North Valley forges ahead

North Valley Hospital will proceed Friday with bids on subcontracts for its new building in spite of bureaucratic roadblocks to $26 million in financing.

Craig Aasved, North Valley's administrator, said at a public meeting Monday that the hospital probably would proceed, too, with $1 million in site preparation to avoid delays and to keep Swank Enterprises as its general contractor.

"We're probably going to go ahead and make that investment in our property," Aasved said.

The hospital scheduled the community meeting in Whitefish to explain the change in regulations holding up its financing. More than $1 million a year in Medicare/Medicaid revenue for North Valley is jeopardized.

Participants at the lightly attended meeting voiced their support for the hospital and asked how to help break the bureaucratic logjam. A second meeting was scheduled Tuesday evening in Columbia Falls.

Kip Smith of the Montana Hospital Association provided a short history of the critical access designation at the heart of North Valley Hospital's status.

He explained that the program began with a model project in Montana to help rural hospitals with large numbers of Medicaid and Medicare patients stay financially viable.

"It has since spread to 45 states," Smith said.

With designation as a critical access hospital, a rural health-care facility receives larger Medicare/Medicaid payments than urban hospitals.

North Valley Hospital received its critical access certification in November 2003. Under a state waiver, the hospital was approved even though it was located closer than the federally mandated 35 miles to the nearest other hospital.

Smith said the problem for North Valley cropped up when Congress passed legislation last August which ends the state waiver program in January 2006. The provision was buried in the massive Medicare reauthorization which included the new prescription drug coverage.

Unfortunately for North Valley, the legislation didn't address whether a waivered facility retains its critical access advantage should it relocate.

North Valley Hospital's site for its new facility is one mile south of the old hospital near the intersection of Montana 40 and U.S. 93.

In spite of numerous promises, the Centers for Medicare and Medicaid Service have not given North Valley Hospital written assurance that it will keep its critical access designation at a new facility.

According to Aasved, the hospital set May 2 to start construction and May 12 for a ceremonial ground-breaking after Medicare officials assured Sen. Max Baucus, D-Mont., that the move posed no problem.

However, the hospital heard a different story just two to three weeks ago from the Department of Housing and Urban Development, the agency processing its application for a $26 million construction loan guarantee. The agency now wants written assurance from Medicare that the designation will remain.

"So we are right in the middle of limbo land," Aasved said.

He said the good news was that HUD continues to process the application.

Aasved said the latest promised date for a ruling from Medicare is the first of May, followed by a 60-day comment period.

To avoid a costly construction delay, he said the board decided to proceed with bidding.

Aasved said site preparation will include bringing utilities and a street up from the highway. With the site prepared, the hospital could have a foundation installed by late summer or early fall.

If it had to sell the property under the worst scenario, Aasved said, the hospital could possibly recoup its investment.

Answering questions at the Whitefish meeting, Aasved said the hospital would have to invest millions to remain in its old building to overcome seismic and other structural problems.

After that investment, he said the remodeled building would have a useful life of eight more years compared to 30 years for a new hospital. Aasved said the hospital would need the trailer park property next door to build a new facility at the old location.

The looming questions about North Valley's project are affecting more than the construction schedule. They have also upset a major campaign to raise millions in private dollars to lower the indebtedness needed to build the new hospital.

"The hospital campaign committee and the board will regroup this Wednesday," Aasved said.

He asked members of the audience to help Montana's congressional delegation resolve the problem by signing letters of support. The hospital will fax the letters to Baucus, Rep. Dennis Rehberg and Sen. Conrad Burns.

According to Smith, the public pressure on the agency mounted after North Valley Hospital's alerted the local media last week. He heard talk of the dust-up on an out-of-state trip.

"I heard about this hospital in Montana that was stirring things up," he said with a laugh.

Denise Smith, Burns' field representative, attended the Monday meeting. She said the senator became involved in North Valley's dilemma after the hospital contacted him last week.

She expected Burns to make personal inquiries this week to help resolve the problem.

Reporter Candace Chase may be reached at 758-4436 or by e-mail at cchase@dailyinterlake.com