Background on the San Juan Island Hospital District Contract with PeaceHealth

Also check out the San Juan Islander site, which has been tracking developments related to the Catholic hospital that opened in Friday Harbor last November.  

State Senator Kevin Ranker, who lives in the San Juan Islands, has asked Washington State Attorney General Bob Ferguson for a formal opinion related to a 50-year public subsidy on San Juan Island for a “Catholic health care ministry.”  (This is the term the Catholic Church and the bishops now use for Catholic hospitals.)  The American Civil Liberties Union estimates that 47% of acute care hospital beds in Washington State will be Catholic-controlled by the end of 2013.
The answer to Ranker’s question could have an important bearing on hospital district contracts throughout the state.

The specific question being asked is:

“Does a public hospital district violate RCW 9.02 if it solely contracts with a provider of health care services that refuses to provide services or information including contraceptive care, voluntary termination of pregnancy care, and other services that relate to a patient’s fundamental rights, as described in RCW 9.02.100, and the public hospital district does not provide “substantially equivalent benefits, services, or information” with respect to voluntary termination of pregnancy care, as required by RCW 9.02.160?”

9:02.100 is the initiative passed into law by Washington voters on November 5, 1991.

Text of 9.02.100, the law that governs Reproductive Privacy.

Reproductive privacy — Public policy.

The sovereign people hereby declare that every individual possesses a fundamental right of privacy with respect to personal reproductive decisions.

Accordingly, it is the public policy of the state of Washington that:

(1) Every individual has the fundamental right to choose or refuse birth control;

(2) Every woman has the fundamental right to choose or refuse to have an abortion, except as specifically limited by RCW 9.02.100 through 9.02.170 and 9.02.900 through 9.02.902;

(3) Except as specifically permitted by RCW 9.02.100 through 9.02.170 and 9.02.900 through 9.02.902, the state shall not deny or interfere with a woman’s fundamental right to choose or refuse to have an abortion; and

(4) The state shall not discriminate against the exercise of these rights in the regulation or provision of benefits, facilities, services, or information.

Background on the case and why it matters:

San Juan Island is part of the San Juan Islands of NW Washington.  San Juan Island is the most densely populated of the four ferry-served islands in the San Juans, with an estimated 6200 full-time residents and a summer population that swells to about twice that. It is about an hour and ten minutes away from the mainland by ferry and approximately 35 minutes away from Seattle by plane.

In early 2009, San Juan Hospital District commissioners signed a subsidy agreement with PeaceHealth, which owns and operates hospitals in Oregon, Washington, and Alaska.  The hospital was touted as an upgrade and replacement for Interisland Medical Center (IMC), a nonfaith-based medical center that provided primary care, including ob-gyn care, and urgent care services.   With the IMC facility, patients with conditions requiring emergency hospitalization were typically stabilized and then flown off-island to Seattle or Bellingham hospitals via a Life-Flight helicopter or by small plane.  (A cadre of volunteer pilots regularly flies patients for free to the mainland for serious conditions, including ongoing cancer treatments.)

Records of public meetings show that when islanders questioned the Catholic affiliation of PeaceHealth in hospital district meetings, they were told that there were no substantive issues, and that if they still had concerns, they should speak to Sister Pruitt, the senior nun in the PeaceHealth organization.

In November, 2012, the new, taxpayer-subsidized 10-bed Catholic hospital, owned and operated by PeaceHealth, opened in Friday Harbor.  It is the only hospital in the San Juan Islands.    PeaceHealth, which emphasizes that it is a charitable nonprofit, reported a $122 million surplus on its 2010 990 return.

A Bishop Intervenes and Islanders Get Worried

In the Spring of 2012, islanders learned that PeaceHealth, which had quietly and for many years done lab tests for Planned Parenthood patients (including San Juan Island residents) at its labs in Bellingham, WA, told Mt. Baker Planned Parenthood’s CEO that it would no longer be running such tests at the request of the local bishop, Archbishop J. Peter Sartain of Seattle, who is the person tasked by The Vatican with bringing Catholic nuns into line with church doctrine.  Because PeaceHealth runs the only lab in the area equipped to do such tests, this refusal on religious grounds would have put patient lives at risk.  (In the case of an ectopic pregnancy, time is of the essence, and the workaround PeaceHealth proposed would have added additional costs and delays.)  The Planned Parenthood board, to their credit, essentially said “No, that’s unacceptable.”

To the Planned Parenthood board, PeaceHealth’s decision to acquiesce to the bishop on an issue so important to patient health and safety meant PeaceHealth was no longer prioritizing patient wellbeing, but instead was prioritizing the directives of the bishops.

Concerned Islanders Review the Contract

Concerned islanders who heard of the Planned Parenthood/bishop incident then asked the San Juan Island hospital district for a copy of its agreement with PeaceHealth, and received it through a public records request.  Note that because the process of getting a hospital was led by a few civic-minded individuals, there was no RFP process prior to the contract being executed, and PeaceHealth was the only provider with which the district entered into serious talks.  (By contrast, in the Skagit area of Washington, commissioners are currently requesting proposals from five potential hospital providers.)

Essential terms of the 50-year contract between the San Juan Island hospital district and PeaceHealth:

  • PeaceHealth is entitled to 95-97% of all hospital district tax revenues (a small percentage is needed to fund administration and emergency response).  The current subsidy is approximately $1.3 million a year.   These taxes are paid by property owners on San Juan Island.
  • PeaceHealth retains all revenues.
  • PeaceHealth maintains all rights to deliver only those services that are consistent with its values and mission and it also has the right to acquire, merge, or be acquired by another entity that shares its mission.  (The San Juan Island district commissioners did not know, at the time the agreement was signed in 2009, that PeaceHealth had been in merger/acquisition/partnership discussions with Catholic Health Initiatives for approximately two years.)
  • PeaceHealth negotiated a noncompete clause and a right of first refusal clause for any additional health services the district might offer in the future plus the right to decide who qualifies as a suitable tenant for adjacent County-owned property.  (Some people have called this the “Planned Parenthood Refusal Clause.”)
  • There would be no ongoing independent oversight of the services PeaceHealth provides.  Instead, a citizens’ advisory committee that operates under delegated authority from PeaceHealth itself would report to PeaceHealth on issues of concern.  The hospital district commissioners would receive semi-annual reports with metrics related to, among other things, the number of patients served and satisfaction levels.  Theoretically, the contract could be dissolved for a material breach by either party, but given the protections for PeaceHealth built into the contract, it’s not clear what could surpass that very high legal hurdle.

In mid-2012, after five years of discussions but a few months before the hospital opened, PeaceHealth announced plans to merge with a division of Catholic Health Initiatives, an ultraconservative Catholic health ministry sponsored by the Holy See in Rome, which requires all of its employees to follow all of the bishops Ethical and Religious Directives for Catholic Health Care as a condition of employment.

The Directives forbid:

  • contraception
  • tubal ligation
  • vasectomies
  • abortion under any circumstances, including in the case of an ectopic pregnancy
  • in vitro fertilization
  • any participation with Washington’s Death with Dignity Law, a law that was supported by 75% of San Juan Island voters

The Directives also require patients in persistent, vegetative comas (similar to Terri Schiavo) to be kept on a feeding tube, despite any Advance Directive to the contrary.

In the spring of 2013, after pressure from activists, PeaceHealth and CHI announced that the merger talks were suspended, although both indicated they will continue to look for ways to work together.

It should be noted that when the proponents of the deal with PeaceHealth were courting donor support, they provided assurances that PeaceHealth would not be imposing strict religious requirements because the PeaceHealth nuns were “feisty” and independent of the bishops.  

Once the merger deal with CHI was announced, more than 300 islanders signed on to a letter to the hospital district commissioners asking them to specify how patient and taxpayer rights would be protected over the 50-year life of the agreement.   In a public meeting to discuss these concerns, senior PeaceHealth officials tried to insist that the bishops’ directives were open to interpretation, upon which the senior nun at PeaceHealth (who had joined the meeting by speakerphone) broke in to assert:  “We will not disobey the bishops.”

Later, the hospital district commissioner issued a more formal response, the general tone of which was “We know what we’re doing.  Trust us as we trust PeaceHealth.”

In January of 2013, the American Civil Liberties Union weighed in through a letter to the hospital district commissioners, advising them that the agreement they signed with PeaceHealth was likely unlawful and unconstitutional.   The hospital district commissioners were advised during a public meeting to seek an opinion from the Attorney General (as the chief lawyer for all state agencies, he’s in effect their lawyer), which they refused to do.  Subsequently, more than 130 citizens signed a letter asking State Senator Kevin Ranker to request an opinion from the AG about whether the agreement is lawful.

Why It Matters

There are many reasons this case is important.  Chief among them is that Washington voters have consistently made clear that patients should have the rights to make their own decisions about their health care.  Washington’s Reproductive Privacy Act was voted into law by Washington voters in 1991 in order to ensure that women would always have access to the full range of reproductive health services.  Because the San Juan Island hospital is supported with tax dollars, it seems unfair and unlawful that taxpayers and patients on San Juan Island should be subjected to health care that is restricted by the “moral authority” of the Catholic bishops.  This issue is not isolated to San Juan Island.  As mentioned previously, the ACLU estimates that 47% of Washington’s acute care hospital beds will be under the bishops’ control by the end of 2013.

Washington’s Constitution says that “No public money or property shall be appropriated for or applied to any religious worship, exercise or instruction, or the support of any religious establishment.”  The Catholic bishops are very clear to say that “Catholic health ministries” (bishop-speak for Catholic hospitals) are religious institutions and their religious doctrine has to be obeyed.

The American Congress of Obstetricians and Gynecologists have made clear that women should have access to reproductive services and that birth control should be made easily available.  Taxpayers should not be asked to support conservative religious institutions that restrict health care services in ways that undermine women’s health.

Catholic Care Doesn’t Mean Less Expensive Care

The opening of the hospital and the concerns about cutbacks in services for religious reasons were two of the top ten stories on San Juan Island for 2012.  Since the hospital has opened, costs for services, especially for urgent care, have gone up dramatically.  In the new facility, which cost approximately $30 million, $10 million of which was donated by islanders, all patients are charged a facility fee, and patients are treated either in the emergency room or by appointment in exam rooms.  As a PeaceHealth doctor made clear, patients who come to the new emergency room, whatever the circumstances, are treated as hospital emergencies, with all the precautionary care and costs implicit in that assumption.  Since Medicare patients are reimbursed at 101% of cost at the new hospital (which was an incentive for building it), the additional costs have fallen mostly on working islanders, who are typically either underinsured or not insured.  This letter from a father whose son made a recent visit to the hospital is one of many stories that have helped spark an island-wide discussion about hospital costs vs. benefits that is still underway.

This entry was posted in Uncategorized and tagged , , on

One thought on “Background on the San Juan Island Hospital District Contract with PeaceHealth

  1. elaine phelps

    The 32nd LD Democratic Organization today adopted the attached resolution on health care mergers

    Elaine Phelps


Leave a Reply

Your email address will not be published. Required fields are marked *