedale Clinic as the site for a hospital.

Bill Johnson, a candidate for the district board, also voiced opposition to mediation and the proposed critical access hospital.

“I’m against a monstrosity of a hospital that will cost $30 million,” he said.

Johnson stated that the project did not have the backing of the Sublette County Commissioners. Like Boman, he encouraged the assembly to revisit the Pinedale Clinic site as an option and work to repair the rift between the rural health care board and county commissioners.

Godfrey asked Haapala and Pfaff whether they thought the proposed critical access hospital was a “monstrosity.” Haapala replied that the proposal was “within industry standards,” with Pfaff adding that the project was actually “a little small.”

Members of the public also voiced support for the proposed critical access hospital. A woman who identified herself as an employee of an oilfield office said that her company struggled to attract new talent because young families were concerned about the lack of a hospital in Sublette County.

Jeff Makelky, principal at Big Piney High School, said that as a principal, he also had to compete to recruit staff and the lack of a hospital made the process harder.

“Our community needs a hospital,” he said, “We need to stop fighting over this. There are so many great things in Sublette County – it’s ridiculous not to have a hospital.”

At the end of the presentations and discussions, the rural health care board passed three motions. A motion to locate the mediation in Pinedale passed, 3-1. A second motion to delegate negotiating and signing authority to board chairman Scott Scherbel, vice-chairperson Laura Clark, Haapala, Pfaff and any other necessary consultants also passed, 3-1. A final motion to appoint a mediator recommended by Dougherty Mortgage passed, 3-1.

Boman offered the dissenting vote on all three motions. She stated that her vote reflected her opposition to the entire mediation process. Clark had an excused absence from the meeting.

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