Montesano Mayor Vini Samuel has given official notice that her city wants to split off from Grays Harbor Community Hospital District 2.
Samuel sent a letter to District 2 board president Maryann Welch on Friday asking for a resolution from the district allowing Montesano to “de-annex” — and saying that if District 2 won’t endorse that by resolution, Montesano will take steps to force a districtwide vote on the issue. Samuel said the city would like an answer by the end of September.
District 2 operates Grays Harbor Community Hospital in Aberdeen and three clinics, including one in Montesano.
Samuel’s letter, read in part at Tuesday’s District 2 hospital board meeting, said the city wants to begin a partnership with District 1, which operates Summit Pacific Medical Center in Elma. She said that partnership could pursue opening a clinic in Montesano.
The Community Hospital Board was taken aback by the letter. Several members said the request was a complete surprise.
The board took no action on Tuesday, but every member present was clearly cool to the plan. It would mean losing the property taxes from Montesano, and potentially losing patient volumes to a new clinic there, should one be built.
The loss of tax revenue would be a huge blow to Community Hospital.
The development comes as the Aberdeen hospital, which faced dire financial problems last winter and spring, is showing some signs of recovery — mostly brought about by major layoffs and the addition of a management consulting firm called Navigant.
A key component of the recovery plan was new status as a rural hospital, which gives the district a higher reimbursement rate for Medicare and Medicaid patients. At Tuesday’s board meeting, members learned that the new status is already in effect at two of the clinics. Initial estimates put the additional revenue at $1.2 million a year, but that could go as high as $4 million, based on a later study, said Niall Foley, District 2’s executive director of finance.
Samuel’s letter said District 2 approached the city in August 2016 about building a clinic in Montesano. It said District 2 pulled out of those negotiations, prompting the city to look at other options, including “de-annexation, partnerships with for-profit hospitals and even the creation of a Hospital District 3.”
Samuel said the city has chosen to withdraw from District 2 and pursue a partnership with the Summit Pacific district.
“Hospital District 1 expressed the greatest commitment to serve the residents of Grays Harbor, including the citizens of Montesano and … this partnership would help address the doctor shortage in East County and all of Grays Harbor,” Samuel wrote to Welch. “If we do not hear from you by end of September as to whether you will pass such a resolution, it is my understanding that a committee will form to allow de-annexation by petition and public vote.”
Welch and other board members said they want to meet with Samuel and other Montesano officials to look for an option that would keep District 2 intact.
Welch said former hospital executive Larry Kahl had some discussions with Montesano officials in 2016, but she said she wouldn’t characterize them as negotiations. She didn’t say what ended those talks.
Board member Robert Torgerson called Samuel’s request an attempt to “have it both ways.” If people in Montesano don’t support the hospital with tax dollars, he asked, “do they pay more if they need to come to this Level 3 trauma center?” Of course, they wouldn’t, Torgerson said, but it would place a greater burden on the rest of the tax base in District 2.
John Warring, a chief shop steward for the United Food and Commercial Workers Union at Community Hospital, spoke during the public comment portion of the board meeting. He said he would “strongly oppose any action that takes part of the area out of our district. My union has been hammered by layoffs, and anything that adversely affects our finances, I would reject out of hand.”
