Without a hospital district, Orcas will lose UW Medicine

This winter the Orcas Island community donated or pledged a staggering $1 million to help bring University of Washington Medicine to manage the Orcas Medical Center.

“I’ve never seen a community raise such a large amount of money from so few people in such a short time,” said UW Executive Director of Neighborhood Clinics Debra Gussin at the medical center’s annual meeting on May 13.

UW Medicine is planning to bring some new models of care to Orcas to support the needs of the community, including telemedicine, which can offer islanders the chance to “see” a specialist without catching the ferry to the mainland. Gussin said telemedicine will increasingly be covered by more carriers. UW also offers Virtual Care, 24/7 phone or video visits with a nurse practitioner for many common conditions. Some insurance already covers Virtual Care visits, and for others the cost is $35. UW has an interactive electronic health record that allows patients to schedule appointments, communicate directly with their care team, view their medical record, labs and X-rays and receive messages about health maintenance. UW has also implemented an e-consultation process for some specialties that would allow primary care physicians on Orcas to consult directly with UW specialists through the electronic medical record and in many cases provide treatment recommendations right away for the patient without a trip to the specialist or an additional charge.

“This is regularly happening this past year with UW medicine,” said Gussin. “Primary care physicians love it; patients love it.”

UW Medicine also provides an integrated behavioral health model that involves a team approach including social workers, psychiatrists and the primary care team to address all aspects of well being.

UW has made an initial three-year commitment to Orcas Island and expects to be in operation before Oct. 1.

But primary care in rural areas like San Juan County tends to be unprofitable, and UW Medicine will require Orcas Medical Center to meet its estimated annual deficit of $550,000-$600,000 in order to continue managing the clinic into the future. And the only way OMC believes it can meet that deficit is through the creation of an island-wide hospital taxing district.

“This is a community decision, and we get to decide whether we have the university here or not,” said OMC treasurer Kevin Walstrom, a new board member who has been deeply involved in the negotiating process with UW. (Walstrom completed his 30-year healthcare career as senior vice president and chief financial officer for PeaceHealth.) “Quite frankly, there’s no one else standing in line to take their place,” he said. “It’s really hard right now to get a physician into a rural setting; it’s a tough job and there’s a high demand for primary care physicians.”

According to Gussin, UW analysis indicates they will be able to serve all islanders. UW will accept Medicare, Medicaid and Apple Health, and UW Medicine also offers a charity care policy for people who are uninsured. They have contracts with the major commercial insurance carriers and hope to soon complete negotiations to accept GroupHealth (now owned by Kaiser).

Of the donated funds, startup costs will use up $409,000 to rewire the building, transfer records to the electronic Epic system and other IT tasks. Walstrom estimates the donations gathered this winter will carry the center through April 2018, adding, “I’m hopeful that when UW gets here, they’ll actually see better volume and better financial results.”

With community support, a tax district could be passed as soon as April 2018; actual tax funds could be available the next April, with several options available for bridge funding provided the district structure was in place.

If a hospital taxing district is rejected by voters this year, board members say they will be out of options, and the medical center would have to close.

Islanders have expressed frustration over the turnover of a number of medical staff at the center, with whom patients had a valued rapport. But when attendees at the OMC annual meeting asked for assurance that the board won’t interfere with hiring and firing medical center staff under UW, Gussin responded firmly, “It is [UW’s] clinic to run, and we will be running it.”

If a hospital taxing district were created, neither UW nor the Orcas Medical Center would control the funds raised; according to law, the district’s board of commissioners would decide how to allocate the money to help provide the best possible medical care for all islanders.

Orcas Medical Center is not the only primary care clinic struggling to break even. As the Sounder interviewed physicians, their staff and various board members, it was clear that most people familiar with the industry believe independent, fee-for-service rural primary care has become a money-losing model that simply can no longer operate without infusions of cash from other sources.

“Every practice here is being subsidized,” stated Dr. David Shinstrom, of Orcas Family Health Center.

Shinstrom’s practice also runs on a deficit, which is offset each year by the fact that he does not take any salary (a $200,000 value), by about $10,000 in donations raised by the OFHC board, and by a $100,000 shortfall that goes onto a long term liability balance sheet, to be recouped through a Medicare reimbursement program the clinic receives because of its “Health Professional Shortage Area” designation.

“We both truly believe [a hospital district for Orcas Island] is the only long-term solution,” said office manager Aaimee Johnson.

That said, a significant part of the financial difficulty is that Orcas Island’s population of roughly 5,000 is spread between three medical practices (OMC, Orcas Island Family Medicine and Orcas Family Health Center), creating redundancies and inefficiencies in providing care.

According to Johnson, between 2014 to 2016 Orcas Family Health Center saw 2,873 different Orcas Islanders, 739 non-Orcas county residents and 576 patients from off island. She said the clinic’s deficit has lessened in past years as more patients come to the practice.

According to Gussin, publicly reported data shows 11,760 medical visits took place on Orcas Island in 2015; of those, 5,503 visits occurred at the medical center.

“I’m very much in favor of a hospital taxing district,” said Shinstrom, but adds, “My concern is, it’s irresponsible to pay the overhead of three separate practices; I cannot support that.”

With 41 years of medical service under his belt, Shinstrom says he would like to retire, but his goal has always been to help ensure high-quality, sustainable, and patient-focused medical care on the island before doing so. He adds, “I think there has got to be one medical practice.”

Orcas Island Family Medicine, owned by Dr. David Russell, also employs a nurse practitioner. The Sounder was unable to obtain patient statistics or financial data from Russell at this time.

According to Gussin and her coworker Jay Priebe, Director of Rural Health Operations at UW Medicine, Orcas Medical Center currently has the capacity to accommodate four or five physicians and serve nearly all islanders.

“We have a pretty brisk operational model that we’re used to, to turn over exam rooms,” said Gussin, who plans to optimize the center’s eight exam rooms. If all islanders were to obtain their primary care at the center under UW, it would be “definitely more advantageous financially,” she said, but it’s doubtful even a single clinic serving the entire island’s population could be solvent without financial assistance.

“There’s pretty much no way to run a small primary care clinic in that small community that is not going to take some form of subsidy,” said Gussin.

The UW plans to start out with somewhere around 1.6 to 1.8 FTE of providers, and is looking at how best to provide after-hours care outside of 9 to 5, Monday – Friday.

“We’re still analyzing the volumes and patterns of demand, but we’re optimistic we can come up with a really good plan for after-hours calls,” said Gussin. Last year, around 228 calls came in after hours. Most were during the summer and on Saturdays, so UW will consider staffing those times appropriately to meet the need.

“I think this is a huge opportunity for both the residents and the tourists, to provide better access to care on Saturdays,” said Gussin, especially for working islanders who have a hard time missing work during the week for a medical appointment.

Orcas Island emergency responders currently place after-hours calls to all three island physicians on a case-by-case basis, depending on the urgency of each situation and the patient’s primary care provider. For visitors, said fire chief Scott Williams, “Generally we’ve looked at the medical center as the urgent care facility.”

Open positions for the medical center are now posted on the UW Medicine website.

“There are a fair number of providers on Orcas Island who are very interested and have indicated their intention to apply,” said Gussin. “People are really excited to be part of the UW Medicine family.”

“There’s years of history here; we’re not going to be able to fix it overnight,” Gussin said at the meeting, but added, “The clinic is absolutely for everyone. We are coming in as Switzerland and would welcome other providers to join us. We want to provide the best possible clinic.”

UW Medicine took management of a clinic in Smokey Point last year, and Gussin said all of the staff there who chose to apply for positions were hired.

“We have a pretty good track record in this regard,” she said. “It’s gone very smoothly. We had no desire to disrupt what’s working well; we wouldn’t want to come in and turn things upside down. We gave existing employees first consideration to any position. If we got to a place where we decided to combine with another practice on the island, to grow OMC in that way, we would consider giving any existing staff that same opportunity. They know their patients; they have those relationships; they know the community. We would really value having their continued support and involvement with the clinic.”

Orcas Islanders rejected a taxing district in the year 2000. When Lopez Island Medical Clinic was notified last fall that it would lose its Island Hospital affiliation just like Orcas Medical Center, the community looked at its operating deficit and recognized a need for ongoing financial support in order to continue serving the community. This April, Lopez Islanders overwhelmingly voted for the creation of a hospital taxing district, and have also contracted UW Medicine to operate their clinic.

Per state RCW 70-44-060, the maximum tax rate for a hospital district is 75 cents per thousand dollars of assessed value, or $337.50 per year for a property assessed at $450,000 (http://app.leg.wa.gov/rcw/default.aspx?cite=70.44.060). San Juan Island voters approved a hospital taxing district in 1989. The levy rate actually paid by San Juan Islanders for the 2017 tax year is 44 cents per thousand, which raised $1,270,637.

Commented Walstrom, “I really personally got involved because I want to see a sustainable medical community long-term, and UW brings a whole lot of great things to the island. They’ve got great technology; they’re really patient-focused, looking at a patient model that meets the needs of the patients and I think it’s going to provide a lot of benefit for the people of Orcas Island.”