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Hospital withdraws application

Officials plan to submit a revised application for a certificate of need to the state Health Care Commission.

Officials plan to submit a revised application for a certificate of need to the state Health Care Commission.

May 14, 2004|by GREGORY T. SIMMONS

gregs@herald-mail.com

Washington County Hospital officials said Thursday they will withdraw their application to move the hospital, citing difficulties with their financing plan and other problems state officials raised in the application last week.

The hospital administration plans to submit a revised application for a certificate of need to the Maryland Health Care Commission. That oversight board, which must approve the new hospital, expressed concerns with the plan for financing construction.

Withdrawing the application was the best option available after a meeting with state officials last week, said James Hamill, president and corporate executive officer of Washington County Health System, the hospital's parent organization.

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Hamill downplayed the new development.

"I don't even think this is a bump in the road," Hamill said.

Hamill said he hopes a new application can be submitted within the next few weeks. He said he hopes a decision can be reached in September or October and construction can begin shortly after, with an expected opening date in March 2007.

Hagerstown Mayor William M. Breichner, who has publicly questioned the viability of the proposed project, said the hospital's decision is "good for the city."

Asked if the city would contest the new application, he said, "If it's a flawed application, we'll say something."

The mayor said he hoped the hospital would review other sites that initially were rejected, although Hamill has given no indication that is likely.

Thursday's development was the latest involving the bid to close the hospital on East Antietam Street and build a replacement near Robinwood Medical Center.

After hospital officials submitted their application last June, the City of Hagerstown hired a Baltimore law firm and two health care consultants who filed a rebuttal to the hospital's application.

The public dispute between city and hospital officials over the hospital's location has been contentious at times. The sides began meeting again in late April at the hospital's request to try to resolve differences. Unresolved issues include cost estimates, how the hospital will expand utilities and roads to the new site, and when the hospital will get zoning approval.

Last week, the state official in charge of reviewing the application met with hospital officials.

According to a tape recording of the meeting, Maryland Health Care Commission member Robert Nicolay said he was ready to release his recommendation for the hospital's application.

However, citing a number of questions he had about the application, Nicolay urged hospital officials to file a new one. He gave them one week to decide whether to submit the new application or continue with the one they submitted last June.

Hamill said moving ahead in the face of an expected recommendation against granting the certificate of need "wasn't worth the gamble." If hospital officials lost that battle, they would have had to wait a year before they could submit a new application, he said.

By withdrawing the application now, Hamill said, hospital officials will be able to meet with Health Care Commission staff and settle remaining questions before submitting a new application.

The main change to the application will be the financing plan, Hamill said.

The Maryland Health Services Cost Review Commission has said the hospital's initial plan didn't comply with the state policy of allowing an increase in patient rates to pay for construction only after construction is complete.

Hospital officials proposed a financing plan under which patient rates would be increased in phases beginning at the start of construction. The officials said that approach would have saved $65 million in financing costs for the $165 million project.

Hamill said the new application will comply with state policy. To do that, it is estimated that patient rates would have to be increased 6 percent after the hospital is built.

The hospital has asked the Cost Review Commission to make an exception to its policy that Hamill said would allow the hospital to raise rates by an estimated 3 percent during the construction and another 2 percent when construction is complete.

If the Cost Review Commission agrees to that request, the hospital could amend its application. The decision is expected in October.

Hamill said he hopes other questions raised by Nicolay last week will be easily answered, but that won't be clear until hospital officials begin meeting with Health Care Commission staff. Concerns include the number of hospital beds and the cost per square foot.

Hamill said it's a good sign that Nicolay didn't foresee access problems with the Robinwood site. Nicolay said, however, that was contingent upon necessary road improvements being made.

The city has spent at least $292,000 in fees since July to contest the hospital's application for a certificate of need.

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