STATE OF WASHINGTON

DEPARTMENT OF HEALTH
Olympia, Washington 98504

March 16, 2017

TO: CHI Franciscan Health

Interested and Affected Persons [if any]

RE: CHI Franciscan Health Harrison Medical Center relocation application

Enclosed is a copy of all rebuttal comments received regarding the CHI Franciscan
Health application proposing to relocate 242 of the 253 acute care beds from the
Bremerton campus to the Silverdale campus.

These rebuttal comments are provided for your information only; responses to rebuttal
comments will not be accepted.

If you have any questions regarding the rebuttal process, you can call me directly at
(360) 236-2957 or e-mail me at karen.nidermayer@doh.wa.gov.

Sincerely,

Karen Nidermayer, Analyst

Certificate of Need Program
Community Health Systems
 Final Rebuttal
Related to CN Application
Proposing to
Relocate all Acute Care Beds from
CHI Franciscan Harrison Medical Centers
Bremerton Campus to its Silverdale Campus

March 14, 2017

 Overview:
Harrisons Current CN Application is the Result of More than 20 Years of
Community Planning and Represents the Best Way to Ensure Access, Quality
and Efficiency in the Delivery of Hospital Services for Decades to Come for
Kitsap Peninsula Residents

In October 2016, CHI Franciscan Harrison Medical Center (Harrison) submitted a CN

application proposing to relocate beds from its Bremerton campus to its Silverdale Campus and
to, by 2023, consolidate all beds and services onto the Silverdale campus. Since at least 2008,
Harrison has advised the CN Program (the Program) in one or more CN applications that its
Bremerton campus was functionally obsolete and its location in downtown Bremerton, on only 7
acres (compared with the 32 acres at Silverdale), left few opportunities to expand. Since at least
that time, the goal has been to decant, and ultimately to consolidate, the two campuses onto a
single campus. With the intent of better serving the Kitsap Peninsula, the CN application that is
the subject of this rebuttal document achieves that goal.

The Bremerton campus opened in 1965. The West wing was added in 1970 and various other
additions occurred over the period of 1978-2002. Today, the newest inpatient rooms at
Bremerton are 32 years old, and 60% of the inpatient beds are in semi-private rooms. An
analysis commissioned by CHI Franciscan concluded that an investment of about $212 million
was needed at Bremerton to simply maintain current operations at that campus. However, even
with that investment, two campuses are not efficient and investment well beyond the $212
million would be needed to keep pace with demand, technology and service development. Once
consolidated in 2023, operating cost reductions associated with improved efficiencies and
operating a single campus are currently estimated at more than $9 million annually.

Importantly and per CHARS, more than three-quarters of the patients admitted to a Harrison
location (Bremerton or Silverdale) reside equidistant or closer to the Silverdale Campus. As
such, Silverdale is not only newer, and not only has the space for growth; it is also either as
accessible or more accessible to the majority of our patients.

This project, in Phase 1, proposes to construct a nine (9) story tower that will house acute care
beds, an emergency department, a cancer center, diagnostic imaging, and ancillary and support
services (pharmacy, laboratory, central supply, etc.). Phase 1 will relocate 168 acute care beds to
Silverdale by January 1, 2020 (144 beds in a new tower and 24 beds in the existing hospital).
Phase 2, which will relocate the remaining 74 beds, includes the construction of a second new
tower and will open by 2023.

At the completion of Phase 1, Silverdale will operate with 238 acute care beds and 24 neonatal
beds (for a total of 262 beds). Phase 2 will include a total of 312 acute care beds and 24 neonatal
beds, for a total of 336 beds. As part of this project, upon CN approval, Harrison will relinquish
the 11 bed license it retains related to inpatient psychiatric beds. As such, Harrisons licensed
beds will decrease from 347 to 336 beds.

1
As the planning for this project progressed, Harrison engaged the public at numerous times. The
project enjoys widespread support as evidenced by the following excerpts from the public
record:

We have a wonderful birthing center in Silverdale. The ICU is in Bremerton. On the rare
occasion that we have an OB patient that requires an ICU, we wind up having to transport a
very ill patient to Bremerton for care. Once out of ICU they then have to be transported back to
Silverdale because there is no post-partum service in Bremerton. The same is true for any
Gynecologic post-operative surgery patients that wind up with complications. This is not an
ideal situation, as it causes delay in treatment and adds costs.
Anita Alvestad-McIntyre, MD, February 2, 2017

The KPHD participated in HMCs six month Bremerton Community Health Care Advisory
Group process, which engaged community and agency leadership in data driven discussion
about the benefits and consequences of the Hospitals move to Silverdale. Harrison Medical
Center also surveyed 500 Kitsap County Residents to learn their perspectives on the same topics.
Themes that emerged from both processes include:

Appreciation for the development of a state of the art Facility providing similar or better
access to hospital facilities by most Kitsap residents;
Understanding that the cost of preserving and extensively renovating the Bremerton
facility would be prohibitive;
Converses regarding potential longer drive times and EMS transit time to the Silverdale
emergency department and hospital from downtown Bremerton and East Bremerton;
Request that Harrison retain or return important outpatient services in Bremerton,
including urgent care services, medical oncology and obstetrical medical care,
radiologic imaging services, primary care services, lab services, outpatient behavioral
health services, oral health care, substance abuse treatment services with a 24hr
pharmacy.
Susan Turner MD, MPH, MS, Health Officer, Kitsap Public Health District, February 14, 2017

There are many priorities of a health care organization and I dont have the time to touch upon
them all. As a board; however, we recognize that those who are sick, vulnerable, scared and in
need deserve access to the best quality health care. We are at a point in time where the
affiliation with CHI-Franciscan has made it possible to build a state-of-the art facility for the
residents of Kitsap County and the Greater Olympic Peninsula.
Raquel (Kelly) R Nelson, Board Chair, Harrison Medical Center, February 11, 2017

By relocating this facility, there is opportunity to build the hospital up to current fire
and life-safety codes, including advanced built-in fire and smoke protection systems
that are not currently available at the Bremerton facility. The compartmentation and
built-in systems will provide enhanced safety for occupants, visitors, employees, and
firefighters responding to emergencies.
Scott Weninger, Fire Chief, Central Kitsap Fire & Rescue, February 21, 2017

2
Moving the existing hospital licensed beds to Silverdale will not only provide faster access
to care for the majority of our county but also will bring those services up to todays
standards for infection control and privacy. It is very difficult to have double rooms for
patients in todays healthcare environment.
Patricia Cochrell, Poulsbo resident, former nurse, Harrison Medical Center, February 21, 2017

The new Silverdale facility will provide the space, privacy, and comforting milieu to further
enhance the care we provide our patients and their families under these difficult
circumstances. With now more than 3 years of experience following the affiliation of Harrison
with CHI Franciscan Health I can unequivocally assure you that there has been no reductions
or limitations imposed upon the delivery of end-of-life care in the hospital. In fact, we have
enjoyed the further development of, and increased access to palliative care expertise and
services.
Griffith M. Blackmon, MD, MPH Medical Director Critical Care Services. February 21, 2017

As Kitsap County grows in population over the next 20 years, adding 80-100,000 residents, the
need for hospital care will increase proportionally. Harrison's location in Silverdale is much
better suited to handle patients, due to its close proximity to the freeway. It is also much
more centrally located to provide more convenience for more residents of Kitsap County,
especially those who live and work in the north end of the countyKitsap Countys
Comprehensive Plan, adopted in 2016, call s for increased density of housing units and jobs in
Silverdale. Harrison's Hospital expansion is an important part of the expected growth. CHI
Franciscan is the county's largest private employer, with thousands of jobs reliant on its
successFurthermore, the County is making long-term investments into Silverdale's
transportation infrastructure, including road capacity upgrades as well as pedestrian and
bicycle facilities. Kitsap County transportation investments in the next six years total $43
million.
Edward E. Wolfe, Kitsap County Commissioner, February 14, 2017

3
Harrison recognizes that a small cohort raised concerns about the project and we have
summarized their comments below:

1) Several raised conjectural access concerns related to the fact that Harrison, which is
secular, is owned by CHI Franciscan which operates under the Catholic Health
Initiatives Ethical and Religious Directives (ERDs). These individuals requested that the
CN Program not allow the expansion of Harrison until certain guarantees are imposed.
We note that not one of the persons expressing concern provided any evidence of any
patient being denied access to any service. Further, we note that this application is
neither about an expansion, nor about a new service or any service being eliminated.
This CN application simply seeks to consolidate Harrisons existing licensed bed
capacity onto a single campus in order to provide better, more accessible, and more
efficient quality patient care.

2) Several physicians, each of which is affiliated with one or more local health care facilities
expressed concern about the utilization of their respective facilities. In addition, they
made unsubstantiated comments that in most cases are factually inaccurate about costs of
care.

3) The City of Bremerton requested that the Program require about 100 beds to be
maintained in Bremerton. This would be costly both from a capital and operating
perspective, and would place the entire project in jeopardy. Harrison has assured, and will
continue to assure the City that its residentswhich are also our patientswill benefit
greatly by the project. In fact, while not part of this CN application, Harrison will be
constructing a large Ambulatory Care Center in Bremerton that will include primary care,
urgent care, and ancillary services and will also house our new Family Practice
Residency Program.

This rebuttal responds to each of these three concerns. The record should reflect that Harrison
will continue to engage each of these groups in an effort to better understand their concerns and
to provide data to inform the dialogue. Each of the groups, along with CHI Franciscan and
Harrison, share the same vision: providing accessible, quality care to residents of the Kitsap
Peninsula.

4
 Concern #1: Harrison is secular; it does not operate under Catholic Health
Initiatives Ethical and Religious Directives (ERDs). The comments
from those that expressed concern, were conjectural in nature: not
one of the letters provided any evidence of any patient being denied
access to any service.

By Harrisons account, there were approximately 10 emails, letters or public comment statements
expressing concern about Harrisons secular status. We believe that 100% of these letters were
from Bainbridge Island residents. The comments largely verbatim restate or summarize the
public comments made by Mr. Barry Peters at the public hearing. After close review, Harrison
summarized the comments into two concerns: 1) concern over Harrison remaining secular in the
future, and 2) concern over the physician acquisitions that have occurred.

Response to Mr. Peters

The conjectural nature of the comments is best represented on page 2 of Mr. Peters letter wherein
he states: In 2012 and 2013, when the acquisition of our secular community hospital Harrison,
was announced, community values appeared to be taken into account At todays hearing,
representatives of Harrison stated that Harrison remains a secular organization. But the question
remains whether that status may change after a CON approval. Later, on the same page, Mr.
Peters urges the CN Program to examine CHI and the physician acquisitions that have occurred.
Mr. Peters misstated several key facts.

There is absolutely no interest or intent to revisit the secular nature of the Hospital which was the
subject of much negotiation prior to the affiliation. The record contains several letters of support
from individuals that were on the Board at the time of the negotiation. These letters reflect the
rigorous nature of the negotiations to ensure that Harrison remain secular. For example, and
according to a letter submitted by a Board member that participated in the negotiations Two very
important matters were negotiated-- abortions and end of life matters. Because Harrison had
never performed abortions, had no plans to begin to do so, and because alternative resources
were available and accessible in the community, we were able to agree to CHIs Ethical and
Religious Directives. In addition, it must be noted for the record that as part of our affiliation, a
Community Board was established to oversee womens reproductive services at Harrison. The
intent was to assure the Board and community that the services that had previously been in place
remained in place. Post affiliation, this Community Board and our various OB/GYN providers
have indicated that there is absolutely no change in the way womens services operate at
Harrison. (Letter of support, James T. Civilla, January 30, 2017)

5
Mr. Peters suggests that Harrison is monopolizing health care or somehow limiting choice
because of the acquisition of existing physician practices. Mr. Peters appears to not understand
the real reasons underlying the rate of physician acquisition increases in Kitsap County,
Washington State and the nation over the past 5+ or so years. Very few hospitals or systems
actively seek to employ physicians; as the practice itself typically requires ongoing subsidy.
The reality is that increasingly providers are approaching hospital systems requesting
employment. This includes new, younger physicians that have little or no interest in establishing
a private practice or even joining an independent group. It also includes long-standing private or
group practice providers that have determined they can no longer generate the revenues nor make
the investments needed to stay current with CMS. These providers are also concerned with
factors such as declining payments and decreased bargaining power with commercial payers and
uncertainty about future reimbursement and delivery models enacted by the Affordable Care Act
such as MACRA and MIPS. An August 3, 2015 article published in Medical Practice Insider
entitled Why doctors are leaving private practice noted (a copy is included in Appendix 1):

Doctors are leaving private practice in increasing numbers, with just one third expected to
continue working as independent practitioners by the end of 2016, a new study from
Accenture found.

The report, "Clinical care: The independent doctor will NOT see you now," found that the
number of independent physicians dropped from 57 percent in 2000 to 49 percent in 2015.
Accenture predicts that next year this number will drop further, to 33 percent, and
represents a 10 percent decline from Accentures 2012 report.

Two factors that physicians cited most often as their biggest concern with remaining
independent were reimbursement pressures and overhead cost, cited by 36 percent and 23
percent of respondents, respectively. With that, some independent doctors are choosing to
opt-out of public programs, such as Medicaid (cited by 26 percent of respondents), health
exchange plans (15 percent) and Medicare (3 percent).

"How the physician employment trend and its implications will unfold remains to be seen,"
the study said. "Other clinical care providers local hospitals, integrated health systems
and even retail clinics are likely to experience a shift in patient populations, a new payer
mix and healthcare delivery challenges as it evolves."

Acquisitions are necessary to ensure access. Had Harrison or CHI not acquired the practices a
significant number would have restricted patients by payer (Medicare and Medicaid) or would
have relocated from the County in order to align with a system that was willing to acquire them.
The reality is that Harrison preserved and enhanced access, not restricted it.

6
Mr. Peters repeatedly asks the CN Program to declare a pivotal unresolved issue in order to
assess the extent of Harrisons monopolization of the market (page 5), market changes that
might impact the need for the beds that Harrison currently has licensed and the extent to which
CHI Franciscan is imposing directives on independent doctors and providers (page 5). Mr.
Peters goes on to suggest that Harrisons WAC 246-320-141 policies are somehow not compliant
(page 6). Finally, Mr. Peters requests a litany of conditions that are unrelated to the project
(pages 7 and 8).

Again, Mr. Peters appears uninformed. Harrison does not monopolize the market. According to
CHARS data, Harrisons 2016 market share (Q1-Q3) of Kitsap County is 56.9%. Our market
share of Bainbridge Island is 27.8%. 1

Because Mr. Peters provided no evidence (or even anecdotes) as to how CHI Franciscan is
imposing directives on independent doctors and providers, it is nearly impossible for us to
respond to his comment. We can state however, other than standard credentialing and medical
staff bylawswhich every hospital in the State haswe have no authority over providers in
independent practices. Finally, Mr. Peters requests conditions be imposed that are unrelated to
the CN application seeking to consolidate our currently licensed beds. We are aware of no CN
decision ever, that eliminated licensed beds from an existing hospital. We further remind the CN
Program that WAC 246-310-490(3), entitled Conditional certificate of need allows the CN
Program to issue a conditional CN as long as the condition relates directly to the project being
reviewed.

(a) The secretary's designee in making his or her decision on a certificate of need
application may decide to issue a conditional certificate of need if the department finds
the project is justified only under specific circumstances: provided however, that
conditions shall relate directly to the project being reviewed and to review criteria.

This CN simply seeks to consolidate Harrisons existing beds on a single campus. We are not
adding beds or services, nor are we eliminating services. It must also be noted that not one
individual provided any example of any service being restricted, nor any patient not receiving
services that they requested or medically needed. More importantly, many of the letters,
including that of Mr. Peters stated explicitly that that they have been satisfied patients of
Harrison over the years.

The Peters public comment included two attachments. The first was an analysis conducted by
Ms. Nancy Field. The second was a report of the ACLU.

1
WA State CHARS. Inpatient only. Excludes normal newborns, psych and rehab.

7
Field Report
In terms of the Field report, there are several critical fallacies that should be corrected.
First, in terms of need and access (page 1), Field states that Harrison must provide a rationale
for retaining its current licensed bed capacity. Field also argues that the beds will be located at
substantially reduced travel times to Bainbridge and to rural communities on the Olympic
Peninsula. Harrison is already CN approved and licensed for 347 acute care beds. This project
does not seek to add beds. In screening, the CN Program never requested any analysis of the
continued need for the beds, and to our knowledge, the Program has never eliminated licensed
beds during the course of a CN review. The Field report is not correct related to the beds.

In terms of the distance from Bainbridge to the Bremerton and Silverdale campuses, the Field
report is correct and residents of Bainbridge Island will experience reduced travel times to
Silverdale. Field alludes that residents fear being referred or transported to an emergency room
and hospital that refuses to offer select services. Harrison is secular and there is no evidence in
the record or in the Field report to suggest that any resident will be refused any services.

Field suggests that Harrison did not appropriately respond to questions about access to care and
admission policies, and goes as far as stating that A review of the policies CHI/Harrison makes
available does not satisfy the requirements of the licensing law, but no specific deficiencies
were identified or noted. The fact is that Harrison fully addressed the questions related to access
and admission in our CN submittal. Further, we operate in full compliance with Department of
Health requirements. Specifically, in accordance with WAC 246-320-141(6), Harrisons policies
related to access to care (admission, nondiscrimination, end-of-life care and reproductive health)
have been provided to the Department of Health, which in turn posted them on its website. In
addition, RCW 70.170.060 and WAC 246-453-070 requires hospitals to submit charity care
policies, procedures and sliding fee schedules to the department for review and approval.
Harrison has complied with this requirement as well. The policies posted on the DOH website
are:

Admissions - updated July 2013

Charity Care - updated March 2017
End of Life - updated July 2010 and December 2013
Non-discrimination - updated October 2012
Reproductive Health - updated November 2012 2

The posted policies represent the current policies of Harrison. We do not believe that any
changes are required. Should the Program want to see any changes, we understand that it has
placed conditions on CNs in the past with the requirement that the applicant provide any updated
policies prior to initiating the CN approved project. In the highly unlikely event that the
Program finds it would like a revision, Harrison would be happy to comply with such
requirement.

2
DOH website indicates that this was updated November 2012; document itself indicates it was updated 6/20/2014.

8
Under financial feasibility, Field cites an October article in Modern Healthcare and alludes that
CHI is facing some financial struggles, and is contemplating merger. For this reason, she
suggests that the project should not be approved. Most large systems today regularly assess the
market and contemplate mergers, affiliations or acquisitions. CHI is no different.

As noted in our application, CHI Franciscan, together with CHI, have elected to use a
combination of its reserves and debt ($145 million) for the financing of this project. The entirety
of Phase 1 will be funded through reserves. Phase 2 includes both reserves and debt.
Attachment 2 of our screening response included a letter from CHIs Senior Vice President,
Corporate Finance and Investments confirming these facts.

In the event that CHI acquired or merged with another entity prior to the completion of the
Harrison project, we would notify the Program of this fact. Consistent with WAC 246-310-500,
if the Program determined that such upstream affiliation affected the CN approved project, we
are well aware that we would need to either document substantial completion or submit a new
CN application.

Under Cost Containment, Field states that the costs for Phase two are higher than for the Phase 1.
This is true, and was explained in our application: Phase 2 requires the construction of a second
tower. As such, additional costs related to the site are being incurred. At this point, the Field
report states that the Department may accept the argument that a hospital can keep and relocate
un-used licensed beds, it must also determine that spending patient care dollars to rebuild those
beds is cost-effective and the preferred alternative. Harrison has conducted its due diligence,
and Harrison and CHI have retained numerous outside experts to evaluate construction options
and to value engineer the project. Value engineering is an integral part the design stage of a new
development. Its purpose is to increase value (defined as function divided by cost). Neither CHI
nor Harrison would proceed with a project that is not bringing value to the Kitsap Peninsula.

ACLU May 2016 Report

Harrison is aware of the contents of the Report. As a secular hospital this report is not
applicable. Further, while a handful of public comments suggest that being owned by a Catholic
system has constrained access, not one letter provided any examples. Harrison is also not aware
of any example wherein we were unresponsive to needs of patients for certain services.

The Catholics for Choice letter and the largely unsigned letter dated February 21, 2017 from a
number of organizations including the ACLU and Planned Parenthood suggest that Harrison fails
to meet the health care needs of the community. The letters make quite a few statements with
absolutely no substantiation (no patient stories, no patient complaints, etc.). Again, Harrison is
not aware of any patients that were denied service or experienced access problems. We are a
secular organization and open and accessible to all patients.

9
 Concern #2: A handful of physicians, each of which is affiliated with an existing
health care facility expressed concern about the utilization of their
respective facilities. The operation of these facilities is not impacted
by the Harrison CN application and several of the statements they
made are either inaccurate, or we are not able to substantiate them.

By Harrisons review, four physicians wrote letters in opposition to the project. The physicians
and their respective affiliations are outlined in Table 1.

Table 1
Affiliation of Providers Opposing the Harrison Consolidation
Provider Type of
Specialty Affiliation Unsubstantiated Comments
Name Facility
Physician
Manfred Market position, increased costs,
InHealth owned
Henne, MD, Radiology inflating physician salaries,
Imaging imaging
Poulsbo closed EHR
center
Kitsap Impact of hospital consolidation
Paul
Podiatry on ASC use
Aufderheide, Clinic and
Podiatry Foot and CHI alleged practice of
DPM, ASC
Ankle prohibiting or discouraging
Bremerton
Specialists physicians from using ASCs.
An expenditure of this
magnitude will put pressure on
the hospital to keep its beds and
Peninsula
Berit Madsen, Radiation Radiation other facilities full and further
Cancer
MD, Poulsbo Oncologist Oncology restrict referrals to non-hospital
Center
outpatient facilities that can
deliver services at a fraction of
the cost
Carol
Surgery
Cassella, MD,
Anesthesiologist Center of ASC Monopoly, costs, Catholic system
Bainbridge
Silverdale
Island

10
 Each of the providers noted above is a quality provider that serves Kitsap residents. Each of
these providers is also affiliated with a health care facility, and therefore has, to at least some
degree, a conflict of interest. While several raised concerns about costs, no data was provided
for us to refute 3. The fact is that Franciscan is very interested in lower cost options. We
established one of the first Accountable Care organizations in Washington State, now known
as the Rainier Health Network. As the Program is aware, CMS established accountable care
organization (ACO) models to promote care coordination and lower costs. The Medicare
Shared Savings Program (MSSP) rewards ACOs that achieve better care for patients while
keeping costs low. Success is measured by the programs 33 quality measures in four main
areas:

1) Patient/caregiver experience

2) Preventive health

3) Care coordination/patient safety

4) At-risk population

To achieve these outcomes, we actively seek out physician partners and every opportunity to
lower costs. A listing of our physician ACO partners is included in Appendix 2. In addition,
CHI, CHI Franciscan and Harrison all abide by all federal regulations at all times. We take the
unsubstantiated comments about inflating physician salaries and creating a monopoly seriously.
We have not inflated salaries nor do we utilize any monopolistic practices.

3
Dr. Cassella referenced up to $500 lab tests and $5,000 orthopedic surgeries. We cannot substantiate these
statements, and neither did Dr. Cassella.

11
 Concern #3: The City of Bremertons request to require Harrison to maintain beds
in Bremerton places the entire project at risk.

Harrison enjoys a long, positive partnership with the City, and we also share a mission of service
to local residents. We respectfully, but wholly disagree with the Citys conclusion that the
relocation and consolidation of Harrison will reduce access to acute care beds and medical
services for the portion of Kitsap County residents that live in the greater Bremerton area. The
Citys position seems predicated on its statement that if the certificate of need is approved,
Harrison will relocate medical care services from a high need area to a lower need area. The
City fails to acknowledge that Harrison intends to construct a new, large Ambulatory Care
Center (ACC) in Bremerton that will include primary care, urgent care, and ancillary services. It
will also be home to our new Family Practice Residency Program that will ultimately include 24
residents. The new ACC will be the largest primary care center in the entirety of Kitsap County.
In addition, the new location will be the demonstration location for Harrisons integration of
mental health into primary care, thereby offering earlier behavioral health intervention that
supports decreased crisis and hospitalization.

Harrison concurs that the City of Bremerton has lower income and more poverty than many
other areas of Kitsap County. Working with Kitsap Public Health District and others on this
project has allowed us to confidently conclude that the new ACC, along with a more efficient
and consolidated hospital is in the best interests of City of Bremerton residents.

The City also misquotes the cost of bringing the Bremerton facility to standards that would allow
us to maintain current operations. On page 1 of its letter, the City states the cost is $130 million.
In fact, and as noted in our CN application, the cost is more than $212 million:

An analysis commissioned by CHI Franciscan concluded that an investment of about

$212 million was needed at Bremerton to maintain current operations at that campus.
However, even with that investment, two campuses are not efficient and investment well
beyond the $212 million would be needed to keep pace with demand, technology and
service development. Once consolidated in 2023, operating cost reductions associated
with improved efficiencies and operating a single campus are currently estimated at
more than $9 million annually.

The City also fails to note that the more than $9 million in annual savings associated with
consolidation, will be available for reinvestment into programs and services that benefit all
Kitsap residents.

If Harrison is conditioned to leave beds in Bremerton, the entire project is placed at risk. We
will need to expend considerably more funds to keep any inpatient capacity in Bremerton.
Further, the efficiencies expected will not be realized.

12
Conclusion
In conclusion, as noted throughout our application and this document, CHI Franciscans proposal
to consolidate acute care services in Silverdale will improve and enhance the patient care
environment. No change in services is proposed with the acute care consolidation.

Many of the concerns raised were related to Catholic Ethical and Religious Directives. As
stated throughout the public hearing and this document, Harrison is secular and operates in
full conformance with its womens reproductive services and end of life care policies as
posted on the Department of Healths website. Harrisons nondiscrimination policy, which
has also been approved by the Department of Health, precludes discrimination. These
Policies are very clear: all persons who need immediate medical care will receive it, with no
conditions and no screening. At Harrison, medical necessity drives care, not race, color,
religion, sex, national origin, age, disability, citizenship, sexual orientation, gender identity,
genetic information, marital status, veteran status, or other protected status.

In a previous CN evaluation related to the lease of United General Hospital by PeaceHealth

(moving from secular to non-secular), the Program concluded 4:

While concerns were raised regarding UGHs discontinuation of obstetric and gynecology
services, including pregnancy termination, elective sterilization services, and end of life
services consistent with the Death with Dignity Act, both PeaceHealth and UGH state
that these services are not currently offered at UGH. This assertion is substantiated in the
application and a review of historical CHARS data reported to the Department of Health
by UGH. [source: Application, p15 and 2009 2011 CHARS data]

Current policies and procedures in use at UGH demonstrate that UGH does not currently
discriminate based on gender or sexual preference. Current PeaceHealth policies and
procedures used at St. Joseph Medical Center demonstrate that non-discriminate access to
care at UGH would continue under the PeaceHealth lease.

In summary, WAC 246-310-210(1)(a) does not apply in this project because there is no
elimination of services at UGH. Residents of the planning area would continue to have
access to the same services currently provided at UGH under the PeaceHealth lease.

Based on the source information reviewed and compliance of the conditions regarding the
Admissions Procedure and Patients Right and Responsibilities Policy and the percentage
of charity care to be provided at PHUGH, this sub-criterion is met.

4
Evaluation dated May 20, 2013, for the Certificate of Need application submitted by PeaceHealth proposing to
lease and operate Skagit County Public Hospital District #304 dba United General Hospital located in Skagit
County, pg. 10-11.

13
As with United General, this Harrison application proposes absolutely no change in
services. In fact, approval of this application will provide Kitsap county residents with a
state of the art, efficient facility in which to receive care. The new facility will allow
Harrison to offer evidence based care environments that support optimal healing, enhance the
patient care experience, reduce infections risks, and increase clinical efficiencies. And, most
importantly, result in increased patient satisfaction.

Therefore, we respectfully request the Program approve our request to relocate the acute
care beds at Harrisons Bremerton campus to Silverdale.

14
 Appendix 1
Medical Practice Insider Article

15
16
 Appendix 2
Physician ACO Partner List

17
 Adult And Geriatric Medicine PLLC
Allcare Medical Clinic Inc.
Bonney Lake Medical Center
Bridgeport Medical Clinic, PLLC
Burien Digestive Health Center LLC
Cascade Eye & Skin Centers, PC
Center For Women's Health PC
Christian Family Care, Inc
Clearview Eye and Laser PLLC
Comprehensive Sleep Medicine Inc
PS
Digestive Health Specialists PS
Doctors Clinic A Professional
Corporation
Ear Nose Throat And Allergy
Associates
Electrodiagnosis & Rehabilitation
Associates Of Tacoma PS
Enumclaw Regional Hospital
Association
Eye Mds Of Puget Sound PLLC
FHS Inpatient Team
Foot And Ankle Specialists PLLC
Franciscan Health System*
Franciscan Medical Group
Hanmi Medical Clinic LLC
Harrison Medical Center*
Highline Internal Medicine PS
Highline Medical Center*
Home Towne Family Medicine,
PLLC
Hudson's Bay Medical Group
Integrated Neurology Health
Services, PS
Key Medical Center, PLLC
My Family Doctor LLC
North Kitsap Family Practice And
Urgent Care PS
Northwest Family & Spinal Clinic
Inc PS
Northwest Medical Specialties PLLC
Northwest Physicians Medical
Group, PLLC
Northwest Vein And Aesthetic
Center PS
NW Pain Management And
Rehabilitation Associates, Inc
Nw Regional Hospital For
Respiratory & Complex Care
Pace Dermatology Associates PLLC
Pacific Cardiovascular DPM, PS
Pacific Podiatry Group, PS
Peninsula Family Medical Center
Portland Avenue Family Clinic Inc
Primary Care Northwest PLLC
Proliance Surgeons, Inc, PS
Puget Sound Allergy Asthma &
Immunology
Puyallup Dermatology Clinic Inc
P.S.
Rainier Nephrology, PLLC
Retina Institute, PLLC
Saint Clare Hospital
Seatac Primary Care Physicians, Inc.
Skin Cancer Clinic Of Seattle Inc PS
Sound Clinical Medicine, P.S.
South Puget Sound Neurology PLLC
South Seattle Nephrology Associates
Southwest Portland Medical Clinic,
Inc.
St Francis Community Hospital
Summit View Clinic, Inc., P.S.
Sumner Family Eyecare, PLLC
Surgical Associates Northwest, P.C.
Synergy Health
Tacoma Radiation Center Inc
Tanya Wilke Family Medicine
TLC Physicians PLLC
WASEA Medical LLC
Adam Nickel, MD ^
Amos Shirman, MD ^
Barry Bockow, MD PS
Christen Vu, MD
Curtis Burnett MD ^
Cynthia Taylor, MD ^
D Loomis, MD ^
Daniel Gottlieb, MD ^
Daniel Ziperovich, MD ^
David C Reed MD PLLC ^
David L Lukens, DO PS ^
18
 Dennis N Gusman, MD ^ Max Lee, MD ^
Edward W. Hartzler, MD, Inc, PS ^ Michael E Blatner MD PS ^
George Ankuta, MD ^ Michael Steiner, MD ^
Hsushi Yeh, MD Paul Andrew Sueno MD PLLC ^
James Graber, MD ^ Philip Vance, MD ^
James M Komorous MD PS R Skoglund MD, PLLC ^
Jeanne Isaacson, M.D., PC ^ Razan R Al-Kudsi, MD ^
Jeffrey Frankel, MD ^ Rena Wong, MD
Jeffrey L Evans, MD PLLC ^ Robert C Wright MD PS ^
Jonathan Y Jin, MD ^ Robert K Chow MD PS ^
Judith Marsden, MD ^ Sarah Neitzel DPM PLLC ^
Kenneth L P Morton Md PC Sheldon J Cowen MD, PS
Kevin Kennedy, MD ^ Stephen Haggard, DPM ^
Lisa Cowden, MD ^ Steve Feller, MD ^
Mark Alenick, MD ^ Steven Mcclean, MD PC ^

*ACO participants in joint ventures between ACO professionals and hospitals

^Harrison or HHP Physicians

19
 City of Bremerton
REBUTTAL COMMENTS TO TESTIMONY AND COMMENTS
RECEIVED BY FEBRUARY 21, 2017
CN Application #17 09 dated October 28, 2016
CHI Franciscan Harrison Medical Center Relocation Project
March 15, 2017

The City of Bremerton (City) submits the following rebuttal comments to the testimony and
written comments received regarding CN Application 17 09. CHI Franciscan Harrison Medical
Center (Harrison) proposes to relocate 242 of the 253 acute care beds from their Bremerton
campus to their Silverdale campus at a total cost of $484 million. Upon project completion in
2023, Harrison Medical Center would be licensed for a total 336 acute care beds in Silverdale
and no inpatient beds would remain in Bremerton.

At the public hearing on February 21, 2017, Mayor Patty Lent and representatives of the
Bremerton City Council testified that the City of Bremerton has responsibility, at a minimum,
for emergency services provided through the fire and police departments. Such services
include maintaining the emergency medical transport system to provide stabilization,
treatment, and transportation of patients to hospitals, as well as police detention and transfer
of patients for psychiatric evaluation to hospital emergency rooms. The City of Bremerton
requested and should be granted affected party status because our responsibilities constitute
direct health care services.

We affirm the testimony that we provided at the public hearing, found at pages 211 219 on
the CD of Written Comments. To keep our comments brief, we are incorporating into our
rebuttal testimony the 6-page, unattributed CON issues paper, labeled Comparison of
CHI/Harrison CON Application with Department of Health Review Criteria found at pages 13
19 on the CD of Written Comments. We agree that the Harrison project fails to meet one or
more requirements under each of the four categories of the CON review criteria. We request
that the Department of Health deny the project a Certificate of Need.

At the outset, we wish to express our appreciation to the governing body and management of
CHI Franciscan Harrison Medical Center for their past and current efforts and their desire to
serve the residents of Kitsap County and adjacent counties. On behalf of the 40,000 residents in
our city limits and the 45,000 residents in the metropolitan area surrounding Bremerton, we
object to the realization of Harrisons vision at the expense of our residents safety, security,
and access to a full range of medical care services. The residents of the largest city in Kitsap
County will be adversely affected if Harrisons relocation project is approved as submitted.

A. Unresolved Pivotal Issue Harrison failed to meet the criteria in WAC 246-310-240,
section (1) which states, Superior alternatives, in terms of cost, efficiency, or
effectiveness, are not available or practicable.
Harrison did not consider an alternative to Phase 2 of their proposed project that is superior to
their proposal, in terms of cost and accessibility. In Phase 2, Harrison proposes to build a 74-
bed tower in Silverdale for $201 million. The City asserts that Harrison could build a new 74-bed
hospital on a new site in Bremerton for approximately $115 million. To prove our point, we
offer the example of St. Anthony Hospital in Gig Harbor, an 80-bed, 68,000 sq. ft. general
hospital with a Level IV trauma center which was built in 2009 at a cost of $94 million. Saint
Anthony was built by CHI Franciscan to accommodate the residents of Gig Harbor who
preferred not to travel 12.6 miles to St. Joseph Medical Center in Tacoma. Given that Silverdale
is 10.6 miles from Bremerton, the City of Bremerton requests that our residents be given the
same level of safety, accessibility and convenience as that afforded the residents of Gig Harbor.

B. Impact of the proposed CHI Franciscan Harrison Medical Center project on the
availability and accessibility of inpatient and outpatient services as well as availability
and accessibility of a sufficient supply of physicians in the Bremerton metro area.

Harrison did not select the most cost effective alternative for providing hospital services in
Kitsap County. David Schultz, President of Harrison Medical Center, stated that Harrisons goal
has been to consolidate beds and decant Bremerton for nearly two decades.1 In this single-
minded approach, Harrison elected to expend $484 million in a 2-phase project. The first
phase, costing $283 million, would relocate 168 beds to Silverdale and provide ancillary services
to support a total of 262 acute care beds. We assert that 262 beds are the maximum amount
that Harrison needs in Silverdale. As presented in the public testimony, Harrison is currently
operating 247 beds and can demonstrate a need for only 236 252 beds.2 Our previous
testimony and testimony by Harrison indicates that the 262 beds in Phase 1 could be rebuilt at
the existing campus in Bremerton for $130 $200 million.3

Phase 2, a 74-bed tower with a project cost of $201 million, is not needed at any time
throughout the planning horizon and amounts to bed-banking. The proposal cannot be
construed as being a relocation of an existing hospital that currently operates 247 beds on two
sites.4 The only way that these beds could be approved as part of a relocation project would be
to maintain the two-hospital current status by either incorporating the 74 beds into a
renovation of the current Bremerton campus or building a new 74-bed hospital in Bremerton;
otherwise, the project should be treated as a new hospital facility project subject to the bed
need methodology. In the two-hospital scenario, the occupancy factor applied to the Silverdale
site would be 70% - 75% and to the Bremerton site would be 65%. The more complex, but
lower cost of two-hospital approach included in our testimony would dictate a 10 15-year
timeline rather than an 8-year timeline and thus a higher bed need. As testified to by Harrison,
the increased operating cost associated with the two-hospital model is only $9 million per year,
1
CN Application #17 09 CHI Franciscan Harrison Medical Center Project Rebuttal Comments to
Testimony and Comments Received as of February 21, 2017, Pg. 190
2
Ibid. Pages 13 - 18
3
Ibid. Pages 190, 212
4
Ibid. Page 18
2% of operating costs, an amount which would be offset by a dramatic reduction in capital costs
for renovating or building a smaller hospital in Bremerton.5

Harrison asserts that the Silverdale location will be more accessible than Bremerton for all
residents in the county. Based solely on geography, this assertion is true. What Harrison fails to
consider is the distribution of population throughout the county. The greatest concentration of
population is the 85,000 residents of the Bremerton metropolitan area. For those 85,000
people, the hospital and doctors will be less accessible when Harrison moves to Silverdale.
Silverdale may be accessible to many, but it is convenient for few.

C. Relocating all emergency room services from Bremerton to Silverdale will increase
transport times and the costs associated with ambulance crews, equipment,
equipment maintenance, and fuel for the Bremerton Fire Department.

For Emergency Medical Transport (EMT) alone, the City of Bremerton estimates that the cost
impact of transporting patients to Silverdale instead of Bremerton will be $119,133 per year.
See the attachment. In addition, the ambulance crews will be out-of-service for an additional
10-15 minutes per round trip while they return from Silverdale to the Bremerton city limits. The
estimated cost impact for the Bremerton Police Department is expected to be less than that for
the fire department.

D. Economic development impact of leaving an empty, unused hospital facility at the

current Bremerton site with no plans to return the site to use which will increase
overall Bremerton costs to mitigate the urban blight over the period that the property
is not placed into use.

At the hearing, Mr. David Schulz, President of Harrison Medical Center stated that the
demolition costs of $3 million to $5 million for the existing campus are not included in the
relocation project budget. The City requests that the $3 million to $5 million budget for
demolition and green fielding should be included as a condition to the certificate of need. The
Harrison testimony clearly assumes that the building is intended to remain vacant until a new
owner is secured. The Department must place a condition on Harrison that if it abandons the
Bremerton facility that it will restore the site to green field status on a timely basis should a
new owner not emerge.6

E. Based on the public hearing record, there is very little community support for the
Harrison relocation project among non-professionals.

An examination of the CD of Written Comments reveals that there were 63 unduplicated

written comments. Of the 33 written comments that were favorable, 8 came from current or
past members of the Harrison governing body, 15 came from current or past members of the

5
Ibid. Page 190, 211
6
Op cit. Pages 191 - 212
management staff, 2 came from relatives of the management staff, 4 came from members of
the medical staff, and 5 came from professionals representing the following organizations:
Central Kitsap Fire & Rescue, Silverdale Water District, Kitsap County Commission, Kitsap
Economic Development Alliance, and the Kitsap Public Health District. None of the 33 favorable
written comments came from ordinary citizens. Besides the five professionals from unrelated
organizations, the only people who support the Harrison project are the professionals who are
governing it, managing it, or practicing medicine.

By contrast, of the 30 written comments that were opposed, 0 came from current or past
members of the Harrison governing body, 0 came from current or past members of the
management staff, 0 came from relatives of the management staff, 4 came from members of
the medical staff, and 6 came from professionals representing the following organizations: CON
Consultant, ACLU, Catholics. 20 of the unfavorable comments came from ordinary people.

Conclusion: An examination of the testimony shows that Harrison has failed to meet the criteria
for the approval of their proposed bed relocation. The City of Bremerton requests that the
Secretary of the Department of Health deny the certificate of need.
 City of Bremerton
Bremerton Fire Department
Emergency Medical Transportation
ESTIMATED ANNUAL COST IMPACT OF HARRISON MOVING TO SILVERDALE
as of March 14, 2017

Annual Cost
Extra Cost Description Annual Cost Calculation

$58,524 Labor 467 extra EMT hours @ $62.66/ hour wages & benefits per EMT x 2 EMT's

$31,969 Equipment $176,870 purchase price with a 100,000 mile life = $1.77 per mile x 18,075 extra miles

$21,330 Maintenance $9,306 annual maintenance cost per vehicle / 7,886 miles = $1.18 per mile x 18,075 extra miles

$7,310 Fuel 18,075 extra miles / 6.8 MPG = 2,655 extra gallons of fuel x $2.75 per gallon

$119,133 Total
Nevertheless, the 374 beds in the current Harrison license have been granted to a substantially
different organization under substantially different circumstances. From the standpoint of Cost
Containment, Harrison has not provided a rationale for its project.

Harrison has projected 69,000 patient days to year 2020. It is prohibited in its rebuttal comments from
changing the rationale for this project unless it proposes to amend its application. The community owed
a legitimate calculation of the need for beds that will cost over $2.7 million each and where Harrison
and its CHI affiliated hospitals are among the most expensive in the state. (See Attached graph.). If it
cannot readily determine the need for 84-100 of the beds are not needed, it should require Harrison to
re-submit its application and provide a supporting rationale. The Department must determine that is
approving the most cost effective and appropriate alternative.

Beyond the lack of rationale for the projects bed capacity and capital expense, there are substantial
issues that suggest the 50 bed CON transfer from Harrison to Harrison/FHS was an error and,
notwithstanding its approval, is no longer valid under the terms agreed upon by the parties:

The transfer of CN 1463 for 50 beds to the combination of Harrison and FHS required
continued adherence to the Non-Discrimination Policy, the End of Life Policy, the Patient
Rights and Responsibilities Policy, as provided by Harrison and in place before the
acquisition by FHS. In fact, the Departments evaluation of proposed transfer states: In
this transfer application, the co-applicants assert that the affiliation between FHS and
HMC resulted in no other changes in the project. In light of public comments by ACLU
et al, Barry Peter, the Departments conditions placed on the transfer are clearly no
longer being met. Additionally, where Harrisons current policies may not have
changed, it has nevertheless handicapped its employees, physicians and other
contractors from effectively carrying out those policies through requirements that they
adhere to the Catholic ERDs. This makes it clear that the policies reviewed and
accepted by the Department at the time of review can no longer be relied on to be
carried out at Harrison on a consistent, predictable or reliable basis.
The transfer of CN 1463 and 1463A should no longer be considered valid. In
interpreting the applicants request to transfer Harrisons CN from Harrison to the
combination of Harrison and FHS, the Department did not apply any standard as
required at WAC 246-310- 200(2)(b) s. To quote the findings: The applicants did not
demonstrate the transfer was substantially complete. Rather, the decision was based
on a dictionary definition of substantial and that cannot be interpreted as a standard
definition of substantially complete The Department must reduce the Harrison license
accordingly,
A review of the record will show that CON evaluations and bed approvals at Silverdale
relied on lower standard occupancy rates than would be applied to a one-campus
 hospital of larger bed capacity. Combining two smaller hospitals for which at least one
was granted a greater number of beds due to lower occupancy standards results in a
bonus number of licensed beds that could not have been otherwise justified. The basis
for these extra licensed number of beds no longer exists. The Department must reduce
the Harrison license accordingly.
The current licensed bed number is different than the current number of set up beds.
Harrisons application neglected to answer the question: how many beds are set up? In
its financial documents, Harrison is described as having 260 beds. The number of set up
beds reported to DOH is 247. A walk through the Bremerton facility by Department
staff will show that many of the licensed beds no longer exist and could not be set up
in 24 hours or at all.
The 374-bed license has been accumulated using lower occupancy standards applied to
a separate smaller facility at Silverdale. Since all beds are proposed for one location, the
rationale for those extra beds no longer exists and they cannot be relocated and
consolidated into one combined facility without a technical analysis of the need for
them.
2. The project as proposed will have a serious and detrimental impact on small public district
hospitals in Clallam and Jefferson Counties

At the public hearing and in written comments, supporters of a 336-bed hospital at Silverdale celebrated
the opportunity for Harrison to more easily serve the residents of Clallam and Jefferson Counties.
However, a review the application materials shows no evidence of any joint planning or any
collaborative discussions with the two public hospital districts whose residents it has unilaterally
decided to serve. And, certainly, with 84-100 beds that are not supported by its Harrisons own Kitsap
patient day projections, Clallam and Jefferson will look like a needed source of paying patients and a
way to pay for overbuilding the Silverdale campus.

A detailed bed need study will permit discussion of market share assumptions and loss of patients and
revenue by Jefferson and Olympic Medical Centers. These hospitals are faced with very high Medicare
and Medicaid payer mix and substantial less commercial revenue than Harrison. Of great concern is the
potential loss to FMG of the areas physicians, so many are prized recruits, appreciated for a willingness
to come to small rural communities to practice. Harrison and a billion-dollar church entity ready to place
its own physicians near these hospitals could force local Clallam and Jefferson County physicians to join
CHI as has happened in other communities.

There is no reference to Jefferson Medical Center or Olympic Medical Center in the application
materials. Harrison does not mention either hospital when asked how its project relates to the rest of
the health care system. The Department must evaluate the impact of a large hospital at Silverdale on
two small rural hospitals whose geographic service areas are truncated by seaside locations so that their
service areas only extend south in the direction of Harrisons surplus beds? A durable purpose of
Certificate of Need review for this regions existing hospitals is its long-standing requirement of
collaborative and cooperative decision-making between providers who may otherwise damage the local
system by competing inappropriately. A quick calculation using 2015 CHARS data shows that very small
market share increases by Harrison could cost Olympic and Jefferson very large percentage losses in
patients in revenue. A 1% increase by Harrison could reduce Olympic revenues by 4% and Jeffersons by
14%. The Department will not be able to determine that the Harrison project does not constitute an
unnecessary duplication of services.

3. Despite claims that Harrison is secular, it is not. As a result, now and in the future, the
availability of reproductive services and end of life care in Kitsap County is unstable, unreliable,
and unpredictable.

In recent legal challenges of hospital pension plans calling themselves church plans under ERISA,
CHI proved to a court that it is a church and that its purpose is religious not medical. This is borne
out by the mission statement that was in place when it acquired Harrison: Nurture the healing
ministry of the church.
Board members include at least three individuals who are also CHI Board members. Assuming the
Nominating Committee referred to during the public hearing is controlled by CHI via this interlocking
directorate, then CHI is in control of the board membership and, as a result, of its decisions.
According to Harrison board member Jim Civillas public comments, the Harrison board was
established for the purpose of overseeing womens reproductive services. This strongly suggests the
board is not truly a governing board with fiduciary responsibility. It is, instead, a community
advisory committee populated by CHI Board members and the other community members they
select on a self-perpetuating basis.
The Department requires other CON applicants to provide organization charts and lists of all related
entities, explanations of why no self-referral is taking place, descriptions of the relationships of
unrelated organizations that may have some of the same owners. Where is the due diligence in this
application?

Since Benjamin Franklins time, the hospital as an institution has been compared to a three-legged
stool. Every student of health care administration has been taught the hospital is made up of three
parts: board, administration, and physicians. These three components support a platform of health
care delivery that balances community, business and clinical care priorities, ideally for the good of the
patient and long-term stability of the organization. Standards for each of these three hospital parts
make up the guidance provided by organizations such as JCAHO, Medicare Conditions of Participation,
and the state laws addressing hospital licensing. Washingtons hospital licensing law addresses not only
facility standards but these three institutional parts: Governance, Administration, and Medical Staff.

Harrison administrator and community supporters state many times now and in the past that Harrison is
a secular hospital. There are two questions the CON review of the project must address:
Is the hospital secular or not?

And, why does it matter?

We take a simple definition from the dictionary:

From Collins English Dictionary

Secular adjective
You use secular to describe things that have no connection with religion.
He spoke about preserving the country as a secular state.
secular in American English adjective
of or relating to worldly things as distinguished from things relating to church and
religion; not sacred or religious; temporal; worldly
secular music, secular schools

From English Oxford Dictionaery

Secular adjective
Not connected with religious or spiritual matters.
secular buildings

Contrasted with sacred
secular attitudes to death

Christian Church
(of clergy) not subject to or bound by religious rule; not belonging to or living in a
monastic or other order.

Is Harrison secular? This review of the three parts of Harrison as an institution show it is not secular.

The FHS/Harrison administration is not secular.

David Schulz, Harrisons CEO, is a CHI employee, not a Harrison employee. As CHIs executive
responsible for administration of its hospitals and medical groups in the Kitsap peninsula
market, Schulz administers CHIs religious St. Anthony Hospital in Gig Harbor. At the same time,
he administers Harrison Hospital and calls it a secular hospital. As a CHI executive reporting to
other CHI executives in Tacoma, he is subject to the Catholic Ethical and Religious Directives.
Depending on the version of the contract he has signed, he must follow the directives and/or he
must not cause any component of CHI not to follow the directives. If, under his employment
agreement, his actions are always controlled by the ERDs, then how can he oversee or
administer clinical activity at Harrison that is not permitted under those directives? It is not
possible for a person to conform to the ERDs at all times while employed by CHI while at
sometimes he does not while making decisions at Harrison. At best, it is an unstable
arrangement and, for reasons explored below, could change, removing this impossible conflict.i
Part of Harrisons administrative staff is a group of Medical Directors as required by state law.
Many of those medical directors have contracts including obligations regarding the Catholic
 ERDs. Some have signed agreements requiring they adhere to the ERDs; some have signed
contracts obligating them not to cause any CHI entity to veer from the ERDs. It appears that
any physicians that do not have such obligations in their contracts will have once they come up
for renewal. As part of the administration, these medical directors, part of hospital
administration, who have consented to adhere to the ERDs cannot be said to be secular.

The FHS/Harrison Board is not secular.

The local group referring to itself as the Harrison board members includes at least three
members who are also CHI Board members. One must assume the Nominating Committee
referred to during the public hearing is controlled by CHI via this interlocking directorate. This
means that CHI is in control of the board membership and, as a result, of its decisions.
According to Harrison board member Jim Civillas public comments, the Harrison board was
established, at the time of the CHI acquisition, for the purpose of overseeing womens
reproductive services. We have not seen the charge to the board or who sits on the
Nominating Committee. The meetings of the board are apparently closed and the minutes not
made public. It is most likely that this board is not truly a governing board with fiduciary
responsibility for Harrison. It is, instead, a community advisory board populated by CHI Board
members and the other community members that CHI representatives select on a self-
perpetuating basis. From public comment, we know the board could change the secular
status of the hospital at any time to religious. We have not heard its rationale for refusing to
provide a full range of reproductive and end of life services. It is hard to believe these refusals
are not based on religious doctrine whether directed by contract or held by CHI-selected
members.
Public comment by one Harrison board member stated that the Harrison board agreed as part
of its acquisition by CHI that it would never perform abortions. We have not seen the basis for
this refusal of a legal health care procedure to the women of Harrisons service area. A review
of the acquisition agreement, if it were available, would provide its religious basis as it was
made by non-physicians for other than medical reasons.
The original Harrison board agreed to a five-year renewal period when it was acquired by CHI.
The only available copy of the agreement is a draft reviewed during the Departments
determination that the acquisition was not reviewable under Washington law. In that draft, the
section on ERDs includes a redaction. Neither the Department nor the public know what
Harrison and CHI agreed to regarding the ERDs. it is safe to assume that more complete
adherence to the ERDs could be required of the Harrison board when the 5-year mark is
reached in 2018.
According to Harrison board member Jim Civillas public comments, the Harrison board was
established for the purpose of overseeing womens reproductive services. This strongly
suggests the board is not truly a governing board with fiduciary responsibility. It is, instead, a
community advisory committee populated by CHI Board members and the other community
members they select on a self-perpetuating basis.
Though one may believe that Harrison is secular now, it is clear the situation is not stable and
the Department is at risk for approving a project whose description could easily change within a
few months.:
 As long as CHI controls the board nominating process, the secular status of Harrison
could be changed at any time and therefore the range of services provided there can be
changed to more closely adhere to the ERDs.
Harrison board, if it does exercise any control, can change the secular status of the
hospital when it wants to.
The FHS/CHI website provides a short-term goal for the Northwest region of One CHI. This
suggests a short-term goal to pull affiliated Harrison fully under the direct ownership of
CHI.
Harrison/CHI agreement is up for renewal at 5 years; this is assumed to mean 2018.
The general belief among many in the Kitsap medical community is that Harrison still does
tubals but only for two more years.
The Harrison medical staff and its affiliated medical groups are not secular.

A third of the three legs of the hospital institution is the medical staff. Physicians across
Kitsap have already signed, or will be asked to sign, agreements obligating them to adhere
to the ERDs or to avoid causing any CHI entity to veer away from them. It is estimated that
80% of Kitsap physicians are now obligated under ERD requirements in their contracts.
Please see attached an example one physician has in his contract.
It appears that Harrison Partners and the Doctors Clinic physicians are all now being moved
into the Franciscan Medical Group, part of Franciscan/CHI.
There are many specialties serving Harrison in which every physician in that specialty have
now agreed to adhere to the ERDs.
Other physicians contracts include a series of web links that eventually reach the Catholic
Bishops web site and a copy of the ERDs. The physician signing must state he or she has
read the string of documents under the rubric of a CHI Code of Conduct but that obscurely
and eventually links to the ERDs thus incorporating them into the physician agreement.
The Harrison application did not acknowledge the CHI/Franciscans religiously-aligned
hospice actually operates within Harrison. With offices in Tacoma, this hospice is active
across Kitsap and, as David Bucher, Harrisons Palliative Care Director, stated at the hearing,
this religious hospice is actively involved with terminally-ill patients on the nursing units in
Harrison. So, despite the statements that the hospital is secular, we know this religious
hospice one that does not appear to cooperate with Death with Dignity is providing
direct services at Harrison. We do not know if Kitsap branch of the CHI/Franciscan Hospice
has its own medical director, but all care offered by the hospice is; provided under the
direction of a CHI hospice medical director bound by Catholic doctrine.

Attachments

Comparison of CHI/Harrison CON Application with Department of Health Review

Criteria
 Cost Comparison Chart: Legend Each dot is a hospital, red dots are FHS hospitals
Excerpt from physician contract

 $70,000
Case Mix Adjusted Charges by Case Mix
$65,000 Washington Hospitals, 2014 CHARS

$60,000

$55,000

$50,000 Harrison
Case-Mix Adjusted Charge per Discharge

$45,000

$40,000

$35,000

$30,000

$25,000

$20,000

$15,000

$10,000

$5,000

$0
0.20 0.70 1.20 1.70 2.20
Case Mix Index
 COMPARISON OF CHI/HARRISON CON APPLICATION
with DEPARTMENT OF HEALTH REVIEW CRITERIA

When it reviews a Certificate of Need, the WA Department of Health applies 4 categories of criteria from
Washington law:
Need and Access;
Financial Feasibility,
Process of Care (Quality); and
Cost Containment.
Where the Department finds that the information the applicant provided does not conform to the
criteria, it must deny the application. When it finds the applicant has not provided sufficient
information to make a determination, it must deny the project or declare a Pivotal Unresolved Issue
(PUI) and collect additional information and hold a second public hearing.

NEED AND ACCESS CRITERIA
CHI/Harrison has 247 set-up beds today and a license of 347. It proposes a project that will result in
336 beds and eliminates 11 psychiatric beds. It must provide a rationale for its project that will result in
up to 100 more beds than it will need and eliminates 11 psychiatric beds.

Assess the impact of a new medical center on the health care system
Today, CHI/Harrison has not provided an assessment of the impact of its closure on Bremerton or its
creation of a 300-bed hospital in a new location. In contrast to the quiet creation of the Silverdale
branch of CHI/Harrison, this project proposes establishing a major medical center in an entirely
different community.

The Department must require such an assessment because the volumes projected to 2025 do not
support the proposed 336 beds. The table below shows the number of excess beds in the project,
assuming two different occupancy rates, 80% or 75%. The table shows that CHI/Harrison proposes
building from 84 to 100 more beds than will be needed in 2025, eight years from the application year.
To project further begins to treat the project as a new hospital, not the relocation of beds from one
campus to another by a hospital.

Harrison Bed Need, 2025
Harrison Bed Need @ Excess Beds @ 336
Year Pt Days ADC 80% occ. 75% occ. 80% occ 75% occ.
2020 61,748 169 211 226 125 110
2021 63,167 173 216 231 120 105
2022 64,637 177 221 236 115 100
2023 66,160 181 227 242 109 94
2024 67,739 186 232 247 104 89
2025 69,044 189 236 252 100 84

This project locates the extra 100 beds at substantially reduced travel times to Bainbridge Island and to rural
communities on the Olympic Peninsula that support two small public district hospitals. Many residents of
these areas fear being referred or transported to an emergency room and hospital that refuses to offer
certain legal health care services those residents may need or want in an emergency or at the end of life.

Utilization of these extra beds must come from:

CON issues paper CHI/Harrison CON 2017-02-20 1

 Increased market share in Kitsap
Increased market share in Clallam and Jefferson, and related drops in volumes at local hospitals,
Or increased market share in all three counties.
In light of the current monopoly position of CHI/Harrison, its religious refusals to offer legal and needed
services, and the financial vulnerability of peninsula hospitals to federal health care policy, these extra
beds should not be built.
CHI/Harrison limits access to needed services
At page 12, the CON application asks for:
G. General description of types of patients to be served by the project. Describe the
extent of any planned limitations to the services offered, either during the initial years
of the project or on a permanent basis.

The applicants response is not complete since it neglects to mention planned limitations to the services
offered. Current limitations to services offered include refusals of care that result from the applicants
adherence to religious directives. The Department cannot determine the projects conformance with
the need criteria without requesting a full response to this question.

Access to needed care
Need Criteria include: the effect of the reduction, elimination, or relocation of the service on the ability
of low-income persons, racial and ethnic minorities, women, handicapped persons, and other
underserved groups and the elderly to obtain needed health care;

The CON application form asks the applicant the following:

2. In the context of the criteria contained in WAC 248-19-370(2) (a) and (2) (b),
document the manner in which:

a. Access of low income persons, racial and ethnic minorities, women and mentally
handicapped persons and other underserved groups to the services proposed is
commensurate with such persons need for the health services (particularly those needs
identified in the applicable Health Systems Plan as deserving of priority). (Note: SHP
General Performance Standards (at Vol II, page B-1) include: All facilities and agencies providing
health care services shall have a patient priority policy which requires acceptance of patients
according to clinical evidence of medical need and potential benefit to patients.
b. In the case of the relocation of a facility or service, or the reduction or elimination
of a service, the present needs of the defined population for that facility or service,
including the needs of underserved groups, will continue to be met by the proposed
relocation or by alternative arrangements.

To a., the applicant responds in part, on Page 24:

Admission to each of CHI Franciscans facilities and programs is based on clinical need.
Services are made available to all persons regardless of race, color, creed, sex, national origin, or
disability.

To b., the applicant responds in part on page 25:

All needs of the service area residents, including the underserved, will continue to be met.

CON issues paper CHI/Harrison CON 2017-02-20 2

The applicants responses to a and b, and to the State Health Plan language included, do not
acknowledge the applicants adherence to religious directives which result in the refusal to offer certain
needed and legally permissible care. Instead, the applicant implies that it responds to its patients needs
based on clinical criteria. Since the applicants present and future adherence to religious directives
conflict with its stated responses to a and b above, the Department must determine that this criterion is
not met.

Psychiatric beds
2015 Kitsap resident patient days in WA psychiatric beds averaged 12 per day. Harrison has 11
psychiatric beds in its license that it is not using and does not intend to. Its CON application assumes
that Kitsap patients will go to the Tacoma facility it was recently approved to operate jointly with
Multicare. Since the great majority of physicians in Kitsap are now employed by CHI, it assumes those
physicians will refer their Kitsap psychiatric patients to the CHI facility in Pierce County.

FINANCIAL FEASIBILITY CRITERIA
The financial feasibility of the project cannot be determined. Accordingly, the Department must deny this
application.

Neither the application narrative or Exhibit 11 Proforma statements of revenue and expense
provide any assumptions or rationale on which to base revenues or expenses. No workload
basis for revenue assumptions is included. The applicant nowhere applies a recognized method
to project patient days 2020-2025. The application mentions use rates and use rate differences
by age cohort but provides no indication of the time period or geographic area (county, health
service area, region?) on which its use rates are based nor the specific use rates applied.
Accordingly, though the 2025 patient day projection of 69,000 patient days is the basis for other
comments made here, there very little basis provided in light of annual patient days having been
flat for 5 years through 2016.

Exhibit 11 provides no unit per revenue assumptions, no bases for any of the deductions from
revenue and none of the expenses are explained.

An October 24, 2016 item in Modern Healthcare, entitled Dignity and Catholic Health Initiatives
in merger talk raises further concern regarding financial feasibility of the project that deserves
attention by the Department of Health.
See http://www.modernhealthcare.com/article/20161024/NEWS/161029963

CHI, however, is facing some financial struggles. The company was
hit by a major bond downgrade this summer and has announced
plans to sell its money-losing health plan business.

CHI's debt-to-equity ratio has skyrocketed in recent years. At about

50% in 2011, it zoomed to nearly 100% in 2013 and on to 110% in
2015.

In July, Fitch Ratings lowered the credit rating of CHI by three

notches, citing the integrated health system's weaker financial
profile, while A.M. Best Co. downgraded CHI's health insurance
subsidiary.

CHI posted a net loss of $568.1 million in the first nine months of its
fiscal 2016, which began July 1, 2015. Health IT costs, investment
losses and troubles with its health insurance company spearheaded
the massive deficit. CHI's credit rating from Fitch, which covers $6

CON issues paper CHI/Harrison CON 2017-02-20 3

 billion of outstanding debt, now sits at BBB+ from A+. That loss
was a substantial deterioration from its fiscal 2015. For all of 2015,
CHI eked out a $3.1 million gain on operations on revenue of $15.2
billion.

In this context, it is important to note that the combination of the proposed Phases I and II,
along with additional unreviewable construction, totals upwards of a billion dollars on the
Silverdale campus.

The public and the Department are provided with no basis on which to evaluate CHI/Harrison revenue
or expense. None of the line items can be compared to any other project or standard so the feasibility
of project cannot be determined. CHI finances have been deteriorating and it is contemplating merger
with another entity for which the Department has no financial information. Accordingly, the project
must not be granted a Certificate of Need.

PROCESS OF CARE (QUALITY) CRITERIA

WA licensing requirement to inform patients
Governor Inslee asked the Department of Health to develop rules that more clearly allow it to
review changes of control over WA hospitals and to assess the impact on its community when a
hospital changes hands. The new rule was successfully challenged in court by hospitals. To date,
the Department has not announced a second effort to address the matter.

Surviving the courts decision was a change to Washingtons hospital licensing rules that clarified a
licensed hospitals responsibility to provide certain information to its community and its patients.
The result was the current version of WAC-246-320-141, entitled Patient rights and organizational
ethics. Section 1 of this rule outlines the types of patient rights that a hospital policy must address.
Sections 5-8 require the policies in Section 1 to address specific patient rights of access and make
those policies available to the public. These specific areas include 1) admission, 2) non-
discrimination, 3) end of life care and 4) reproductive health care. The rule does not require that
each hospital guarantee the same level of access under its published patients rights policies but it
does require the information be available to patients and to the community.

A review of the policies CHI/Harrison makes available does not satisfy the requirements of the
licensing law. The documents provided about CHI/Harrisons policies are too vague to provide
useful information to an interested Kitsap resident. This licensing revision is a very small part left of
an effort to review community-wide impacts on hospital acquisitions. As such, they require a
hospital to be more clear and specific in the information it provides. Without such information, a
potential patient cannot weigh the risk of using the CHI/Harrison emergency room or being
admitted there vs. use of an alternate hospital or form of care. Especially in end of life care and
reproductive health care, urgent clinical situations can arise. Such urgent or emergent situations will
preclude a time-consuming effort to discern a hospitals policy to refuse or require care that is
specific to the patients immediate medical condition.

Until CHI/Harrison provides more detail, Kitsap residents cannot discern the effect of its ethical
concerns and religious directives on the care it provides. Officials of the Department of Health must
reconcile the fact of CHI/Harrisons license with its clear lack of responsiveness to WAC-246-320-
141. The Department of Health should declare a Pivotal Unresolved Issue in this matter.
CHI/Harrison should be asked to fully complete a checklist such as that provided at
clearhealthwa.org in order to meet its responsibilities. Until it does so, the Department must find
that the applicant does not meet the requirements of WAC 246-310-230, Criteria for structure and

CON issues paper CHI/Harrison CON 2017-02-20 4

 process of care, (3) There is reasonable assurance that the project will be in conformance with
applicable state licensing requirements. Under this rule, the Certificate of Need Program must
determine, not just that the hospital has obtained a license, but specifically that it meets the
licensing requirements.

Patient Safety at End of Life
In assessing whether a project meets this criterion, the Department may look to national
organizations with the expertise to set reasonable standards of care. In End of life care: A patient
safety issue, JCAHO advisory on safety and quality issues discusses the safety issues involved
when the hospital controls end of life options instead of letting the patient decide. JCAHO says that
the tremendous complexity and number of providers and procedures involved in end of life care in a
hospital ICU carries with it great potential for harm to patients. In discussing the appropriate
response by hospitals JCAHO advises:
Recommending or proceeding with procedures or treatments that are not
consistent with what matters to the patient is a patient safety issue that
could and does lead to harm and sentinel events (a patient safety event that
reaches a patient and results in death, permanent harm, severe temporary
harm, or intervention required to sustain life). Advanced care planning
involves multiple steps designed to help individuals:
Learn about the health care options that are available for end-of-life care
Determine which types of care best fit their personal wishes
Share their wishes with family, friends and their physicians
In light of CHI/Harrisons refusal to honor the full range of legal end-of-life choices by its patients, the
Department cannot determine that the proposed project assures the safety of its patients. Adherence
to non-science based religious directives allows CHI/Harrison, its staff, and its physicians to refuse
wanted care or insist on unwanted care at the end of life. This is a clear violation of patient rights and
puts patient safety at risk.

COST CONTAINMENT CRITERIA

Unexplained costs per bed
A comparison of the per bed cost of Phase 1 and Phase 2 shows substantial unexplained
construction cost differences. The table below contrasts the projected capital cost per bed and for
the square feet allocated by the applicant to beds for Phases 1 and 2. It shows that construction
of Phase 2 beds is expected to cost over a million dollars per bed, or over 60% more, than beds in
Phase 1. The construction cost per square foot in Phase 2 for bed related space, as defined by the
applicant, is twice that projected for such space in Phase 1. CHI/Harrison provides no apparent
rationale for these discrepancies.

Column
Column 1 Column 3 Column 4 Column 5
2
Sq. ft. for
Project Cost Beds Cost per bed Cost/bed
beds
Phase 1 $283,000,000 168 $1,684,524 353,873 $800
Phase 2 $201,000,000 74 $2,716,216 127,980 $1571
Notes to table:
Figures from Columns 1, 2, and 4 are from the application.
Column 1 Column 2 = Column 3
Column 4 Column 2 = Column 5

CON issues paper CHI/Harrison CON 2017-02-20 5


Historical overage
CHI/Harrisons recent Silverdale project required a CON amendment to allow for its completion
costing 25% more than the amount originally approved.

Unneeded construction
Furthermore, the proposed project cannot be determined to be cost effective because it contains up
to 100 more beds than are needed based on the applicants own volume projections. Although the
Department may accept the argument that a hospital can keep and relocated un-used licensed beds,
it must also determine that spending patient care dollars to rebuild those beds is cost effective and
is the preferred alternative of those available.

CHI/Harrisons project costs are not explained, its past projections have not proved reliable, and the
project includes $127,000,000 of construction for beds for which the applicant indicates no future
revenue. The Department cannot make a determination that the project as proposed is a cost effective
one.

CONCLUSION
In conclusion, the CHI/Harrison project fails to meet one or more requirements under each of the four
categories of CON review criteria. The Department of Health must deny the project a Certificate of
Need.

CON issues paper CHI/Harrison CON 2017-02-20 6

 for Medicare and Medicaid Services (CMS) data for 2011-2014 shows the
majority of reported outpatient charges rising in 2014 after CHI affiliation at
faster rates than state averages.

The applicant proposes to pay for this half-a-billion dollar project through a
combination of its current reserves and debt financing. Presumably, the reserves
and debt will have to be replenished by passing along the cost to Kitsap residents.
If not, can the applicant explain how these funds will be recouped without
burdening our community?

Death With Dignity

Dr. Griffith Blackmon is an outstanding physician and we have the utmost respect
for him and his colleagues, who deliver superb care to critically ill patients in
Harrisons ICU. But Dr. Blackmon did not specifically address whether he or his
colleagues are allowed to participate in the DWD act allowing medically assisted
death with prescription medications, a service that is lawfully guaranteed to
Kitsap residents as of 2009.

Similarly, Mr. David Veterane, former Chairman of the Board at Harrison stated
that the same reproductive care and end-of-life services that were offered prior to
the affiliation are available today.

However, in an email exchange with Robb Miller, Executive director of

Compassion & Choices of Washington dated November 13, 2013 (see below), the
former CEO of Harrison Mr. Scott Bosch admitted that Harrisons policy on
DWD has changed since the affiliation with CHI. In 2009, prior to the merger,
Harrisons policy on Death With Dignity stated: Harrison Medical Center
respects the relationship between the provider and the patient, and has determined
from voter preference that it is in the communitys best interest to allow its
healthcare providers to participate in the Washington Death With Dignity Act if
they so choose.

Harrisons revised policy after the merger now states: while Harrison was
initially neutral during the DWD campaign, once passed, we adopted a policy of
not participating in the administration of the DWD drugs at any of our sites. This
is consistent with many other hospitals in the state. Up until our affiliation with
FHS, our employed physicians were allowed to write the prescription for the
drugs. This changed Aug 1st, 2013 and HMC employed physicians are no longer
able to write these scripts while on duty as an employed doc. These physicians
can, if they wish and under their WA license, separately see patients and prescribe
the drugs for the DWD. Under these circumstances, these physicians would also
have to obtain separate malpractice insurance. (For a copy of the full email
exchange between Mr. Bosch and Mr. Miller please see Appendage B.)

2
 Note that while HMC may claim they still allow employees to prescribe these
drugs if they wish, their refusal to cover these physicians through their existing
Harrison-provided malpractice insurance makes such participation so
professionally risky and unfeasible it is effectively prohibited.

Regardless of Harrisons decision to describe itself as secular or not, the citizens

of Kitsap should be guaranteed the right to receive DWD prescriptions from
willing Harrison physicians. Because Harrison now employs every single
oncologist, cardiologist, pulmonologist, and numerous surgical subspecialists
those most likely to treat terminally ill patientsmany Kitsap residents who wish
to pursue medically assisted death must travel to another market and build a
relationship with a new physician to be granted this legally protected choice. We
ask that the full scope of DWD, through willing HMC providers, should be a
condition for the CON approval, as outlined in Section 6 (6) and Section 4 (2b) of
the CON application.

Reproductive rights and Harrisons promise to remain secular

We were reassured to hear Dr. Anita McIntyre say that all reproductive services
are available today, just as were prior to the affiliation, and she understands those
rights will be fully protected by HMC in the future.

At the CON hearing Mr. David Schultz, HMCs current CEO, stated that HMCs
board could overturn Harrisons secular status but the sitting board has promised
not to do so. However, all new board members must be approved by FHV, so the
composition of the board can change such that their views on reproductive
services are restricted by the Ethical and Religious Directives (ERDs) enforced at
other CHI facilities. The affiliation agreement between Harrison and CHI spoke
to such a Board Conversion event, as evidenced by these paragraphs extracted
from the agreement: (For the full text refer to Appendage C.)

The slate of candidates will be submitted to the HMC Board, which shall
review the nominated candidates names and qualifications, and shall vote to
accept or refuse each nominee. The HMC Board shall be required to then
submit to the FHV Board of Directors the slate of approved candidates and
the FHV Board of Directors shall review the names and qualifications of the
submitted candidates, and shall approve or refuse each of the submitted
candidates, provided that approval shall not be unreasonably withheld; if
FHV refuses any nominees submitted by the HMC Board, the HMC Board
shall then within thirty (30) days of any refusal submit to the FHV Board
new candidates for approval for said unfilled positions as set forth earlier in
this Section. Notwithstanding the preceding procedures, if a vacancy exists
on the HMC Board for more than 150 days, FHV may unilaterally fill the
vacancy provided that at all times a super-majority of no less than two-thirds
(23) of the HMC Board consists of persons who live or work within
Jefferson, Kitsap, or Mason Counties.

3
 We request that if Harrison is granted this CON they be required to remain secular
and offer all current reproductive rights for a minimum of twenty years.

Appendage B:

From: Scott Bosch [mailto:Scott.Bosch@harrisonmedical.org]

Sent: Wednesday, November 13, 2013 3:05 PM
To: 'rmiller@compassionwa.org'
Cc: Michael Anderson; Adar Palis; 'Glen Carlson'; 'Bill Morris'; 'Scott Ekin'
Subject: RE: Question about Harrison's policies on the Washington Death With Dignity
Act

Mr. Miller, thank you for contacting me with your questions and concerns. Thru this
process we have discovered that indeed, the policy that you reference is outdated and is
now in the process of being updated. To answer your questions, while Harrison was
initially neutral during the DWD campaign, once passed, we adopted a policy of not
participating in the administration of the DWD drugs at any of our sites. This is
consistent with many other hospitals in the state. Up until our affiliation with FHS, our
employed physicians were allowed to write the prescription for the drugs. This changed
Aug 1st, 2013 and HMC employed physicians are no longer able to write these scripts
while on duty as an employed doc. These physicians can, if they wish and under their
WA license, separately see patients and prescribe the drugs for the DWD. Under these
circumstances, these physicians would also have to obtain separate malpractice insurance.
Harrison continues to have the policy of full disclosure of patient end of life options with
an aggressive palliative care program in place to assist patients and their families in
making these difficult choices. One thing that would be very helpful to our providers
would be to have a comprehensive list of area physicians that we could refer to that do
participate in the DWD act. If you can help us with that, it would be much appreciated. I
hope I have been able to clear up any remaining questions about Harrisons participation
in the DWD process. Please let me know if you have additional ones. Thanks.

From: Robb Miller [mailto:rmiller@compassionwa.org]

Sent: Tuesday, November 12, 2013 10:46 AM
To: Scott Bosch
Subject: Question about Harrison's policies on the Washington Death With Dignity Act

Dear Mr. Bosch:

We are receiving questions from the community served by Harrison Hospital as well as
the physicians and other medical providers you employ about your policies on the
Washington Death With Dignity Act now that Harrison is affiliated with Franciscan,
which strongly opposes Death With Dignity, prohibits its physicians from participating,
and does not provide helpful information or referrals to patients who make inquiries.

4
Is the policy posted online in your patient handbook
(www.harrisonmedical.org/file_viewer.php?id=5163<http://www.harrisonmedical.org/fil
e_viewer.php?id=5163>) still valid?

Washington Death With Dignity Act (Initiative 1000). This act,

which became Washington state law on March 5, 2009, allows
terminally ill adults to request lethal doses of medication from
medical and osteopathic physicians. The terminally ill patient
must be medically diagnosed with six months or less to live and
must be a Washington resident.
Harrison Medical Center respects the relationship between
the provider and the patient, and has determined from voter
preference that it is in the communitys best interest to allow its
healthcare providers to participate in the Washington Death With
Dignity Act if they so choose.

All providers at Harrison are expected to respond to any patients

query about life-ending medication with openness and compassion.
Harrison believes our providers have an obligation to openly
discuss the patients concerns, unmet needs, feelings, and desires
about the dying process. Providers should seek to learn the
meaning behind the patients questions and help the patient
understand the range of available options, including but not
limited to comfort care, hospice care, and pain control. Ultimately,
Harrisons goal is to help patients make informed decisions about
end-of-life care.

Harrisons position on the Washington Death with Dignity Act

remains neutral, neither supporting nor opposing the option.
We seek to make a positive difference in peoples lives through
exceptional healthcare at all points on the healthcare continuum.
We seek to facilitate end-of-life care and provide comfort to our
patients when they learn their lives may be affected by a terminal
disease or condition.

If this is not still your policy, could you provide me with your new policy?

Thank you,

Robb Miller, Executive Director

Compassion & Choices of Washington
PO Box 61369
Seattle, WA 98141
206.256.1636
877.222.2816 toll-free
206.256.1640 fax

5
rmiller@CompassionWA.org<mailto:rmiller@CompassionWA.org>
www.CompassionWA.org<http://www.compassionwa.org/>

Appendage C:

Board Conversion Event shall mean such point in time, if any, in which greater than
thirty percent (30%) of the members of the HMC Board consists of individuals other than
the members of HMC Board on the Closing Date or their replacements nominated by the
HMC Board and approved by FHV pursuant to Section 3.2(c) of this Agreement
(qualified replacements); replacements unilaterally appointed by FHV pursuant to the
last sentence of Section 3.2(c) without a nomination from the HMC Board will not be
deemed qualified replacements;

(c) Vacancies in the HMC Board positions held by the individuals listed in Schedule
3.2(a) or their successors, shall be filled as follows: The HMC Board Nominating
Committee shall, prior to any annual, regular, or special meeting called for the purpose of
electing HMC Board Trustees, and within 120 days after receiving notice of a HMC
Board vacancy, meet and prepare a slate of nominees qualified to serve on the HMC
Board in accordance with the Restated Bylaws. The slate of candidates will be submitted
to the HMC Board, which shall review the nominated candidates names and
qualifications, and shall vote to accept or refuse each nominee. The HMC Board shall be
required to then submit to the FHV Board of Directors the slate of approved candidates
and the FHV Board of Directors shall review the names and qualifications of the
submitted candidates, and shall approve or refuse each of the submitted candidates,
provided that approval shall not be unreasonably withheld; if FHV refuses any nominees
submitted by the HMC Board, the HMC Board shall then within thirty (30) days of any
refusal submit to the FHV Board new candidates for approval for said unfilled positions
as set forth earlier in this Section. Notwithstanding the preceding procedures, if a vacancy
exists on the HMC Board for more than 150 days, FHV may unilaterally fill the vacancy
provided that at all times a super-majority of no less than two-thirds (23) of the HMC
Board consists of persons who live or work within Jefferson, Kitsap, or Mason Counties.

(b) The board of directors of the Oversight Corporation (the Oversight Board) will
consist of not more than five (5) members, one of whom shall be the Chair of the HMC
Board serving as an ex officio member with the right to vote. The initial Oversight Board
shall consist of the individuals set forth on Exhibit I, all of whom will be directors on the
HMC Board. Each subsequent member of the Oversight Board (other than the ex officio
member) shall be appointed by the Oversight Board, shall be directors serving on the
HMC Board or directors who previously served on the HMC Board. All actions of the
Oversight Corporation, including, without limitation, the appointment of Oversight Board
members and the initiation of any legal proceedings pursuant to the Oversight
Agreement, shall require the approval of a majority of the members of the Oversight
Board. The Oversight Corporation and the Oversight Board are required to act only in the
best interests of HMC pursuant to the same fiduciary duties imposed on the HMC Board

6
and directors on the HMC Board.

7
 3/11/17

COSTS Associated
with Hospital Monopoliza7on

Costs Have Increased (CHI)

1. CHI is forcing procedures that have been done in outpa;ent
se<ngs to hospital based se<ngs. Monopoly of providers has led to
control of loca;on of services.
COST of HOSPITAL BASED CARE IS MORE EXPENSIVE THAN
OUTPATIENT SERVICES
2. CHI charges more than WA state averages. This ability to inate
prices is highly correlated with monopoly characteris;cs of our
market.
COST of HOSPITAL BASED CARE IS MORE EXPENSIVE THAN OTHER
HOSPITAL BASED CARE ELSEWHERE.

1
 3/11/17

Not only is more market share is forced through

hospital-based facili7es,
Harrison charges more than other similar
hospitals.

Harrison Charges vs. Other Hospitals

90,000
80,000
70,000
60,000
50,000
40,000
Harrison
30,000
20,000 All WA Hospitals
10,000 WA Hosp, similar volume
0
s
fem o my d ure ure
al/ ect oce ed
uin en
d p r roc
, ing p rm el p
air Ap ea ow
p or e b
a Re or
F
arg
rni w, d l
He lbo an
r, E all
lde r sm
ou no
Sh Mi

Oct 2014-Sept 2015 data on inpa;ent cost per hospitaliza;on

Source: wahospitalpricing.org (Washington State Hospital Associa;on)

2
 3/11/17

Harrison Charges vs. Other Hospitals

Harrison
90000
Swedish
80000
Virginia Mason
70000
St. Anthony
60000

50000

40000

30000

20000

10000

0
Hernia repair, inguinal fem Appendectomy Minor small and large bowel Shoulder, Elbow and Forearem
proceudres procedures

Oct 2014-Sept 2015 data on inpa;ent cost per hospitaliza;on

Source: wahospitalpricing.org (Washington State Hospital Associa;on)

Harrison Charges vs Other Hospitals

250000

200000

150000
Harrison
100000 All WA Hosp with Similar Vol
All WA Hospitals
50000

0
Major Joint Coronary Bypass Cesarean Sec;on Pneumonia
Replacement of
Lower Extremity

Oct 2014-Sept 2015 data on inpa;ent cost per hospitaliza;on

Source: wahospitalpricing.org (Washington State Hospital Associa;on)

3
 3/11/17

Harrison Charges vs Other Hospitals

250000

200000

150000
Harrison

100000 Swedish
Virginia Mason
50000 St. Anthony

0
Major Joint Coronary Bypass Cesarean sec;on Pneumonia
Replacment of lower
extremity
Oct 2014-Sept 2015 data on inpa;ent cost per hospitaliza;on
Source: wahospitalpricing.org (Washington State Hospital Associa;on)

CMS Medicare Data

2011-2014 data available publicly for selected outpa;ent procedures
by hospital.
Of these 19 procedures, we isolated all 8 codes for which Harrison
had more than 100 billed cases and data was available for all four
years
Compared this to WA state averages

Source: www.cms.gov/Research-Sta;s;cs-Data-and-Systems/sta;s;cs-
trends-and-reports

4
 3/11/17

MRI Charges and Payments

4000

3500

3000

2500 HMC
2000 HMC Pymt
All WA
1500
All WA Pymt
1000

500

0
2011 (163) 2012 (120) 2013 (133) 2014 (162)

Level II Cardiac Imaging

9000
8000
7000
6000 HMC
5000 HMC Pymt
4000 All WSA

3000 All WA Pymts

St Josephs
2000
1000
0
2011 (282) 2012 (196) 2013 (186) 2014 (234)

5
 3/11/17

Level II Echocardiogram without Contrast

4000

3500

3000
HMC
2500
HMC Pymts
2000
All WA
1500 All WA Pymts
1000 St Josephs

500

0
2011 (226) 2012 (229) 2013 (312) 2014 (439)

Level III Nerve Injec7ons

3500

3000

2500
HMC
2000 HMC Pymt
All WA
1500
All WA Pymt
1000 St. Joseph
500

0
2011 (238) 2012 (310) 2013 (157) 2014 (224)

6
 3/11/17

Level II Debridement and Destruc7on

350

300

250
HMC
200
HMC Pymt
150 All WA

100 All WA Pymt

50

0
2011 (709) 2012 (847) 2013 (1,290) 2014 (584)

Level III Debridement & Destruc7on

500
450
400
350
300 HMC
250 HMC Pymts
200 All WA
150 All WA Pymts
100
50
0
2011 (171) 2012 (95) 2013 (390) 2014 (507)

7
 3/11/17

Level III Diagnos7c and Screening Ultrasound

2500

2000

HMC
1500
HMC Paymt
All WA
1000
Al WA Pymts
St Joseph's
500

0
2011 (185) 2012 (209) 2013 (220) 2014 (274)

Level 2 Hospital Clinic Visits

$400.00

$350.00

$300.00

$250.00 Harrison
$200.00 All WA
HMC Payments
$150.00
St Joseph
$100.00

$50.00

$0.00
2011 (8694) 2012 (10,914) 2013 (12,068) 2014** (13,340)
** in 2014 CMS switched to repor;ng all levels (1-5) of Hospital visits together

8
 3/11/17

Some observa7ons
HMC is has signicantly higher charges than average in 7/8 of codes
examined
These charges are increasing over ;me, at a rate of increase higher
than average WA charges
Signicant bumps in charges occurred in 2014 increased rate of
change in 7/8 codes in 2014
Most outlying overcharging is in pa;ent visits
2015 data, not available currently, is essen;al for looking for trends
from merger and monopoliza;on

Some notes on charges

Hospitals get paid much less than charges
Harrison gets 53% payment from private insurers, and 21% from
Medicare.
Medicare reimbursement rates are non-nego;able, private insurers are.
The uninsured pay the full price minus poverty discounts
Discounts are 38% for 300% FPL, 52% for 200% FPL, 100% for 100% FPL
($25k/family of four)
Charity care is based on Charges, not fair market value of the
services