Evaluation CN20-48

STATE OF WASHINGTON

DEPARTMENT OF HEALTH

Olympia, Washington 98504

October 20, 2020

Theresa Boyle, Senior Vice President Strategy, Marketing, and Communication MultiCare Health System

Sent by e-mail: [email protected]

RE: Certificate of Need Application #20-48 MultiCare Health System

Dear Ms. Boyle:

We have completed review of the Certificate of Need application submitted by MultiCare Health System. The application proposes to establish an adult elective percutaneous coronary intervention (PCI) program at MultiCare Valley Hospital located in Spokane County. Enclosed is a written evaluation of the application.

For the reasons stated in this evaluation, the department has concluded that the project is not consistent with the Certificate of Need review criteria identified below, and a Certificate of Need is denied.

Washington Administrative Code 246-310-210 Need Washington Administrative Code 246-310-220 Financial Feasibility Washington Administrative Code 246-310-230 Structure and Process of Care Washington Administrative Code 246-310-240 Cost Containment

This decision may be appealed. The two appeal options are listed below.

Appeal Option 1: You or any person with standing may request a public hearing to reconsider this decision. The request must state the specific reasons for reconsideration in accordance with Washington Administrative Code 246-310-560. A reconsideration request must be received within 28 calendar days from the date of the decision at one of the following addresses:

Mailing Address: Physical Address Department of Health Department of Health Certificate of Need Program Certificate of Need Program Mail Stop 47852 111 Israel Road SE Olympia, WA 98504-7852 Tumwater, WA 98501

Theresa Boyle, MultiCare Health System Certificate of Need Application #20-48 October 20, 2020 Page 2 of 2

Appeal Option 2: You or any person with standing may request an adjudicative proceeding to contest this decision within 28 calendar days from the date of this letter. The notice of appeal must be filed according to the provisions of Revised Code of Washington 34.05 and Washington Administrative Code 246-310- 610. A request for an adjudicative proceeding must be received within the 28 days at one of the following addresses:

Mailing Address: Physical Address Department of Health Department of Health Adjudicative Service Unit Adjudicative Service Unit Mail Stop 47879 111 Israel Road SE Olympia, WA 98504-7879 Tumwater, WA 98501

If you have any questions, or would like to arrange for a meeting to discuss our decision, please contact the Certificate of Need Program at (360) 236-2955.

Sincerely,

Eric Hernandez, Program Manager Certificate of Need

Enclosure

EVALUATION DATED OCTOBER 20, 2020, FOR THE CERTIFICATE OF NEED APPLICATION SUBMITTED BY MULTICARE HEALTH SYSTEM PROPOSING TO ESTABLISH AN ADULT, ELECTIVE PERCUTANEOUS CORONARY INTERVENTION PROGRAM AT MULTICARE VALLEY HOSPITAL LOCATED WITHIN SPOKANE COUNTY

APPLICANT DESCRIPTION MultiCare Health System (MHS), a Washington nonprofit corporation, is an integrated healthcare delivery system providing inpatient, outpatient, and other healthcare services primarily to the residents of Pierce, South King and Spokane Counties and, with respect to pediatric care, much of the southwest Washington area. MHS currently operates eight acute care hospitals and one behavioral health hospital. Below is a list of the licensed healthcare facilities solely owned and/or operated by MHS. [source: MultiCare Health System website and MHS 2018 Audited Financial Statements]

Hospital Ambulatory Surgical Facility Tacoma General/Allenmore Hospital1 MultiCare Rockwood Eye Surgery Center Mary Bridge Children’s Hospital and Health Center MultiCare Good Samaritan Hospital MultiCare Auburn Medical Center In Home Services MultiCare Covington Medical Center Mary Bridge Infusion and Specialty Services MultiCare Deaconess Hospital MultiCare Home Health, Hospice, and MultiCare Valley Hospital Palliative Care NAVOS (psychiatric hospital

In addition to the nine hospitals listed above, MHS has 50% ownership interest and CHI Franciscan Health has 50% ownership in an entity named ‘Alliance for South Sound Health’ that owns and operates a psychiatric hospital known as Wellfound Behavioral Health Hospital.2 The psychiatric hospital operates 120-beds in Tacoma within Pierce County.

PROJECT DESCRIPTION This project focuses on MultiCare Valley Hospital located in Spokane County. The hospital, referenced in this evaluation as ‘Valley Hospital,’ is licensed for a total of 123 acute care beds and located at 12606 East Mission Avenue in Spokane Valley [99216]. The hospital provides a variety of healthcare services to the residents of Spokane County and surrounding communities. Table 1 below shows Valley Hospital’s 123 beds broken down by service. [source: DOH hospital licensing files]

Department’s Table 1 MultiCare Valley Hospital Configuration of Licensed Acute Care Beds Services Provided Total Beds General Medical Surgical 123 Total 123

As of the writing of this evaluation, Valley Hospital provides a variety of general medical surgical services, including obstetric services, intensive care, and emergency services. The hospital is currently a Medicare and

1 While Tacoma General Hospital and Allenmore Hospital are located at two separate sites in Tacoma, they are operated under the same hospital license: HAC.FS.00000176. 2 Initial license issued on April 30, 2019—HPSY.FS.60919628. Medicaid provider and holds a three-year accreditation from the Joint Commission3. [source: DOH hospital licensing files]

MHS submitted this application proposing to establish an adult, elective percutaneous coronary intervention (PCI) program at Valley Hospital. The project would increase the types of services provided at the facility, but does not propose to increase the total number of acute care beds. The applicant provided the following description of the new services. [source: Application, pdf 13] “The Valley Hospital catheterization laboratory ("cath lab") has been performing diagnostic cardiac cath services in one (1) mixed use cardiac cath/interventional radiology lab in December 2019 these facilities were expanded to include one (1) additional cardiac cath lab in order to expand cardiovascular services to include urgent and emergent cardiac catheterizations and PCI. With the Certificate of Need application, Valley Hospital seeks to include elective PCI within its services offered.”

MHS states there is no capital expenditure associated with the addition of a PCI program and provided the following information to support this position. [source: Application, pdf 26 and May 12, 2020, screening response, pdf10] “MultiCare anticipates no start-up or initial operating expenses. The expansion of the emergent PCI program to include elective PCI services requires no construction, start-up costs, or capital expenditures. Thus, there are no financial impacts from capital expenditures of the project. Further, as stated above, Valley intends to provide emergent PCIs whether this CN application is approved or not.”

When this application was submitted in February 2020, the hospital did not provide emergent PCI procedures. Within this application, MHS provided the following discussion about establishing an emergent PCI program at Valley Hospital. [source: Application, Project Introduction and Rational, pdf 5] “In July 2017, MultiCare Health System acquired Deaconess and Valley hospitals within Spokane County. In the process of evaluating and adjusting programs and services to best meet resident need, MultiCare determined that improved local access to Percutaneous Coronary Intervention (PCI) services was very important. MultiCare has observed a great number of Spokane Valley residents visit out-of-area providers to receive cardiology services. This indicates a deficiency of services within Spokane Valley, and with this in mind, Valley Hospital has expanded clinic services offerings, inpatient capabilities, and catheterization lab services to include additional diagnostics and lower acuity devices. Furthermore, MultiCare has resolved to begin offering emergent PCI services at Valley Hospital. In December 2019, an additional multi-use catheterization laboratory ("cath lab") room was completed to meet this need.

MultiCare is thus in the process of fully implementing an emergent PCI capability at its Spokane Valley Hospital to improve local access in Eastern Spokane County, a process that is expected to be completed in early 2021. The development of emergent PCI services at Valley Hospital is occurring independently of any ability to provide elective PCI services. However, emergent and elective PCI services are highly complementary programs, in that addition of elective services to an existing emergent program requires little additional investment but significantly expands local access for non-urgent cardiac services to residents of East Spokane County. An elective PCI program, since it increases program utilization, also improves clinical expertise and operational efficiency.”

If approved, MHS states that the adult, elective PCI program would be available in February 2021 and provided the following explanation and detail for its implementation timeline. [source: Application, pdf 16]

3 The Joint Commission is an independent, not-for-profit organization that accredits and certifies more than 22,000 health care organizations and programs in the United States. Joint Commission accreditation and certification is recognized nationwide as a symbol of quality that reflects an organization’s commitment to meeting certain performance standards. [source: Joint Commission website, May 19, 2020] Page 2 of 65 “As described above, independent of this proposed project, Valley Hospital has constructed and is in the process of staffing one (1) additional catheterization lab to supplement their current mixed use cardiac cath/lnterventional radiology lab. By February 1, 2021, Valley Hospital will have two operational catheterization labs available to treat urgent/emergent PCIs. The proposed project is for certificate of need ("CN") approval to perform elective PCIs in these labs as well, leading to increased PCI volumes at Valley Hospital. There is expected to be a modest incremental increase in staffing required for direct PCI patient care over time.

The timeline for non-project related construction of the additional emergent PCI catheterization lab is as follows:

25% ready- December 2019 • Completion of additional Cardiac Cath Lab

50% ready - August 1, 2020 • Completion of education needs assessment for support services – ICU/PCU staff and education / competency plan • Completion of communication plan for support services - Patient registration, Pharmacy, Dietary, Supply Chain, Billing/Coding • Completion of cardiovascular admission recovery unit conversion, staff recruitment

75% ready - December 1, 2020 • Completion of physician recruitment • Completion of cath lab staff training, support unit staff training • Completion of supply inventory completed, min/max established, integrated into supply chain

Complete and offering services - February 1, 2021”

APPLICABILITY OF CERTIFICATE OF NEED LAW This project is subject to review as the establishment of a new tertiary service not previously provided by the hospital under the provisions of Revised Code of Washington (RCW) 70.38.105(4)(f) and Washington Administrative Code (WAC) 246-310-020(1)(d).

EVALUATION CRITERIA WAC 246-310-200(1)(a)-(d) identifies the four determinations that the department must make for each application. WAC 246-310-200(2) provides additional direction in how the department is to make its determinations.

To obtain Certificate of Need approval, the applicant must demonstrate compliance with the criteria found in WAC 246-310-210 (need); 246-310-220 (financial feasibility); 246-310-230 (structure and process of care); 246-310-240 (cost containment). Where applicable, the applicant must demonstrate compliance with the above general criteria by meeting the Adult Elective Percutaneous Coronary Interventions (PCI) Without On- Site Cardiac Surgery Standards and Forecasting Methodology outlined in WAC 246-310-700 through 755.

TYPE OF REVIEW As directed under WAC 246-310-710, the department accepted this project under the year 2020 adult, elective PCI Concurrent Review Cycle. The purpose of the concurrent review process is to comparatively analyze and evaluate competing or similar projects to determine which of the projects may best meet the identified need. For PCI projects, concurrent review allows the department to review PCI applications proposing to serve the same PCI planning area [as defined in WAC 246-310-705(5)] simultaneously to reach a decision that serves the best interests of the planning area’s residents. Page 3 of 65

Valley Hospital is located in planning area #1 as defined in WAC 246-310-705(5). The planning area includes the following nine counties: Adams, Asotin, Ferry, Grant, Lincoln, Pend Oreille, Spokane, Stevens, and Whitman.

Consistent with historical practice, the department calculated the statewide PCI numeric need and released the supporting methodology by posting it to its website prior to the end of January 2020, which is when letters of intent are due. After the statewide numeric methodology was published, a large hospital with both open heart surgery and PCI capabilities closed. The hospital was located in Yakima County, within PCI planning area #4. Given this significant change in factors relied on by the department when calculating the statewide numeric methodology, in late September 2020, the department recalculated the numeric methodology to take into account the closure of the Yakima County hospital. The closure of a Yakima County hospital in PCI planning area #4 and the re-calculation of the statewide numeric methodology does not affect the calculations for PCI planning area #1 which is the planning area of this project submitted by MHS.

During the year 2020 PCI concurrent review, no other application was submitted proposing to establish a PCI program in planning area #1. As a result, the department reviewed this project under a regular review schedule as allowed under WAC 246-310-710(3). The review timeline is summarized below.

APPLICATION CHRONOLOGY Action MultiCare Health System Letter of Intent Submitted January 31, 2020 Application Submitted February 26, 2020 Department’s pre-review activities • DOH 1st Screening Letter March 31, 2020 • Applicant's Responses Received May 12, 2020 • DOH 2nd Screening Letter May 29, 2020 • Applicant's Responses Received July 10, 2020 Beginning of Review July 21, 2020 End of Public Comment/No Public Hearing Conducted • Public comments accepted through end of public comment August 25, 2020 Rebuttal Comments Received September 4, 2020 Department's Anticipated Decision Date4 October 20, 2020 Department's Actual Decision Date October 20, 2020

AFFECTED PERSONS “Affected persons” are defined under WAC 246-310-010(2). In order to qualify as an affected person someone must first qualify as an “interested person” defined under WAC 246-310-010(34).

For this project, the following entity requested affected person status.

Providence Health & Services Washington Providence Health & Services Washington submitted a request for interested and affected person status for this application. In Washington State, Providence Health & Services operates a variety of healthcare facilities. Providence Health & Services operates one of two hospitals in Spokane County (within planning area #1) that has approval for PCI services—Providence Sacred Heart Medical Center in Spokane. Providence Health & Services provided both public comments and rebuttal comments on this project. As a result, Providence Health & Services and Providence Sacred Heart Medical Center qualifies as an affected person for this project.

4 The initial decision date of October 19, 2020, was extended by one day because of governor directed furloughs. Page 4 of 65

SOURCE INFORMATION REVIEWED • MultiCare Health System’s Certificate of Need application received February 26, 2020 • MultiCare Health System’s first screening responses received May 12, 2020 • MultiCare Health System’s second screening responses received July 10, 2020 • Public comments received on or before August 25, 2020 • Rebuttal comments received on or before September 4, 2020 • Department of Health’s Hospital and Patient Data Systems’ Comprehensive Hospital Abstract Reporting System data for year 2018 • Department of Health PCI outpatient survey responses for 2018 • Hospital/Finance and Charity Care Program’s (HFCC) Financial Review dated October 12, 2020 • Department of Health Integrated Licensing and Regulatory System database [ILRS] • Compliance history for MultiCare Health System obtained from the Washington State Department of Health – Office of Health Systems and Oversight • DOH Provider Credential Search website: www.doh.wa.gov/pcs • MultiCare Health System’s website at www.multicare.org • MultiCare Valley Hospital’s website at www.multicare.org/valley-hospital • COAP (Clinical Outcomes Assessment Program) website at www.coap.org • Swedish Health Services v. Department of Health Opinion

CONCLUSION For the reasons stated in this evaluation, the application submitted by MultiCare Health System proposing to establish an adult, elective percutaneous coronary intervention program at MultiCare Valley Hospital located in Spokane County is not consistent with applicable review criteria of the Certificate of Need Program and a Certificate of Need is denied.

CRITERIA DETERMINATIONS A. Need (WAC 246-310-210) Need Forecasting Methodology (WAC 246-310-745), and Standards (WAC 246-310-715(1), (2)) Based on the source information reviewed, the department determines that MultiCare Health System does not meet the applicable need criteria in WAC 246-310-210.

(1) The population served or to be served has need for the project and other services and facilities of the type proposed are not or will not be sufficiently available or accessible to meet that need. WAC 246-310-700 requires the department to evaluate all adult elective PCI applications based on the populations need for the service and determine whether other services and facilities of the type proposed are not, or will not, be sufficiently available or accessible to meet that need as required in WAC 246-310- 210. The adult, elective PCI specific numeric methodology applied is detailed under WAC 246-310-745. WAC 246-310-210(1) criteria is also identified in WAC 246-310-715(1), and (2).

PCI Methodology WAC 246-310-745 The determination of numeric need for adult, elective PCI programs is performed using the methodology contained in WAC 246-310-745(10). The method is a five-step process of information gathering and mathematical computation. The first step examines historical PCI use rates at the planning area level to determine a base year PCI use rate per 1,000 population. The remaining four steps apply that PCI use rate to future populations in the planning area. The numeric net need for additional PCI programs is the result of subtracting current capacity from projected need.

Page 5 of 65 For PCI programs, Washington State is divided into 14 separate planning areas.5 MHS’s project is to be located in Spokane County which is included in PCI planning area #1. The need methodology calculates the need for each planning area. The need methodology discussion in this evaluation is limited to Planning Area #1. The planning area includes the following nine counties: Adams, Asotin, Ferry, Grant, Lincoln, Pend Oreille, Spokane, Stevens, and Whitman.

The department calculates the numeric methodology for each of the 14 planning areas prior to the beginning of the concurrent review cycle and posts the results of the methodology to its website. The department’s completed methodology is Appendix A attached to this evaluation.

MultiCare Health System MHS calculated its own numeric methodology for PCI planning area #1 using the steps in the department’s methodology as a template, but reducing the planning area to a portion of Spokane County known as Spokane Valley. MHS’s adjusted numeric methodology concluded need for an additional PCI program in its PCI sub-planning area. [source: Application, pdfs 17-21]

Public Comments The department received public comments that focus on the numeric methodology contained in WAC 246- 310-745(10). Those comments are restated below.

Numeric Methodology Public Comment

Andrew Taylor, Chief Strategy Officer, Providence Health & Services-WA/MT Region “In order to determine whether there is need for a new adult elective PCI program in a particular Planning Area, the Department of Health ("the Department") annually applies the PCI need forecasting methodology to each of the Planning Areas. The Department’s 2019-2020 need calculation, which applies to the 2020 PCI concurrent review cycle, establishes that there is no need for a new elective PCI program in Planning Area 1.

It is important to note that the methodology does not provide for any exceptions to the need calculation made by the Department. The need forecasting methodology regulation unequivocally states: "If the net need for procedures is less than two hundred, the Department will not approve a new program.” There are no exceptions to this requirement. The methodology shows that the 2023 “Projected Net Need” for PCI procedures in Planning Area 1 is only 64 procedures, which falls significantly short of the requirement for 200 procedures. Accordingly, under the regulations, the Department cannot approve MultiCare’s proposed program.

MultiCare attempts to circumvent the indisputable result of the PCI need forecasting methodology by contriving to create a new “Spokane Valley Service Area,” which consists of just eleven zip code areas within Planning Area 1. MultiCare acknowledges that this is “a relatively small number of zip codes” and concedes that its self-created, self-named “Spokane Valley Service Area” is “a geographic subset of the larger PCI planning area defined by the Washington Department of Health.” This approach is clearly unacceptable, and MultiCare’s ill-conceived attempt to sidestep the Department’s definitions for a designated PCI Planning Area must be rejected.

WAC 246-310-705(5) defines a ““PCI planning area” as “an individual geographic area designated by the Department for which adult elective PCI program need projections are calculated.” There is no PCI Planning Area designated as “Spokane Valley.” Most importantly, the governing regulations do not permit

5 WAC 246-310-705. Page 6 of 65 the Department to make a PCI need forecast for a “geographic subset” of a PCI Planning Area contrived by an applicant in order to show an institutional “need” for a new PCI program.

The Department “shall only grant a certificate of need to new programs within the identified planning area if: (a) The state need forecasting methodology projects unmet volumes sufficient to establish one or more programs within the planning area.” There is no need for a new elective PCI program in Planning Area 1 under the PCI Numeric Need Methodology. Accordingly, MultiCare’s application must be denied.”

Peg Currie, Chief Operating Officer, Providence Sacred Heart Medical Center and Holy Family Hospital “I urge the Department of Health not to approve a new PCI program at MultiCare Valley Hospital given that the Department’s PCI need methodology does not show a need for an additional program in the planning area. My concern is that approving an unneeded program may lead to fragmentation of care and decreased efficiency. Duplication of unneeded services creates higher cost and potentially lower quality. The Heart Institute has demonstrated that it is fully capable of meeting the needs of the community in conjunction with the existing network of hospitals and caregivers.”

Matthew Duesik, Associate Vice President, The Providence Heart Institute “I am writing to express my opposition to MultiCare Health System’s Certificate of Need application to establish a new elective PCI program at MultiCare Valley Hospital. From my understanding, the Department’s PCI need methodology demonstrates that there is no need for an additional elective PCI program in Planning Area #1. My concern stems from the fact that approving MultiCare’s proposal will result in a duplication of services in the community.

In general, I support improving access to health care services as needed. However, if the Department were to approve MultiCare’s proposed elective PCI program, this would result in a clear duplication of services simply because there is no need shown for another PCI program in the Planning Area. If no need is demonstrated, then it is evident that the community has adequate access to these types of services.”

Susan Stacey, Chief Nursing Officer, Providence Sacred Heart Medical Center “I am writing you as the Chief Nursing Officer as well as the Chief Operating Officer for Providence Sacred Heart Medical Center and Children's Hospital. I have been a resident of Spokane Co for 40 years and have been a member of the Providence executive team for the last 13 years. I have had the opportunity to see the growth of our community's health care systems and specifically the cardiac programs in our community.

I am writing in opposition to MultiCare Health System's certificate of need application to establish an elective PCI program at MultiCare Valley Hospital in Planning Area #1, which includes Adams, Asotin, Ferry, Grant, Lincoln, Pend Oreille, Spokane, Stevens, and Whitman Counties. Based on the Department of Health's PCI need methodology, a new elective PCI program is not needed in the Planning Area and would be duplicative. The Department's rules are clear: when need is not shown under the methodology, the Department cannot approve a new program in a PCI planning area.

Specifically, WAC 246-310-720(2) states that the Department "shall only grant a ce1tificate of need to new programs within the identified planning area if: (a) The state need forecasting methodology projects unmet volumes sufficient to establish one or more programs within a planning area." It is my understanding that there are no exceptions to this rule. Therefore, the Department must deny MultiCare's application, as Planning Area #1 does not need a new PCI program under the methodology.”

Page 7 of 65 Robert (Dean) Martz, MD Chief Physician Executive, Regional Operations Providence WA/MT Region “Thank you for providing the opportunity to comment on the MultiCare Health System certificate of need application to operate an elective PCI program in Planning Area #1 (CN application #20-48). After reviewing the pertinent details, I strongly oppose the project and request that the Department of Health (DOH) deny the application. Based on the 2020 need projections provided by the DOH, there is insufficient need to approve a new PCI program in the community. From my understanding, the guiding regulations are well-defined and, when need for a program is not shown, the DOH shall not approve a PCI program. In following these guidelines and, since need is not demonstrated, the DOH must deny the MultiCare PCI application.

While I support improving access to health care services, if the DOH were to approve the MultiCare elective PCI program it would result in a clear duplication of services simply because there is no need shown for another PCI program in the Planning Area. In fact, when examining the PCI procedure growth projections provided by MultiCare, I notice that their need projections are based on only serving a part of the population in the planning area. In the application, MultiCare creates a restricted planning area named Spokane Valley that includes just 11 zip codes (99016, 99019, 99025, 99027, 99037, 99206, 99212, 99214, 99215, 99216, and 99217). Planning Area # 1 includes nine counties (Adams, Asotin, Ferry, Grant, Lincoln, Pend Oreille, Spokane, Stevens, and Whitman Counties). MultiCare cannot establish need for an elective PCI program based on a subset of the planning area. From my understanding PCI regulations do not permit an applicant to create an institution-specific service area in order to establish need for an elective PCI program.”

Scott O’Brien, Chief Operating Officer, Providence WA/MT Region “I write with concern regarding the certificate of need application filed by MultiCare Health System to open an elective PCI program at MultiCare Valley Hospital in Spokane. Upon reviewing the relevant details, I oppose the project and request the Department of Health to deny the application. There is no basis to approve the proposed program given the fact that the Department’s PCI need projection shows that there is no need for a new PCI program in the planning area. The governing regulations are explicit: when need for a program is not shown under the PCI need methodology, the Department may not approve a new program. Therefore, the Department is required to deny MultiCare’s application.

MultiCare attempts to create need for its proposed program by arguing for the establishment of a new “service area” based on just 11 zip codes in the Spokane Valley area, instead of relying upon the nine counties in Planning Area #1 identified in the Department’s regulations. In addition, after reviewing the PCI procedure volume projections provided by MultiCare, I observed that the estimated annual procedure growth rate exceeds the projected annual population increases contained in the Department’s PCI need methodology. Taken together, this strongly implies MultiCare would rely on taking market share away from existing elective PCI providers in order to accomplish its projected growth rates. This is a key concern for our community, as duplication of services may result in increased costs, decreased efficiency, and fragmentation of care.

Please note that, although I wholly support improving health care service accessibility, approval of MultiCare’s proposed elective PCI program would result in a clear redundancy of services. There is simply no need for another PCI program in the Planning Area, and this addition would not benefit the community.”

Daniel Getz, DO, Chief Medical Officer, Providence Health & Services “I am writing to express my opposition to Multi Care Health System's certificate of need application to establish a new elective PCI program at MultiCare Valley Hospital. MultiCare, in its application, claims there is an "access" issue in the Planning Area and that residents do not have the appropriate access to

Page 8 of 65 elective PCI services. From my understanding, the Department's PCI need methodology demonstrates that there is no need for an additional elective PCI program in the planning area. Since there is no need, it follows that there is not an "access" issue. Therefore, the Department must deny MultiCare’s application.”

Michael Marshall, MD, Chief Physician Executive, Providence St. Joseph Health “Thank you for providing the opportunity to comment on the MultiCare Health System certificate of need application to operate an elective PCI program in Planning Area #1 (CN application #20-48). After reviewing the pertinent details, I strongly oppose the project and request that the Department of Health (DOH) deny the application. Based on the 2020 need projections provided by the DOH, there is insufficient need to approve a new PCI program in the community. From my understanding, the guiding regulations are well-defined and, when need for a program is not shown, the DOH shall not approve a PCI program. In following these guidelines and, since need is not demonstrated, the DOH must deny the MultiCare PCI application.

While I support improving access to health care services, if the DOH were to approve the MultiCare elective PCI program it would result in a clear duplication of services simply because there is no need shown for another PCI program in the Planning Area. In fact, when examining the PCI procedure growth projections provided by MultiCare, I notice that their need projections are based on only serving a part of the population in the planning area. In the application, MultiCare creates a restricted planning area named Spokane Valley that includes just 11 zip codes (99016, 99019, 99025, 99027, 99037, 99206, 99212, 99214, 99215, 99216, and 99217. Planning Area# 1 includes nine counties (Adams, Asotin, Ferry, Grant, Lincoln, Pend Oreille, Spokane, Stevens, and Whitman Counties).

MultiCare cannot establish need for an elective PCI program based on a subset of the planning area. From my understanding PCI regulations do not permit an applicant to create an institution-specific service area in order to establish need for an elective PCI program. A key purpose of the PCI need methodology is to prevent proliferation of institution-specific 'service areas' that are based on institutional need and not community need. There are no exceptions for applicants to carve out sub-areas from a planning area. I ask that the DOH not consider MultiCare's attempt to circumvent the PCI regulations and create artificial need when it does not exist. The DOH has no alternative but to deny MultiCare's request for a PCI program at MultiCare Valley.”

Robert Hunter, MA, MBA, Executive Director, Cardiovascular Services Providence Health Care “I am writing to express my opposition of the certificate of need application filed by MultiCare Health System to operate an elective PCI program at its MultiCare Valley Hospital in Spokane County. The purpose of my letter is not to belabor the obvious. I am confident the Department's analysis will show the following: (1) There is not a demonstrated need in Planning Area 1 for an additional elective PCI Program. The Department of Health's most recent forecasting methodology projects an unmet need for 0.32 of a program in Planning Area 1; (2) MultiCare's request to establish a new planning area is without merit or precedent. As the Department is aware, applicants simply do not have the discretion to reconceive a planning area that is codified in the WAC; (3) Approving their request would be inconsistent with past decisions and contrary to the applicable explicit governing regulations (WAC 246-310- 720).”

Rebuttal Comments The department received rebuttal comments from both the applicant, MHS, and affected person, Providence Health & Services, that focus on the numeric methodology contained in WAC 246-310- 745(10). Those comments are restated below.

Page 9 of 65 MultiCare Health System September 4, 2020, Rebuttal Comments “As stated in our May 11, 2020 screening responses, we understand WAC 246-310-705(5) and WAC 246- 310-720(2) and agree that based on the Department of Health 2019-2020 Percutaneous Coronary Intervention Numeric Need Methodology published in February 2020 there is no numeric need in the PSA 1 planning area.

That said, we wish to again emphasize that the PCI planning areas used by the Department in its calculations of need were constructed over 10 years ago, an earlier era reflecting population densities and traffic patterns which have changed. Providence dismisses these developments; we contend they remain important, and in fact are cited by the numerous letters of support received by the department from Spokane Valley community, business leaders, and Pulse Heart Institute physicians.

As we stated in our May 11, 2020 screening responses: “We confirm our understanding that the PCI rules under WAC 246-310 do not include a reference to sub- planning areas. As we note above, the PCI planning areas used by the Department in their calculations of need were constructed over 10 years ago, an earlier era which reflect population densities and traffic patterns which have changed. The Spokane Valley Service Area was constructed to be reflective of local utilization patterns and maximize resident access. Alignment of PCI service provision with local healthcare utilization patterns and maximizing resident access is the rationale behind our application— improved healthcare.

Spokane Valley is a geographically distinct service area, separate from Downtown Spokane, and there exists significant community demand for local PCI services. In order to reflect local utilization patterns, the Spokane Valley Service Area was determined based on those zip codes which comprised approximately 80% of 2018 patient days at Valley Hospital, a standard methodology to establish “planning areas” within the health planning profession.”

Providence Health & Services September 4, 2020, Rebuttal Comments “At the outset, it is crucial to recognize that the threshold, and determinative, issue in the Department’s review of MultiCare’s application already has been resolved: the 2019-2020 Percutaneous Coronary Intervention Numeric Need Methodology establishes that there is no need for a new elective PCI program in PCI Planning Area 1. The Methodology shows a “2023 Projected Net Need” of only 64 adult procedures in the Planning Area, which is significantly less than the 200-procedure minimum volume standard. The language of the governing PCI regulation is clear and indisputable: “If the net need for [PCI] procedures [in a PCI Planning Area] is less than two hundred, the Department will not approve a new program.” The regulation is mandatory: there are no exceptions. Therefore, the proposed MultiCare Valley elective program cannot, as a matter of law, be approved by the Department.

This incontrovertible conclusion necessarily provides the context for the Department’s review of the letters of support for MultiCare’s application. Of course, Providence fully supports the right of those affiliated with MultiCare and members of the public to participate in the public comment process. However, it is telling that none of the letters acknowledge (or, alternatively, appear to be aware of) the fundamental fact that the applicable law requires the Department to deny the application.

Instead, the letters echo MultiCare’s unavailing attempt to circumvent the indisputable result of the PCI need methodology by inventing a new “Spokane Valley Service Area,” which consists of merely eleven zip code areas within PCI Planning Area 1. As we discussed at length in our public comments, the Department’s PCI regulations do not permit an applicant to create an institution specific “service area” in order to contrive “need” for a new elective PCI program. The central policy purpose of the PCI regulations, and of the PCI need methodology, is to prevent the proliferation of PCI programs based upon

Page 10 of 65 perceived institutional “need.” This is exactly what MultiCare is proposing to do, and, regrettably, the letters of support prepared and/or gathered by MultiCare endorse that effort.

To be clear, Providence acknowledges the sincerity of the opinions expressed in the letters, particularly those of local residents, business owners, and elected officials. We always value public discussions of health planning issues, and we appreciate the views of those who are striving to ensure sufficient, appropriate access to health care for the community. However, given that the applicable law requires the Department to deny MultiCare’s application, the points raised in the letters are not germane to the Department’s ultimate decision.”

In addition to the public comment that focuses on the numeric methodology, the department received public comments regarding the availability and accessibility of PCI services in the sub-planning area identified and used by MHS in its application. While all public comments are considered in this review, below are excerpts from some of the public comments in support of MHS’s application.

Stephen Thew, MD, Kootenai Heart Clinics Northwest “As you are aware, the Valley Hospital in Spokane Valley, Washington, is applying for a Certificate of Need to provide coronary interventional capabilities at their institution. I have been practicing interventional cardiology in this community for the last 15 years and I want to strongly support their application for this Certificate of Need. Rapid revascularization of coronary arteries is a well proven and well established treatment with improved mortality and morbidity outcomes for patients with myocardial infarction. In addition, CMS has allowed and encouraged outpatient revascularization procedures which can be done safely at the Valley Hospital.

Here in the community we previously had interventional capabilities at Holy Family Hospital, but, due to a business decision, that was stopped several years ago. Now, unfortunately, the only place a patient can get revascularized in this entire region is in downtown Spokane. By allowing coronary interventions at Valley Hospital, we can help serve the large population in Spokane Valley and the eastern part of our community. Currently all of these patient need to travel a significant distance for this treatment.

Thank you very much for your time and consideration of this. I very strongly support Valley Hospital's Certificate of Need application to provide coronary interventional services at the Valley Hospital.”

Tim Hattenburg, Spokane Valley City Council Member “I am writing to express my support of the Multi Care Hospital's Certificate of Need for establishing an Interventional Cardiology Program at Valley Hospital. Their program is lead by 18 cardiologists and 4 surgeons. This past year Valley Hospital was recognized for it's excellence in this area. Door to EKG 6 minutes- best in the system!

I am currently a city council member for the City of Spokane Valley and a lifelong member of the community. I can attest to the value and the care provided by Valley Hospital throughout my lifetime.

My self and family have been patients there over the years and have received excellent care. Valley Hospital and their services are crucial to our growing community.”

Many physicians associated with MultiCare Pulse Heart Institute provided comments. Below is an excerpt from one of the letters. “I am an interventional cardiologist who has served the Spokane County for many years and I am writing today to advocate for the approval of MultiCare Health System’s application to provide our community PCI procedures at MultiCare Valley Hospital.

Page 11 of 65

I hear firsthand from my patients how frustrating it is to them when they must leave the Valley and travel to downtown Spokane for care. My patients are very loyal to Valley Hospital because of the great patient experience and excellent quality of care they receive. The communities near Valley Hospital are experience strong population growth and the need for care close to home is going to increase over time.

Approving the request to add elective PCI services at Valley Hospital is the right decision for our community. Valley Hospital is a highly rated facility. These services will be provided by Pulse Heart Institute, a physician led organization, and are the same physicians who provide excellent quality care at Deaconess Hospital. At Pulse Heart Institute we partner with our patients and other providers to address heart and vascular health as a component of total patient health to improve lives through all phases of care, from education to prevention, from treatment to recovery. Our physicians are at the top of their field and our quality metrics place us among the top performing Cardiovascular institutions in the state.

In closing, I urge approval of Valley Hospital’s Certificate of Need request for an elective PCI program at MultiCare Valley Hospital. This will help ensure that our communities in Spokane Valley, Otis Orchards, Freeman, Liberty Lake, Newman Lake, and Millwood will have access to quality heart care close to home.”

Lee McGrath, Premera Blue Cross “As a local health plan with a long history of serving the Spokane area, we have a deep interest in supporting broad access to care in this region. The Spokane Valley is a population center in the Eastern Washington area and bringing PCI procedures there will allow residents of that area and beyond, faster access to these services. Currently residents of the Spokane Valley and other neighboring communities, such as Otis Orchards, Freeman, Liberty Lake, Newman Lake, and Millwood, must travel to Spokane to receive these services.

In partnering with MultiCare, our organizations have worked closely together over the years. MultiCare is committed to the health of the communities they serve and is invested in bringing top quality care to their patients. Within their system, MultiCare Valley Hospital is a top performer.

In closing, we wish to convey our support for MultiCare’s application to bring PCI capabilities to MultiCare Valley Hospital as this will provide better access to quality care for the residents of the city of Spokane Valley and the surrounding areas.”

Washington State Senator Mike Padden “This is to recommend that you allow MultiCare to add Percutaneous Coronary Intervention capabilities at MultiCare Valley Hospital.

As a long-time resident of Spokane Valley, I can attest to MultiCare Valley Hospital’s commitment to furthering the health of our community. It is important for my constituents to have access to quality medical services. The first hospital in eastern Washington to be awarded a five-star rating from the Centers for Medicaid and Medicare Services, MultiCare Valley Hospital has demonstrated its ability to act quickly, and adapt to an ever-changing medical environment.

Again, I urge you to approve MultiCare’s application to add Percutaneous Coronary Intervention capabilities at MultiCare Valley Hospital.”

Page 12 of 65 Washington State Representative Bob McCaslin “As a state legislator whose legislative district includes MultiCare Valley Hospital, I strongly recommend approval of MultiCare's certificate of need request to operate an elective percutaneous coronary intervention (PCI) program. The communities served by MultiCare Valley Hospital are growing rapidly. Approval of MultiCare's application will help to make sure that access to PCI procedures keeps pace with that growth.

MultiCare's investment in our local communities has been impressive. They have established relationships with businesses and organizations to enhance public health in ways that extend beyond medical treatment and hospital services. Their support for organizations like Big Brother Big Sisters of the Inland Northwest, Second Harvest Inland NW, and Spokane Valley Partners demonstrates their commitment to the well-being and wholeness of those who live here.

As the need for PCI capabilities increases with the population, we are fortunate to have the competent and caring professionals of MultiCare available to administer those services. By adding PCI at MultiCare Valley Hospital, you will help ensure that our communities in Spokane Valley, Otis Orchards, Freeman, Liberty Lake, Newman Lake, and Millwood will have access to quality heart care from a health care provider they have come to trust.”

In addition to the comments in support referenced above, the department also received letters expressing opposition to the availability and accessibility assertions stated by MHS in its application. Again, while all letters are considered, below is a sampling of the letters.

Jeffry Philips, Community Mission Board Member, Providence Healthcare “I would like to submit comments regarding the MultiCare Health System certificate of need application for an elective PCI /coronary angioplasty program in Planning Area 1, which includes both Spokane and Stevens Counties, among other areas. While I sit on the Providence Health Care Community Mission Board, these comments also reflect my concerns as a community business leader relating to the rising costs of health care.

The MultiCare application requests a certificate of need to perform PCIs on an elective or non-emergent basis, which will fragment heart care services. Without a significant growth in demand in this market, redundant elective PCI services cannot be financially supported. I am concerned that an expansion by MultiCare will simply dilute the current service volumes and create PCI programs that will struggle to be viable. That could jeopardize the overall service and lead to an increase in costs in order to sustain the programs.”

John Peterson, MD, Providence Spokane Cardiology “I would like to submit comments regarding the MultiCare Health System certificate of need application for an elective PCI /coronary angioplasty program in Planning Area 1, which includes both Spokane and Stevens Counties, among other areas. While I sit on the Providence Health Care Community Mission Board, these comments also reflect my concerns as a community business leader relating to the rising costs of health care.

Page 13 of 65

Robert Hunter, MA, MBA, Executive Director, Cardiovascular Services Providence Health Care “Although I wholly support improving health care services, including accessibility, approval of MultiCare's proposed elective PCI program would result in a clear redundancy of services. There is simply no need for another PCI program in the planning area, and an additional program would not benefit our community. In support of my statement, I would site their application failed to demonstrate that it will provide "adequate access" to low-income persons and other underserved groups.

There are four additional points I would like to bring forward regarding MultiCare's application: • In its application, MultiCare claims there is an "access" issue in the planning area, which its proposed program will purportedly address. However, MultiCare Valley is located approximately 9 miles from both MultiCare Deaconess Hospital and Providence Sacred Heart Medical Center, with all three hospitals located close to I-90, which provides easy access to the hospitals. The drive time between MultiCare Valley and the two hospitals in downtown Spokane is about 15 minutes. The drive time for emergency transportation is, of course, far less. The geographic landscape between MultiCare Valley and downtown Spokane is mostly flat, with no geographic barriers. Therefore, there is no "access" issue. • With respect to elective PCI services, by definition, these procedures are scheduled in advance, and arrangements for travel time can be coordinated. While MultiCare alludes to an "access" issue in the planning area, it does not provide any evidence to support this claim. Further, the drive times for emergency transport, if needed, would be much shorter. Finally, there are no unique geographic barriers in the area. Accordingly, there are no "access" issues. • MultiCare makes the additional unsubstantiated claim that approval of its elective PCI program will "reduce community and system burden of emergency transport between facilities." (Application, p. 14.) Again, MultiCare provides no evidence to support this claim. In fact, there is no "system burden of emergency transport between facilities." • MultiCare states that it intends to operate an emergent PCI program at MultiCare Valley Hospital even if the elective PCI program is not approved by the Department. MultiCare may operate an emergent program at MultiCare Valley without obtaining a Certificate of Need. Thus, MultiCare can address the alleged emergency transport issues without establishing an elective program.

I will close with the contention that applications like this one are the very reason the certificate of need legislation is in place for the State of Washington. Unchecked, expensive healthcare services, such as elective PCI program, would increase dramatically and add significant cost to the system. This is a clear example of an application that is based upon institutional need, not community need. For this reason, along with the other issues raised, the Department of Health should deny the application.”

Mandya Vishwanath, MD Providence Sacred Heart Medical Center “A new program - whether it is cardiac surgery or PCI - would be justified if it met at least one of two objectives: 1) meet an unfilled need or 2) significantly improve quality or efficiency including cost. Just like cardiac surgery, PCI outcomes are not determined merely by the excellence of the cardiologist but is in fact inextricably dependent on the entire team involved. A large volume of cases done over a period of years is imperative to achieving this. If I remember correctly, a proposal to start such a program at the Valley Hospital was unsuccessful in the past and for the right reasons.

The two existing large centers in Spokane are known the world over for pioneering and continually improving and updating cardiac surgical and interventional programs. As evidenced by the very early recognition of excellent door to balloon times and very good outcomes, they have consistently delivered top notch care to the patients of this wide geographical area. This is due in no small part to the very experienced team that functions like a well-oiled machine. I am afraid an additional PCI program that will

Page 14 of 65 necessarily be a small one will not only not deliver similar care but will in fact detract from the two major centers. Moreover, we have a very long tradition of being able to get even the very ill patients expeditiously to the Centers in downtown Spokane where they are the recipients of very good care. This has been the case of patients who have had to be air-ambulanced from far off places. I am therefore puzzled why patients around the Valley Hospital - in such close proximity - should be denied care what has been proven repeatedly to be of the highest order. I do not see either a need that needs to be fulfilled nor do I see how this would improve quality, reduce costs or lead to increased efficiency in any way. On the contrary, it will be a needless duplication of services.

As a member of a large Center, I was never opposed to the establishment of new programs that were indeed appropriate. The Open Heart Surgery programs we helped start at Kootenai Hospital, Kadlec Regional Medical Center, or Central Washington Hospital bear testimony to the fact that far from opposing we were very supportive in establishing these programs. All these centers also have very good interventional programs. I am afraid the proposal to start this new PCI center at Valley Hospital would be contrary to all of this and would in fact lead to splintered and fragmented care.”

Guy E. Katz, MD, FACC Vice President of The Providence Heart Institute “I am writing to express my opposition to MultiCare Health System’s certificate of need application to establish a new elective PCI program at MultiCare Valley Hospital. From my understanding, the Department’s PCI need methodology demonstrates that there is no need for an additional elective PCI program in Planning Area #1. My concern stems from the fact that approving MultiCare’s proposal will result in a duplication of services in the community.

The Providence Spokane Heart Institute is a nationally-recognized center of excellence for heart and vascular care in the Inland Northwest, and serves as one of the quaternary cardiovascular programs within Providence St. Joseph Health. The Heart Institute has clinics and outpatient centers throughout the region to provide convenient access to care and offers the only transplant and adult and teen congenital heart programs in the region.

Andrew Taylor, Chief Strategy Officer, Providence Health & Services-WA/MT Region

There is no evidence of patient “access” issues. MultiCare claims that the proposed elective PCI program at MultiCare Valley will address purported patient “access” issues. Thus, for instance, it asserts that “maximizing resident access is the rationale behind our application — improved healthcare access to Spokane Valley residents”37 and that the “proposed project will allow Spokane Valley residents local access to a more proximate elective PCI provider.” However, MultiCare does not provide any actual evidence of patient “access” issues in Planning Area 1.

In fact, the geographic reality belies MultiCare’s unsupported claims: there are two existing elective PCI programs within 9 miles of MultiCare Valley. As shown in Table 3 of MultiCare’s application, the distance from MultiCare Valley to Providence Sacred Heart Medical Center’s program is only 8.4 miles and the distance to MultiCare Deaconess Hospital’s program is only 8.8 miles. Moreover, both hospitals are adjacent to the I-90 corridor, permitting easy access for Planning Area residents. Further, there are no geographic obstacles between the Spokane Valley and the two hospitals in downtown Spokane.

Page 15 of 65 Accordingly, there is no evidence in the record of the purported patient “access” issues claimed by MultiCare. Rather, as MultiCare states in its application, the purpose of establishing an elective program at MultiCare Valley is (1) to “balance utilization across Deaconess and Valley Hospitals,” (2) to address “imbalances in OR utilization between Deaconess and Valley Hospitals,” and (3) “shift the location at which [Pulse Heart Institute cardiologists] perform elective PCIs.” To be clear, these are all institutional motivations and goals. They have nothing whatsoever to do with alleged patient “access” issues, for which there is no evidence.

There is no evidence of “commuting time” issues. MultiCare also claims that failing to open an elective PCI program at MultiCare Valley “will result in otherwise avoidable commuting time for both Spokane Valley residents and Pulse Heart Institute providers between Deaconess and Valley Hospitals.” However, MultiCare does not provide any evidence that the “commuting time” between the Spokane Valley and MultiCare Deaconess Hospital is lengthy or onerous given that, as noted above, the distance between the two hospitals is only 8.8 miles, with both hospitals located adjacent to the I-90 corridor, permitting easy access. Furthermore, MultiCare’s assertion that the “commuting time” for “Pulse Heart Institute providers”44 should be considered by the Department in evaluating the need for a new elective PCI program is inappropriate, and it further confirms the motivation for establishing the program is institutional “need,” not community need.

In addition, elective PCI procedures are scheduled in advance. No emergency transportation is required. Patients will be able to make advance arrangements for the brief travel time over the short distance from the Spokane Valley to either of the elective PCI programs at the two downtown hospitals. Thus, MultiCare’s argument that the brief “commuting time” for pre-scheduled elective procedures justifies approval of a new elective program at MultiCare Valley has no merit whatsoever.

There is no evidence of “emergency transport” issues. MultiCare claims that establishing an elective PCI program at MultiCare Valley “will reduce community and system burden of emergency transport between facilities and longer transports than otherwise necessary.” However, as is the case with the purported patient “access” and “commuting time” issues, MultiCare fails to provide any actual evidence to support its claim. It has provided no facts or data showing that there is either (1) a “community and system burden of emergency transport between facilities,” or (2) “longer transports than otherwise necessary.”

Moreover, MultiCare has stated that it is opening an emergent PCI program at MultiCare Valley and that the emergent program will continue in operation regardless of whether MultiCare’s application to establish an elective PCI program is approved. In its Screening Question #2, the Department requested MultiCare to “confirm that emergent PCI services at Valley Hospital are not reliant on the outcome of this elective PCI application.” MultiCare responded: “This understanding is correct — the emergent PCI program is not reliant on the elective PCI certificate of need process.”

Accordingly, with MultiCare having committed to operate an emergent PCI program at MultiCare Valley with or without approval of its proposed elective PCI program, the purported issues relating to “emergency transport” will not exist (assuming solely for the sake of argument that they ever did exist).

Rebuttal Comments In response to the comments above, both MHS and Providence Health & Services provided rebuttal statements.

Page 16 of 65 MultiCare Health System September 4, 2020, Rebuttal Comments “Providence argues that the proposed project will do nothing to improve patient access, an argument that rests, ironically, entirely on their contention that “MultiCare does not provide any actual evidence of patient ‘access’ issues.” We disagree with Providence in this regard and we are supported by the letters from Spokane Valley residents, businesses, and community leaders, outlined above. We note that no letters of opposition have been provided from persons not directly employed or professionally affiliated with Providence.

Among those letters of opposition, Guy Katz, MD and Michael Ring, MD expressed concern regarding a redundancy of services readily available in Spokane. We emphasize that Spokane Valley is not Spokane and represents a distinct and separate community in need of its own hospitalization services. Patient feedback, as disclosed within the Pulse Heart Institute provider letters, clearly indicates the reticence of many individuals to travel into downtown Spokane to receive care. MultiCare Valley Hospital is approximately 10 to 15 minutes away from the Downtown Spokane hospitals Sacred Heart and Deaconess.

However, many residents in Spokane Valley do not live by Valley Hospital and may well live much further then that 10-15 minute commute figure Providence quotes. That additional time for patients and families can be significant, and Downtown Spokane is often thought of as a distant, inconvenient, and intimidating location for Spokane Valley patients.

Additionally, regarding the “redundancy” contention, the Pulse Heart Institute cardiologists are providing hundreds of PCIs at Deaconess Hospital currently. They will be providing emergent PCIs at Valley Hospital in the near future. There cannot be “redundancy” or “duplication” of PCI services when Valley Hospital and the Pulse Heart Institute cardiologists will already be providing PCI care at Valley Hospital if this project is approved—the project will allow a further extension of their services, to Deaconess and Valley hospitals, which better serves their patients and communities. These same physicians would be providing the same elective PCIs, but with the project, at an additional location—Valley Hospital. The access or locational issue with PCI volumes, and in this regard, place of service—Deaconess or Valley— would be irrelevant.”

Providence Health & Services September 4, 2020, Rebuttal Comments “To be clear, Providence acknowledges the sincerity of the opinions expressed in the letters, particularly those of local residents, business owners, and elected officials. We always value public discussions of health planning issues, and we appreciate the views of those who are striving to ensure sufficient, appropriate access to health care for the community. However, given that the applicable law requires the Department to deny MultiCare’s application, the points raised in the letters are not germane to the Department’s ultimate decision.

That being said, certain of the letters contain misstatements about, or reflect misunderstandings of, the facts regarding the provision of PCI services in the community and the scope and requirements of the governing CN regulations. Thus, in order to ensure that the Department’s record is complete and accurate, we will address several comments made in the letters which merit correction or clarification. These issues include the following: • Several commenters fail to draw a distinction between elective and emergent PCI procedures and/or appear to be under the misapprehension that Spokane Valley residents do not currently have timely access to emergency PCI services. In addition, some of the commenters appear to be unaware that MultiCare has made a commitment to operate an emergent PCI program at MultiCare Valley, regardless of whether the application for an elective program is approved by the Department.

Page 17 of 65 • Some commenters fail to recognize that MultiCare’s self-created “Spokane Valley Service Area” is an extremely small geographic area intended to address the perceived institutional “need” of MultiCare, rather than the overall community need of PCI Planning Area 1, as required by the PCI regulations. • Several commenters have overstated or mischaracterized the purported PCI “access” and “distance” issues experienced by Spokane Valley residents, while other commenters mistakenly perceive that “inconvenience” and the wish to obtain services “close to home” provide a valid basis for approval of an elective PCI program under the applicable law.

While the inarguable lack of numeric need for another elective PCI program in PCI Planning Area 1 is sufficient reason alone, without any further comment, to deny the MultiCare CN application, we will address below the misstatements and misunderstandings in the public comments in order to ensure the accuracy of the Department’s record. As noted above, Providence values the voice of the community within these certificate of need proceedings, and we view these rebuttal comments as an opportunity to address the confusion and concerns found in certain of the letters. Again, the Department’s evaluation of MultiCare’s application begins and ends with the basic fact that there is no need for a new elective PCI program in PCI Planning Area 1 under the Department’s PCI need methodology, with additional weaknesses of the application and public record further confirming the conclusion that the application fails to satisfy the CN review criteria. Accordingly, the Department is required by law to deny the application.”

Department Evaluation of Numeric Methodology Including Availability and Accessibility of PCI Services in PCI Planning Area #1

The department calculates the PCI methodology using two different data sets. One set uses CHARS data for inpatient PCIs and survey responses for outpatient PCIs. The other set uses COAP data6, which is reported by each Washington State hospital and identifies the total number of PCIs performed, but does not distinguish between inpatient and outpatient procedures. The numeric methodology uses the total number of PCIs in all of its calculations; therefore a separation of inpatient and outpatient PCIs is unnecessary.

This portion of the evaluation will describe, in summary, the calculations the department made at each step of the methodology and the assumptions and adjustments, if any, made in that process. This section will also include a discussion of any differences between the applicant’s and the department’s numeric methodologies. For the department’s methodology, the discussion below will address the results of each data set used. The methodology using both CHARS and survey response will be referenced as #1; the COAP methodology will be referenced as #2.

The titles for each step are excerpted from WAC 246-310-745.

6 COAP is an acronym for Clinical Outcomes Assessment Program, a regional quality collaborative that leverages medical and clinical, administrative, and financial data to establish and drive best practices in cardiac care. One purpose is to support all hospitals and clinicians in achieving the highest levels of patient care and outcomes. COAP operates under the auspices of the Foundation for Health Care Quality (FHCQ), a nationally recognized not-for-profit 501(c)3 corporation which is the sponsor for, and home of, a number of programs addressing patient safety, variability, outcomes and quality in various medical and surgical services. All hospitals in Washington State that provide adult cardiac surgery and/or percutaneous coronary interventions (PCI) participate in COAP, producing a rigorous database that allows the State to identify areas for quality improvement and collaborate on improvement efforts. Page 18 of 65

Step 1: Compute each planning area's PCI use rate calculated for persons fifteen years of age and older, including inpatient and outpatient PCI case counts. (a) Take the total planning area's base year population residents fifteen years of age and older and divide by one thousand. (b) Divide the total number of PCIs performed on the planning area residents over fifteen years of age7 by the result of Step 1 (a). This number represents the base year PCI use rate per thousand.

Specific sections of WAC 246-310-745 defines specific terms used in the methodology. Base year is defined in WAC 246-310-750 as the most recent calendar year for which December 31 data is available as of the first day of the application submission period for the department’s CHARS reports or successor reports. Since this application was submitted on February 26, 2020, year 2019 data was not yet available. For this project, the base year is 2018.

Using the base year of 2018, the department calculated the use rate as described above. The table below compares the use rates calculated by both the department and MHS.

Department’s Step One Table Department Department MHS Methodology #1 Methodology #2 Methodology Year 2018 Population 15+ 623,886 623,886 125,8558 Divide by 1,000 623.89 623.89 125.85 Year 2018 PCIs 1,285 1,296 273 Use Rate Calculated 2.06 2.08 2.169

As shown in the Step One Table above, when comparing the applicant’s and the department’s 2018 population of residents 15 years and older the results are significantly different. The difference is attributed to the eleven-ZIP code sub-planning area used by the applicant when compared to the nine-county PCI #1 planning area used by the department. For MHS’s numeric methodology, only year 2018 PCIs in the sub- planning area were counted.

Step 2: Forecasting the demand for PCIs to be performed on the residents of the planning area. (a) Take the planning area's use rate calculated in Step 1 (b) and multiply by the planning area's corresponding forecast year population of residents over fifteen years of age.9

In this step, the forecast year is defined as the fifth year after the base year. For this project, the forecast year is 2023. The table below is a summary of step two.

Department’s Step Two Table Department Department MHS Methodology #1 Methodology #2 Methodology Forecast Year Population 657,170 657,170 134,208 Divide by 1,000 657.2 657.2 134.21 Use Rate (calculated from step 1) 2.06 2.08 2.169 Projected Demand for Planning Area Residents 1,354 1,365 291

7 Residents 15 years of age and older. 8 For its methodology, MHS used the following Spokane County ZIP codes: 99016, 99019, 99025, 99027, 99037, 99206, 99212, 99214, 99215, 99216, and 99217. 9 Residents 15 years of age and older. Page 19 of 65

As shown in the Step Two Table above, the forecast year populations are also significantly different in the methodologies. Further, when the use rate calculated from step 1 is applied to the smaller population of the sub-planning area, the resulting ‘projected demand’ is significantly different.

Step 3: Compute the planning area's current capacity. (a) Identify all inpatient procedures at CON approved hospitals within the planning area using CHARS data; (b) Identify all outpatient procedures at CON approved hospitals within the planning area using department survey data; or (c) Calculate the difference between total PCI procedures by CON approved hospitals within the planning area reported to COAP and CHARS. The difference represents outpatient procedures. (d) Sum the results of (a) and (b) or sum the results of (a) and (c). This total is the planning area's current capacity which is assumed to remain constant over the forecast period.

In this step, "current capacity" is defined as “the sum of all PCIs performed on people (aged fifteen years of age and older) by all certificate of need approved adult elective PCI programs, or department grandfathered programs within the planning area. To determine the current capacity for those planning areas where a new program has operated less than three years, the department will measure the volume of that hospital as the greater of: (a) The actual volume; or (b) The minimum volume standard for an elective PCI program established in WAC 246-310-720.”

Using the definition above, the current capacity of planning area #1 is the total number of PCIs performed in MHS Deaconess Hospital and Providence Sacred Heart Medical Center, both located in Spokane County. The table below shows a comparison of the current capacity for the department’s two calculated methodologies.

Department’s Step Three Tables MHS Deaconess Hospital Department Methodology #1 Department Methodology #2 Inpatient PCIs Outpatient PCIs Combined Inpatient & Outpatient Total (CHARS) (Survey) (COAP) 221 82 303 486

Providence Sacred Heart Medical Center Department Methodology #1 Department Methodology #2 Inpatient PCIs Outpatient PCIs Combined Inpatient & Outpatient Total (CHARS) (Survey) (COAP) 598 389 987 1,181

The number of PCIs performed by the two hospitals are added together and the sum represents the current capacity in the planning area as defined in the numeric methodology. The calculations are shown in the table below.

Page 20 of 65

Department’s Planning Area #1 Capacity Department Methodology #1 Department Methodology #2 Inpatient PCIs Outpatient PCIs Combined Inpatient & Outpatient Total (CHARS) (Survey) (COAP) 819 471 1,290 1,667

Step 3 of MHS’s methodology used specific ZIP codes in Spokane County and determined there is no existing provider in the sub-planning area identified as Spokane Valley.

Step 4: Calculate the net need for additional adult elective PCI procedures by subtracting the calculated capacity in Step 3 from the forecasted demand in Step 2. If the net need for procedures is less than three hundred, the department will not approve a new program.

Step 5: If Step 4 is greater than three hundred, calculate the need for additional programs. (a) Divide the number of projected procedures from Step 4 by three hundred. (b) Round the results down to identify the number of needed programs. (For example: 575/300 = 1.916 or 1 program.)

For Steps 4 and 5, the department will show the calculations and the results in one table.

Department’s Step Four and Step Five Table Department Department MHS Step Methodology #1 Methodology #2 Methodology Step 2-Forecasted Demand 4 1,354 1,365 291 Step 3-Current Capacity 4 1290 1,667 ---- Net Need in Planning Area 4 64 (302) 291

Divide Net Need by 200 5 0.32 (1.51) 1.46 Round Down 5 0 0 1

Step 5 shown in the table above shows the department projects no need for an additional PCI program during this 2020 concurrent review cycle using a base year of 2018 and projecting to year 2023.

In contrast, MHS projects need for one new PCI program when focusing its calculations on the eleven ZIP codes in Spokane County. MHS concludes its Step 5 above with the following statement: “Based on the RCW [sic] 246-310-745(10) methodology, while there exists no projected need for additional PCI programs in PSA 1, sufficient need exists within the community of Spokane Valley to justify one additional program.”

As acknowledged by MHS in its rebuttal comments, during the screening of this application, the department noted that MHS provided its numeric methodology using a sub-planning area within PCI planning area #1. This notation prompted the following clarification question for MHS. [source: March 31, 2020, Screening Question, #7]

Certificate of Need Program Question #7 “The results of the numeric methodology provided in this section of the application show no need for an additional provider in the PCI planning area #1 as defined in WAC 246-310-705(5). MHS also included a methodology using a partial or sub-planning area within PCI planning area #1 referenced as the “Spokane Valley Service Area.” Using this sub-planning area, MHS projected a need for one PCI Page 21 of 65 program. Confirm that the PCI rules under WAC 246-310 do not include a reference to sub-planning areas.”

MultiCare Health System Screening Response [source: May 12, 2020, screening response, pdf 5] “We confirm our understanding that the PCI rules under WAC 246-310 do not include a reference to sub- planning areas.

As we note above, the PCI planning areas used by the Department in their calculations of need were constructed over 10 years ago, an earlier era which reflect population densities and traffic patterns which have changed. The Spokane Valley Service Area was constructed to be reflective of local utilization patterns and maximize resident access.

Alignment of PCI service provision with local healthcare utilization patterns and maximizing resident access is the rationale behind our application—improved healthcare access to Spokane Valley residents.”

As also acknowledged by MHS in its rebuttal comments, when focusing on the planning areas identified in WAC 246-310-705(5), the department noted that the numeric methodology did not identify numeric need for an additional provider in PCI planning area #1. This notation prompted the following clarification question for MHS. [source: March 31, 2020, Screening Question, #1]

Certificate of Need Program Question #1 WAC 246-310-720(2) states: The department shall only grant a certificate of need to new programs within the identified planning area if: (a) The state need forecasting methodology projects unmet volumes sufficient to establish one or more programs within a planning area; and (b) All existing PCI programs in that planning area are meeting or exceeding the minimum volume standard. [emphasis in original]

Note the “state need forecasting methodology” referenced in rule was published on the Department of Health website in February 2020. This is the methodology that will be used in the 2020 concurrent review cycle. Based on the methodology, there is no numeric need in the planning area. The rule does not include any provisions for an exception to this standard. Please confirm your understanding of this section of rule. Contact me directly using the e-mail address provided in this letter if you would like to discuss your options.

MultiCare Health System Screening Response [source: May 12, 2020, screening response, pdf 2] “We confirm our understanding of WAC 246-310-720(2) and based on the Department of Health 2019- 2020 Percutaneous Coronary Intervention Numeric Need Methodology published in February 2020 there is no numeric need in the PSA 1 planning area.

We note, however, the PCI planning areas used by the Department in their calculations of need were constructed over 10 years ago, an earlier era which reflects population densities and traffic patterns which have changed. For example, the population density of Spokane County has increased about 10% since 2010, from about 267 persons per square mile, to about 293 persons per square mile.10

We also note that when elective PCI rules were implemented and allowed, in certain situations, the provision of adult elective PCIs at hospitals without open-heart surgery onsite, there were numerous requirements, e.g., hospital and physician annual volume standards. These requirements were specifically

10 The following footnote is included in the MHS screening response: “Population density based on a 2010 population of 471,221 in 2010, an estimated 2020 population of 516,808, and a constant land area of 1,763.82 square miles.” Page 22 of 65 included to ensure a sufficient volume of PCI procedures at a given hospital, thereby better ensuring high quality and safe care. In our case, the provision of elective PCIs at Valley Hospital would be provided by the same Pulse Heart Institute cardiologists, using the same high standards of care delivery, who perform PCIs at Deaconess Hospital today. In other words, there would not be a volume/quality issue since these same physicians would be providing the same PCIs, but with the project, at an additional location—Valley Hospital. There would not be the same locational issue with PCI volumes, and in this regard, place of service— Deaconess or Valley--would be irrelevant. Also, as noted in our Application, Valley Hospital has plans in process to implement an emergent PCI program, with the same Pulse Heart cardiologists who perform all PCIs at Deaconess Hospital today. In other words, there would not be a volume/quality issue since these same physicians would be providing the same PCIs, but with the project, at an additional location—Valley Hospital.

We selected a sub-planning area of the Spokane Valley Service Area, consistent with well established health care delivery planning criteria, to reflect local utilization patterns and maximize resident access. Towards that end, the Spokane Valley Service Area was based on those zip codes which accounted for approximately 80% of Valley Hospital’s patient days.

This method of defining a service or planning area is standard in healthcare planning. Alignment of PCI service provision with local healthcare utilization patterns and maximizing resident access is the rationale behind our application and was motivated by the significant demand for local PCI service within Spokane Valley. The public comment letters received by the Department from Spokane Valley residents, community and business leaders, and Pulse Heart Institute physicians demonstrate the existence of this demand, and the community need for local PCI services.

Finally, it should be pointed out that, consistent with well-established health care delivery planning criteria, the Spokane Valley Service Area was constructed to be reflective of local utilization patterns and maximize resident access. Towards that end, the Spokane Valley Service Area was based on those zip codes which accounted for approximately 80% of Valley Hospital’s patient days. Alignment of PCI service provision with local healthcare utilization patterns and maximizing resident access is the rationale behind our application—improved healthcare access to Spokane Valley residents.”

As acknowledged by the applicant, WAC 246-310-720(2) provides the following guidance for the addition of a new PCI program in a planning area. It states: (2) The department shall only grant a certificate of need to new programs within the identified planning area if: (a) The state need forecasting methodology projects unmet volumes sufficient to establish one or more programs within a planning area; and (b) All existing PCI programs in that planning area are meeting or exceeding the minimum volume standard.”

The numeric methodology does not calculate need for an additional PCI program in planning area #1 for the 2019 review cycle. For this reason, the department concludes that the numeric methodology does not demonstrate need for an additional PCI program in planning area #1.

Additionally, the rules do not allow for a PCI sub-planning area to demonstrate numeric need. The PCI planning areas are identified in WAC 246-310-705(5) and which defines ‘PCI planning area’ which states: "PCI planning area" means an individual geographic area designated by the department for which adult elective PCI program need projections are calculated. For purposes of adult elective PCI projections, planning area and service area have the same meaning. The following table establishes PCI planning areas for Washington state:…”

Page 23 of 65

Based on the definition of PCI planning area in the rule referenced above, Spokane County is located in PCI planning area #1, which includes the full counties of Adams, Asotin, Ferry, Grant, Lincoln, Pend Oreille, Spokane, Stevens, and Whitman.

Furthermore, there is case law supporting the department’s interpretation of WAC 246-310-720(2). In Swedish Health v. The Department of Health11 the Court of Appeals upheld the department’s action in denying a Certificate of Need to a hospital in a planning area where one of the two required components in WAC 246-310-720(2) was not met. Relevant excerpts from the Opinion are below:

“…if the Department were to grant a certificate of need to Swedish, despite the plain language of its regulation that specifies minimum volume standards for existing PCI programs, it is fair to assume prejudice to those existing programs. Otherwise, minimum volume levels of existing programs would be irrelevant to forecasting need.” [source: Swedish v. Department of Health p12]

“Swedish points to the Department's regulations for certificates of need for different procedures or services. Swedish argues that these regulations "contain[] numerous exceptions, exemptions, and caveats which allow for[the] approval of various types of projects which may not otherwise satisfy applicable criteria." But the fact that those other regulations contain exemptions is not material to the issues before us.

The PCI regulations lack such language, indicating that their standards are mandatory and not subject to exemption. We reject the argument that the fact that other certificates of need may be granted without meeting all the identified criteria establishes that PCI certificates of need can also be granted without meeting the governing criteria.” [source: Swedish v. Department of Health pp13-14]

“Swedish appears to argue that the Department failed to decide whether the special circumstances that Swedish cites merited issuance of a certificate of need, despite the failure to meet an essential criterion for issuance. Because the regulation clearly requires fulfillment of the minimum volume criterion, and it is undisputed that this criterion is not met in this case, the Department did not need to decide whether the special circumstances advanced by Swedish merited issuance of a certificate of need. Swedish’s arguments to the contrary are unpersuasive for the reasons we explained earlier in this opinion.” [source: Swedish v. Department of Health pp15-16]

“Moreover, even assuming the Department could have issued an order inconsistent with its rules, nothing indicates that it was required to consider doing so before denying Swedish's application. Thus, the Department did not fail to decide all issues requiring resolution.” [source: Swedish v. Department of Health p16]

“In sum, the Department did not erroneously interpret or apply the law when it denied Swedish's application for a certificate of need.” [source: Swedish v. Department of Health p15]

WAC 246-310-720 is mandatory, not permissive. The numeric methodology is a population and utilization-based assessment used to determine the projected need for PCI services in an identified planning area. Based solely on the numeric methodology applied by the department using appropriate and accessible data sources, need for an additional PCI program in PSA #1 is not demonstrated.

11 Swedish Health Servs. v. Dep't of Health, 189 Wn. App. 911, 358 P.3d 1243, 2015 Wash. App. LEXIS 2088, 189 Wn. App. 911, 358 P.3d 1243, 2015 Wash. App. LEXIS 2088 Page 24 of 65 For the reasons above under WAC 246-310-720, the department concludes that the department cannot approve a new PCI program in planning area #1. This sub-criterion is not met.

Further criteria are subject to review under this section of the evaluation. According to General Requirements in WAC 246-310-715, the applicant hospital must submit a detailed analysis regarding the effect that an additional PCI program will have on the University of Washington (UWMC) program and how the hospital intends to meet the minimum number of procedures. The criteria and applicant’s responses are addressed below.

WAC 246-310-715(1) Submit a detailed analysis of the impact that their new adult elective PCI services will have on the Cardiovascular Disease and Interventional Cardiology Fellowship Training programs at the University of Washington, and allow the university an opportunity to respond. New programs may not reduce current volumes at the University of Washington fellowship training program.

MultiCare Health System “Please see Table 11 for the number of PCI cases to PSA 1 residents performed at the University of Washington Medical Center (UWMC). In 2018, this included a total of 5 emergent PCIs and 17 elective PCIs. Furthermore, for residents of the Spokane Valley Service Area, a total of 1 emergent PCI and 3 elective PCIs were performed at UWMC.

Thus, neither MultiCare Health System nor Dr. Larry Dean, Director of UW Regional Heart Center, expect any impact on the Cardiovascular Disease and lnterventional Cardiology Fellowship Training programs at the University of Washington.

Applicant’s Table

Please see Exhibit 3 for a letter from Dr. Needham Ward of MultiCare's Pulse Heart Institute to Dr. Larry Dean, Director of UW Regional Heart Center, sent on January 13, 2020.

Please see Exhibit 4 for the emailed response from Dr. Larry Dean, Director of UW Regional Heart Center, sent on January 26, 2020 and indicating no impact on the UW Training Program in lnterventional Cardiology.” [source: Application, pdf 23-24]

The letter in Exhibit 3 referenced in Exhibit 3 above is from MultiCare Pulse Heart Institute and addressed to the director of the Regional Heart Center at University of Washington Medical Center. The letter provides a summary of the PCI project submitted and includes the existing number of PCIs provided at MHS Deaconess Hospital. The letter also states that from January 2017 through March 2019, University of Washington Medical Center performed no PCIs procedures for residents of MHS’s Spokane Valley sub- planning area of Spokane Valley. The letter does not identify the number of PCIs performed at University of Washington Medical Center for residents of the entire PCI planning area #1; rather it focuses on the eleven ZIP codes identified in this application as ‘Spokane Valley.’ The letter concludes that the approval of MHS’s application would have no impact on the University of Washington Medical Center’s training program.

Page 25 of 65

University of Washington Medical Center provided an e-mail response to the letter. The e-mail is restated below. [source: Application, Exhibit 4]

“Hi Needham. I've reviewed the attached letter and confirm receipt and as per the DOH CN regulations find no impact on the UW training program in interventional cardiology. Please let me know if you require anything else. Thanks. Larry S. Dean, MD, MSCAI, FACC”

Public Comments None

Rebuttal Comments None

Department Evaluation It is noted that MHS focused on specific ZIP codes within a portion of Spokane County for its review under this standard. To evaluate this standard, the department reviewed year 2018 inpatient discharge data reported by University of Washington Medical Center. The data reviewed focused on patients age 15 and older residing in the counties included in PCI planning area #1—Adams, Asotin, Ferry, Grant, Lincoln, Pend Oreille, Spokane, Stevens, and Whitman. For year 2018, four patients residing in Grant County and one patient residing in Spokane County received inpatient PCI services at University of Washington Medical Center.

Even though the department obtained the information necessary to review this criterion, MHS did not present an opportunity for University of Washington Medical Center to provide comments specific to the entire PCI #1 planning area as required in rule. Based on the information above, the department concludes that this sub-criterion is not met.

WAC 246-310-715(2) submit a detailed analysis of the projected volume of adult elective PCIs that it anticipates it will perform in years one, two and three after it begins operations. All new elective PCI programs must comply with the state of Washington annual PCI volume standards of two hundred by the end of year three. The projected volumes must be sufficient to assure that all physicians working only at the applicant hospital will be able to meet volume standards of fifty PCIs per year. If an applicant hospital fails to meet annual volume standards, the department may conduct a review of certificate of need approval for the program under WAC 246-310-755.

MultiCare Health System MHS provided a table showing the projected number of PCIs it expects to perform in partial year 2021 and full years 2022 through 2024. The table below summarized the information provided by the applicant. [source: May 12, 2020, screening response, pdf 7]

Page 26 of 65 Applicant’s Table

Public Comments None

Rebuttal Comments None

Department Evaluation MHS clarified in the application that the majority of patients expected to be served by Valley Hospital’s PCI program are those Washington State patients currently residing in Spokane Valley, within Spokane County. This project assumes that Spokane Valley residents requiring PCI services would no longer be referred to one of the two existing PCI providers in the planning area. Rather, MHS assumes that a high number of these patients would instead obtain PCI services at Valley Hospital.

As noted in the need section of this evaluation, PCI Planning Area #1 is made up of nine counties, including Spokane County. MHS’s Spokane Valley ‘planning area’ is a sub-set of Spokane County, which, in turn, is a sub-set of PCI planning area #1. As previously discussed in this evaluation, this approach is not allowed by the PCI rules. Further, in the ‘need’ section of this evaluation, the department’s methodology concluded no need for an additional PCI program in planning area #1. For these reasons, the department concludes that this sub-criterion is not met.

(2) All residents of the service area, including low-income persons, racial and ethnic minorities, women, handicapped persons, and other underserved groups and the elderly are likely to have adequate access to the proposed health service or services. To evaluate this sub-criterion, the department evaluates an applicant’s admission policies, willingness to serve Medicare and Medicaid patients, and to serve patients that cannot afford to pay for services.

The admission policy provides the overall guiding principles of the facility as to the types of patients that are appropriate candidates to use the facility and assurances regarding access to treatment. The admission policy must also include language to ensure all residents of the planning area would have access to the proposed services. This is accomplished by providing an admission policy that states patients would be admitted without regard to race, ethnicity, national origin, age, sex, pre-existing condition, physical, or mental status.

Medicare certification is a measure of an applicant’s willingness to serve the elderly. With limited exceptions, Medicare is coverage for individuals age 65 and over. It is also recognized that women live longer than men and therefore more likely to be on Medicare longer.

Page 27 of 65 Medicaid certification is a measure of an applicant’s willingness to serve low income persons and may include individuals with disabilities.

Charity care shows a willingness of a provider to provide services to individuals who do not have private insurance, do not qualify for Medicare, do not qualify for Medicaid, or are underinsured. With the passage of the Affordable Care Act in 2010, the amount of charity care decreased over time. However, with recent federal legislative changes affecting the ACA, it is uncertain whether this trend will continue.

MultiCare Health System MHS provided copies of the following policies currently used at all of its hospitals, including Valley Hospital in Spokane. [source: Application, Exhibit 5, Exhibit 6, and Exhibit 7] • Admission Policy titled ‘Admission of a Patient’– updated April 2018 • Financial Assistance (Charity Care Policy) – updated September 2018 • Patient Nondiscrimination Policy – updated April 2018

The above policies are also posted to the Department of Health website along with the following policies: • End of Life Policy – updated September 2019 • Nurse Staffing Policy – updated December 2019 • Reproductive Health Policy – updated July 2017 • Reproductive Health Services Provided Policy – updated September 2019.

Valley Hospital is currently Medicare and Medicaid certified. MHS provided its current source of revenues by payer for Valley Hospital as a whole, and projected for both the PCI services and the hospital with PCI services. MHS stated that the addition of an adult, elective PCI program would slightly change the payer mix for the hospital. [source: May 12, 2020, screening response, pdf 4]

Current and projected hospital-wide and cardiac catheterization cost center payer mix is shown below.

Department’s Table 2 MultiCare Valley Hospital Current and Projected Percentages of Revenue Revenue Source Current Hospital Wide Projected Hospital Wide Medicare/Advantage 45.5% 45.7% Medicaid/Healthy Options 20.0% 20.0% Self Pay (no insurance) 2.8% 2.8% Other* 31.7% 31.5% Total 100.0% 100.0% * “Other” includes both commercial and managed care.

In addition to the policies and payer mix information, MHS provided the following information related to access to healthcare services provided by Valley Hospital. [source: Application, pdf 25] “Our Financial Assistance Policy is included as Exhibit 6. Between 2016 and 2018, hospitals within the Eastern Washington Region averaged Charity Care levels equal to about 0.85% of Total Patient Revenues. Valley Hospital has operated under MultiCare management since July 2017. In 2018, the first full year of operations under MultiCare management, Charity Care levels for Valley Hospital were slightly less than the Eastern Washington regional average but exceeded the region's three-year historical average. Please see Table 12 for historical Charity Care statistics for Deaconess and Valley Hospitals, as well as the Eastern Washington region overall.

Page 28 of 65 As an aside, we note that the MultiCare hospitals Auburn Regional Medical Center, Good Samaritan Hospital, and Tacoma General/Allenmore, which apply the same financial assistance policy, all provided Charity Care amounts above their respective regional averages in 2018.”

MHS also provided a table showing historical percentages of charity care for its two Spokane County hospitals since its ownership in 2017. That table is not recreated in this section of the evaluation.

Public Comments The department received the following public comment consistent with this sub-criterion.

Jeffry Philips, Community Mission Board Member, Providence Healthcare “I also have concerns about the amount of charity care that MultiCare will provide in this arena for the uninsured and underinsured. As you are aware, Providence has continued in their commitment to serve those who are most vulnerable in our communities, regardless of financial means -- a commitment that is embedded.”

Charity Care Concerns Raised by Providence Health & Services “Under Washington law, acute care hospitals are required to maintain a charity care program. Charity care is a critical component in safeguarding the health of communities, providing a safety net, and ensuring access to health care services for underserved populations and the uninsured and underinsured. Charity care ensures that everyone is able to obtain the care and services they need, regardless of their ability to pay. The level of charity care provided by an applicant in the past, together with the projected level of charity care for its proposed project, are the key factors considered by the Department in determining whether the project will provide “adequate access” to low income persons and underserved groups.

As shown in Table 1 below, MultiCare Valley’s and MultiCare Deaconess Hospital’s 2018 charity care rates were below the Eastern Washington Region rate. In order to make an additional regional comparison, we limited the hospitals to be compared to only acute care hospitals in PCI Planning Area 1, and we show those rates in Table 1. Even after narrowing the hospitals to just those in the Planning Area, MultiCare Valley’s and MultiCare Deaconess Hospital’s 2018 rates were still lower than the PCI Planning Area 1 rate.

In addition, revised charity care assumptions and inconsistent statements relating to charity care in MultiCare’s application and in its screening responses raise questions as to both the accuracy of its Page 29 of 65 reporting and whether its assumptions are reliable. In Exhibit 8 of its application, MultiCare states: “Charity care [is] calculated at 0.89% of total patient revenues for 2018, and assumed to equal this proportion for all future years.” In addition, MultiCare provides actual charity care amounts for 2018 and 2019 and budgeted amounts for 2020. Table 2 below reproduces MultiCare’s actual and budgeted charity care amounts as set forth in the Income Statement contained in the application.

Noting that MultiCare Valley’s charity care rates have been lower than the Eastern Washington Region average, the Department in its Screening Question #11 requested MultiCare to “[e]xplain what ‘reasonable efforts’ MHS will use to increase charity care at Valley Hospital to an amount closer to the regional average.” In response, MultiCare provided a new charity care actual amount for 2019. MultiCare stated:

As described in the attached table, Valley Hospital’s charity care was $6.2 million in 2018, but it increased to $11.96 million, based on 2019 actual financial statistics, 1.6% of total patient revenues. This percentage figure is well above the 2016-2018 Eastern Washington Region average of 0.87%. Further, as detailed in Exhibit 17, in the interest of conservatism, we have held that charity care percentage of 1.6% constant over the forecast period 2021-2024. (emphasis added)

The fact that in MultiCare’s application its 2019 charity care actual amount was $6,631,988, while in its screening responses it states that the 2019 charity care amount was $11.96 million, raises doubts about MultiCare’s correct 2019 charity care amount. Since MultiCare has not provided audited financial statements for 2019, it is not possible to confirm which charity care amount is correct. The inconsistency is made even more confusing by MultiCare’s updated Income Statement for its 2018-2019 Historical and 2020 Budget. In its screening response update to its historical statistics, MultiCare provides the following charity care actual and budgeted amounts: 2018 actual = $6,204,838; 2019 actual = $11,961,367; 2020 budget = $6,612,874. As shown in Table 3 below, these represent charity care as a percentage of total patient revenue at the following rates: 2018 = 0.89%; 2019 = 1.60%; 2020 = 0.89%.

Page 30 of 65

Overall, the charity care inconsistencies in the CN application and screening responses should raise substantial concerns for the Department about how much charity care, in fact, MultiCare Valley will provide in the future. This is an instance in which applying a charity care-related condition to the approval of a certificate of need application is not sufficient. MultiCare has been inconsistent in the information and budget projections it has offered, providing no reliable assurances about legitimate steps it will take to provide charity care at an amount closer to the regional average. For these reasons, MultiCare has failed to fulfill subcriterion 2, and its application must be denied.”

Rebuttal Comments MHS provided rebuttal comments in response to the public comments related to this sub-criterion.

MultiCare Health System September 4, 2020, Rebuttal Comments

Historical Provision of Charity Care Providence, in their public comments, expresses concern regarding the past amounts of Charity Care provided by MultiCare facilities in Eastern Washington. As proof, they report the Charity Care amounts provided by MultiCare/Deaconess Hospital and MultiCare/Valley Hospital for the years 2016, 2017, and 2018 in Table 1 of their Public Comment. However, this table is deceptive and misleading, because, as reported in the Department of Health Charity Care Reports, Deaconess and Valley hospitals were owned and operated by Community Health System (“CHS”) until July 2017. Thus, Providence criticizes MultiCare for charity care amounts provided by an entirely different organization. In fact, since MultiCare assumed ownership of the Deaconess and Valley facilities, the absolute and relative amounts of charity care provided have steadily risen. We present these proportions for MultiCare Deaconess and Valley Hospitals for the period 2017 to 2019, along with Providence Sacred Heart and the Eastern Washington Region5 Average for comparison.

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Since 2017, the amount of Charity Care provided by Valley Hospital has increased from about $2M to $12M, a six-fold increase overall, and a five-fold increase relative to total patient service revenue (0.31% to 1.6%). Over this same period, the amount of Charity Care provided at Deaconess Hospital also increased, from about $2.8M to $25.8M. This represented an 8-fold increase overall, and a 7-fold increase relative to total patient service revenue (0.19% to 1.37%). Providence Sacred Heart also increased its amount of Charity Care provided, from about $22.5M in 2017 to about $30.2M in 2019, representing about a 15% average annual increase.

Furthermore, the Eastern Washington Region Average has increased significantly over the period 2017 to 2019, largely driven by the increased amounts of Charity Care provided by MultiCare Deaconess and Valley Hospitals. Although the final 2019 statistics have, to date, not yet been released, the quarterly reports filed by Eastern Washington hospitals indicate that in 2019, the Eastern Washington Region Average of Charity Care as a proportion of Total Patient Service Revenue was equal to 1.35%.6 This ratio was equal to 1.37% for MultiCare Deaconess, 1.6% for MultiCare Valley, and 1.13% for Providence Sacred Heart. Thus, in 2019, MultiCare Deaconess and MultiCare Valley both exceeded the Eastern Washington Region Charity Care Average.

Revision of Reported 2019 Charity Care Levels As stated in our application and identified by Providence in its public comments, our original Pro Forma, 2020 Budget, and reported 2019 financial statistics assumed Charity Care to equal the 2018 proportion of 0.89% of Total Patient Service Revenues. This assumption was necessary because when our application was submitted in February 2020, full year 2019 Charity Care statistics were not yet known. Between the time when our application was submitted and our May 11, 2020 screening responses, the full year 2019 Page 32 of 65 Charity Care information did become available, and we updated our 2019 financial statistics and Pro Forma accordingly. For consistency, we left our 2020 budget figures based on the 2018 Charity Care proportion.

We are unsure why updating Charity Care statistics as part of our screening responses to reflect the most recent, actual data available should “raise substantial concerns for the Department about how much charity care, in fact, MultiCare Valley will provide in the future.” The simple fact of the matter is that CHS provided very little charity care for a number of years prior to its sale of the Deaconess and Valley facilities to MultiCare. Since MultiCare has assumed operations of these facilities, the Charity Care which they have provided has increased dramatically, to the point where these facilities have driven a region-wide increase in the amount of Charity Care provided as a proportion of patient service revenues.”

Department Evaluation Valley Hospital has been providing healthcare services to the residents of Spokane County and surrounding areas since it became operational in January 1969. While the hospital has experienced some ownership changes in the more than 50 years of operation, the most recent is MHS’s purchase of both Valley Hospital and Deaconess Medical Center in year 2017. [source: MHS Valley Hospital website]

Within this application, MHS states that healthcare services at Valley Hospital are available to low-income, racial and ethnic minorities, handicapped and other underserved groups. [source: Application, pp24-25]

The Admission Policy provided in the application is used for all MHS hospitals, including Valley Hospital in Spokane County. The Admission Policy describes the process Valley Hospital uses to admit a patient and outlines rights and responsibilities for both Valley Hospital and the patient.

MHS also provided its Non-Discrimination Policy used for all MHS hospitals, including Valley Hospital. The policy is intended to ensure all patients, employees, and contractors can expect fair and respected treatment with no discrimination and includes the following non-discrimination language.

“MHS does not exclude, deny benefits to, or otherwise discriminate against any person on the basis of race, color, creed, religion, age, disability, national origin, language, marital status, sex (including pregnancy), sexual orientation, gender identity or expression, veteran or military status, or any other basis prohibited by federal or state law in admission to, participation in, or receipt of the services and benefits under any of its programs and activities, whether carried out by MHS directly or through a contractor of any other entity with which MHS arranges to carry out its programs and activities.

This policy applies to MHS Personnel's interactions with patients, vendors, guests, and visitors of MHS. For questions regarding employment discrimination involving MHS, please see the MHS Policy and Procedure "Equal Employment Opportunity and Employment Law."

The policy also includes contact information for questions or concerns.

Valley Hospital currently provides services to both Medicare and Medicaid patients. MHS expects slight changes in Medicare and Medicaid percentages at the hospital if this project is approved. The table provided by MHS below shows the comparison of current with projected for the hospital as a whole. [source: May 15, 2020, screening response, p4] Financial data provided in the application also shows both Medicare and Medicaid revenues.

The Financial Assistance Policy (Charity Care) provided in the application has been reviewed and approved by the Department of Health's Hospital Financial/Charity Care Program (HFCCP). The policy outlines the process one would use to obtain financial assistance or charity care. The policy was approved Page 33 of 65 in March 2018. This is the same policy posted to the department’s website for Valley Hospital. The pro forma financial documents provided in the application include a charity care 'line item' as a deduction of revenue.

Public comments provided for this sub-criterion assert that the proposed PCI services would not be available or accessible to all residents of the service area because MHS relied on a sub-planning area for this PCI project. While use of a sub-planning area for PCI services is not acceptable under the current PCI rules, nothing in MHS’s application documentation suggests that Valley Hospital would not provide PCI services to patients that reside outside of its sub-planning area.

Charity Care Percentage Requirement For charity care reporting purposes, Washington State is divided into five regions: King County, Puget Sound (less King County), Southwest, Central, and Eastern. Valley Hospital is located in Spokane County, within the Eastern Region. Currently there are 21 hospitals operating within the region. Of the 21 hospitals, not all reported charity care data for years reviewed—years 2016, 2017, and 2018.12

Table 3 below compares the three-year historical average of charity care provided by the hospitals currently operating in the Eastern Region and Valley Hospital’s historical charity care percentages for years 2016- 2018. The table also compares the projected percentage of charity care. [source: May 15, 2020, screening response, Exhibit 17 and HFCCP 2016-2018 charity care summaries]

Department’s Table 3 Charity Care Percentage Comparisons Percentage of Percentage of Total Revenue Adjusted Revenue Eastern Region Historical 3-Year Average 0.85% 2.42% MHS Valley Hospital Historical 3-Year Average 0.54% 1.15% MHS Valley Hospital Projected Average 1.60% 4.66%

As noted in Table 3 above, the three-year historical average shows Valley Hospital has been providing charity care below both the total and adjusted regional averages. For this project, MHS projects that Valley Hospital would increase its charity care dollars and percentages and provide care above the regional average for both total and adjusted revenues.

Public comments provided for this sub-criterion assert that the projected charity care percentages are unreliable based on the historical percentages provided by the hospital. This could be considered a reasonable concern based on historical data. However, it is noted that MHS assumed ownership of both Valley Hospital and Deaconess Medical Center in year 2017. As a result, only historical year 2018 shows charity care percentages and dollars under MHS ownership.

Regardless of ownership, in past hospital CN applications, the department has been attaching a charity care condition to the approvals, based, in part, on the fluctuation of charity care percentages since the passage of the Affordable Care Act in March 2010. Additionally, the department would typically attach a charity care condition on a hospital project that is proposing a new service, including a tertiary service. For these reasons, if this project is approved, the department would attach a condition that requires MHS to agree to provide charity care at an amount consistent with the Eastern Regional amounts.

12 Four hospitals did not report for year 2016: Ferry County Hospital, Garfield County Hospital, Othello Community Hospital, and Whitman Medical Center. Three hospitals did not report in year 2017: Adventist Walla Walla General Hospital (closed in year 2017), Ferry County Hospital, and Othello Community Hospital. Two hospitals did not report in year 2018: Ferry County Hospital and Othello Community Hospital. Page 34 of 65

Based on the information provided in the application and with MHS’s agreement to a charity condition, the department concludes this sub-criterion is met.

(3) The applicant has substantiated any of the following special needs and circumstances the proposed project is to serve. (a) The special needs and circumstances of entities such as medical and other health professions schools, multidisciplinary clinics and specialty centers providing a substantial portion of their services or resources, or both, to individuals not residing in the health service areas in which the entities are located or in adjacent health service areas. (b) The special needs and circumstances of biomedical and behavioral research projects designed to meet a national need and for which local conditions offer special advantages. (c) The special needs and circumstances of osteopathic hospitals and non-allopathic services.

(4) The project will not have an adverse effect on health professional schools and training programs. The assessment of the conformance of a project with this criterion shall include consideration of: (a) The effect of the means proposed for the delivery of health services on the clinical needs of health professional training programs in the area in which the services are to be provided. (b) If proposed health services are to be available in a limited number of facilities, the extent to which the health professions schools serving the area will have access to the services for training purposes.

(5) The project is needed to meet the special needs and circumstances of enrolled members or reasonably anticipated new members of a health maintenance organization or proposed health maintenance organization and the services proposed are not available from nonhealth maintenance organization providers or other health maintenance organizations in a reasonable and cost-effective manner consistent with the basic method of operation of the health maintenance organization or proposed health maintenance organization.

Department Evaluation The sub-criterion under (3), (4), and (5) is not applicable to these applications.

B. Financial Feasibility (WAC 246-310-220) Based on the source information reviewed, the department determines that MultiCare Health System does not meet the applicable financial feasibility criteria in WAC 246-310-220.

(1) The immediate and long-range capital and operating costs of the project can be met. WAC 246-310 does not contain specific WAC 246-310-220(1) financial feasibility criteria as identified in WAC 246-310-200(2)(a)(i). There are also no known recognized standards as identified in WAC 246- 310-200(2)(a)(ii) and (b) that directs what the operating revenues and expenses should be for a project of this type and size. Therefore, using its experience and expertise the department evaluates if the applicant’s pro forma income statements reasonably project the proposed project is meeting its immediate and long- range capital and operating costs by the end of the third complete year of operation.

MultiCare Health System MHS provided the following assumptions to project adult, elective PCI volumes, patient mix, and payer mix at Valley Hospital. [source: May 12, 2020, screening response, pp3-4 and pp7-8]

Page 35 of 65 PCI Projected Assumptions “After review, we have revised the number of elective and emergent PCIs expected at Valley Hospital over the forecast period. We present our revised forecast, which includes 2024, in Table 2 below. The revised financials in Exhibit 17 reflect the revised volume forecasts.

Based on the Department of Health need methodology, we forecast Spokane Valley residents in need of 284 PCIs in 2021, 287 PCIs in 2022, 291 PCIs in 2023, and 295 PCIs in 2024, where this growth is driven off forecast population changes.

The projected PCI volumes presented in Table 2 are based on a growing proportion of Spokane Valley residents receiving care at Valley Hospital. In 2021, which reflects only 11 months of PCI operations, we expect this proportion to equal about 28%. We expect this proportion to grow to about 42% in 2022, about 72% in 2023, and 80% in 2024. The combination of these proportions and the Spokane Valley resident utilization gives the forecast volumes of 80, 120, 210, and 236 through the respective years 2021, 2022, 2023, and 2024. Although the specific numerical values of these proportions are discretionary, their general magnitude is based on expectations that most Spokane Valley residents will choose a local hospital for PCI services once that option is available. From the community support and statements on the importance of a local PCI provider, by Year 3 we anticipate about 80% of PCIs from Spokane Valley residents to be performed at Valley Hospital.

The distribution of PCIs between elective and emergent procedures is based on 2018 Spokane Valley resident PCI utilization. From the Department of Health PCI Outpatient Surveys and CHARS, in 2018, Spokane Valley residents received a total of 72 urgent/emergent PCIs and 24 elective PCIs at Deaconess Hospital and a total of 106 urgent/emergent PCIs and 64 elective PCIs at Providence Sacred Heart Medical Center.3 Overall, Spokane Valley Residents had 185 urgent/emergent PCIs and 91 elective PCIs in 2018. Thus, about 67% of PCIs performed on Spokane Valley residents were urgent/emergent. We assume this ratio will hold constant through the forecast period, and use this to calculate the respective number of urgent/emergent and elective PCIs in Table 2.

The emergent and elective projections in Table 2 are consistent with the rationale on page 22 of our application. Of the 72 emergent PCIs performed on Spokane Valley residents at Deaconess Hospital in 2018, it is assumed about two-thirds will shift to Valley Hospital in Year 0 (previously Year 1), and all will be performed at Valley Hospital in Year 1 (previously Year 2). An additional eight emergent cases are expected in Year 1, and we expect the additional growth in Year 2 and Year 3 to derive from further reductions in Spokane Valley resident outmigration.

Page 36 of 65 With respect to elective PCI utilization, we anticipate 26 elective PCIs in Year 0, 40 in Year 1, 69 in Year 2, and 78 in Year 3. These numbers are projected based on the ratio of emergent to elective ratio of PCIs for Spokane Valley residents’ service mix at Valley Hospital. Our rationale for these numbers is the expectation that all elective PCIs from Spokane Valley residents performed at Deaconess will be performed at Valley Hospital and resident outmigration will substantially decline.”

Payer Mix “Table 7 on page 14 of our application presented the 2019 payer mix for Valley Hospital under the column title “Existing Payer Mix” and the projected payer mix for the emergent and elective PCI cost centers under the column title “PCI Payer Mix.” The projected payer mix for Valley Hospital exclusive of the emergent or elective PCI programs is assumed equal to the 2019 payer mix. The payer mix for the hospital as a whole with PCI was stated to be “basically unchanged” relative to the hospital without PCI, although we did not show these numbers. We do so now in Table 1 below.

Furthermore, after review of our payer mix calculations, we recognized a small rounding error in the PCI payer mix for the category “Commercial & Mgd Care” of 0.004. Our revised financial pro forma presented in Exhibit 17 reflects the corrected payer mix proportions.”

MHS operates Valley Hospital on a January 1 through December 31 fiscal year. MHS’s projections below beginning in fiscal year 2021 through fiscal year 2024. [source: May 12, 2020, screening response, p7 and Exhibit 17]

Department’s Table 4 Valley Hospital Adult, Elective PCI for Years 2021 through 2024 FY 2021 FY 2022 FY 2023 FY 2024 Patient Volume 80 120 210 236 Patient Mix Emergent 66.9% Elective 33.1%

The assumptions MHS used to project revenue, expenses, and net income for Valley Hospital’s adult, elective PCI cost center for fiscal years 2021 through 2024 are below. [source: May 12, 2020, screening response, Exhibit 17]

Page 37 of 65

PCI Cost Center Expense Line Items “Projected PCI volumes of 80 cases in 2021, 54 of which are assumed to be emergent PCIs, will not need additional FTEs for elective cases, presumed to equal 24 PCIs. The staffing model assumes 7.8 FTEs are needed for emergent PCIs. The incremental demand for elective cases will only increase by less than 2 cases per week, which can easily be absorbed by staff assumed required for emergent PCIs.”

Additionally, MHS provided a listing and breakdown of costs for the ‘Purchased Services’ line item shown in the statement for the PCI cost center. [source: May 12, 2020, pp16-17]

Hospital Aggregate Line Items • Management FTE includes the Clinical Director of the PCI Department. • Technical includes cath lab technician FTEs who assist in patient care and who have expertise/training to operate cath lab imaging equipment. Please see Exhibit 10, Application for a more detailed description of staff competencies and job responsibilities.

Page 38 of 65 • PTO stands for “paid time off.” It is used in the FTE table to capture time provided to employees for vacation, sick leave, training, seminars, etc. It should be noted this designation is separate, and is costed separately, from “Benefits,” as listed in the FTE table. [source: May 12, 2020, p18]

Using the projected revenue by payer source for the hospital and the PCI cost center shown on the previous page, MHS provided the following revenue and expense statement for Valley Hospital’s adult, elective PCI cost center. The statement shows fiscal years 2021 through 2024. [source: May 12, 2020, screening response, Exhibit 17]

Department’s Table 5 Valley Hospital’s Adult, Elective PCI Cost Center Projections for Fiscal Years 2021 through 2024 FY 2021 FY 2022 FY 2023 FY 2024 Net Revenue $1,644,234 $2,466,355 $4,316,117 $4,850,493 Total Expenses $1,546,158 $2,235,634 $2,676,763 $2,759,963 Net Profit / (Loss) $98,076 $230,721 $1,639,354 $2,090,530

Net revenue includes both inpatient and outpatient revenue, minus any deductions for contractual allowances, bad debt, and charity care. Total expenses include all expenses specific to the PCI cost center, such as staffing, supplies, and any purchased services.

In addition to providing the adult, elective PCI cost center revenue and expense statement, MHS also provided a projected revenue and expense statement for Valley Hospital as a whole with the PCI program. The summary below shows fiscal years 2021 through 2024. [source: May 12, 2020, screening response, Exhibit 17]

Department’s Table 6 Valley Hospital with Adult, Elective PCI Service Projections for Fiscal Years 2021 through 2024 FY 2021 FY 2022 FY 2023 FY 2024 Net Revenue $145,916,932 $146,739,051 $148,588,814 $149,123,191 Total Expenses $130,924,157 $131,613,632 $132,054,762 $132,137,962 Net Profit / (Loss) $14,992,775 $15,125,419 $16,534,052 $16,985,229

Net revenue includes both inpatient and outpatient revenue for the entire hospital, minus any deductions for contractual allowances, bad debt, and charity care. Total expenses include all expenses for the hospital, including purchased services, professional fees, staff wages and benefits, and corporate service allocation, which is allocations of shared services across hospitals in the health system. These costs are identified in the breakdown of the ‘Purchased Services’ line item.

Public Comments Below are the public comments submitted regarding this sub-criterion.

Andrew Taylor, Chief Strategy Officer, Providence Health & Services-WA/MT Region “In order for its application to be approved, MultiCare must demonstrate that its proposal satisfies financial feasibility sub-criterion 1: "the immediate and long-range capital and operating costs of the project can be met." There are significant issues relating to the pro forma financial statements and supporting information submitted by MultiCare.

Page 39 of 65 First, the accuracy and reliability of MultiCare's pro forma financial statements are dependent upon the accuracy and reliability of the PCI procedure volume projections for the proposed MultiCare Valley PCI program. However, during the Department’s application screening process, MultiCare significantly revised its pro forma financial statements and the key assumptions upon which the PCI program financial projections are based. Of greatest concern is the fact that, between its application and its first screening responses, MultiCare completely reversed the relative proportions of the PCI program’s emergent and elective procedures.

In its application, MultiCare projected that, in “Year 3” of the MultiCare Valley program’s operation, elective procedures would constitute approximately 71% of the program’s total volume of PCI procedures. However, in its screening responses, MultiCare now projects that, in “Year 3” of operation, elective procedures will constitute only approximately 33% of the program’s total volume of PCI procedures. This wholesale revision of the PCI volume projections completely undermines the validity and reliability of the financial projections for the MultiCare Valley program.

Second, MultiCare asserts that “[t]here are no capital expenditures necessary to expand cardiovascular services to include elective PCI services.” However, concurrently with the submission of its application to establish an elective PCI program, MultiCare is moving forward with the establishment of an emergent PCI program at MultiCare Valley. The establishment of the emergent program requires the construction of “one (1) additional cardiac cath lab in order to expand cardiovascular services to include urgent and emergent cardiac catheterizations and PCI.” It seems clear that the capital expenditures required to establish the emergent PCI program at MultiCare Valley are an integral part of the proposed elective PCI program: “all equipment … will already be in place, given an emergent PCI program.”

This is not a case in which MultiCare Valley has been operating an emergent program for an extended period of time and has now decided to add an elective program. Rather, MultiCare is developing both programs at the same time. Thus, MultiCare Valley’s emergent program and its proposed elective program are a single, integrated program. Accordingly, it is reasonable that some portion of the capital costs of the emergent PCI program should be allocated to the elective program. To our knowledge, MultiCare’s pro forma financial statements fail to take into account these costs. Thus, the financial projections are not accurate or reliable.

Accordingly, as discussed below in Section III, there are significant issues relating to the pro forma financial statements and supporting documentation submitted by MultiCare. As a result, the financial statements are not reliable, and MultiCare's proposal does not satisfy financial feasibility sub-criterion 1.”

Rebuttal Comments In response to the concerns raised above, MHS provided the following rebuttal responses.

MultiCare Health System September 4, 2020, Rebuttal Comments “As stated in our May 11, 2020 screening responses, we revised the number of emergent and elective PCIs expected at Valley Hospital over the forecast period. As Providence well knows, it is not atypical or uncharacteristic for an applicant to make revisions during the screening phase when responding to Department screening questions, which is what occurred. We note that Providence itself often revises its application materials in its varied Certificate of Need applications during the screening phases.

Within our screening responses, we fully explained our revisions and the reasons behind them and provided complete utilization and financial projections to support these revisions. Providence offers no criticism of

Page 40 of 65 the utilization forecasts themselves, but states that such revisions “raises serious doubts about the overall reliability of the pro forma financial statements” and speculates whether “there other aspects of the financial projections that MultiCare will decide to revise after ‘further review’.” The statements by Providence here are baseless, and furthermore, not consistent with either the Department’s or Providence’s own actions in prior CN reviews.

We further emphasize the absence of any Providence statements about the revisions themselves. Thus, Providence implicitly accepts the revisions as reasonable. Instead Providence argues no such revisions should have been made, which is counter to standard applicant practice, counter to Providence’s practice, and is accepted by the Department.”

Department Evaluation To evaluate this sub-criterion, the department first reviewed the assumptions used by MHS to determine the projected number of patient volumes and patient mix for the PCI program at Valley Hospital. MHS based its projected number of patients and internal knowledge of its self-defined sub-planning area not identified in the PCI rules. Further, MHS assumes that “that all elective PCIs from Spokane Valley residents performed at Deaconess will be performed at Valley Hospital and resident outmigration will substantially decline.” This assumption that 100% of the patients residing in the eleven ZIP codes identified by MHS as the ‘Spokane Valley planning area’ is not supported by documentation in the application.

MHS based its projected payer mix on Valley Hospital’s hospital-wide payer mix, with specific percentages of changes in the payer sources: Medicare (5% increase), Medicaid (1% decrease), and ‘commercial/other’ (4% decrease) categories. These percentage changes by payer source are also not supported by documentation in the application.

Further, there is no numeric need for the program in the planning area (see discussion under WAC 246- 310-210). Absent numeric need, the department cannot conclude that there are sufficient volumes to support a new program in the planning area. Based on the above information, the department cannot substantiate MHS’s assumptions using a sub-planning area and concludes they are not reasonable.

MHS based its revenue and expenses for Valley Hospital on the assumptions referenced above. MHS also used historical 2019 operations as a base-line for the revenue and expenses projected for the hospital as a whole with the proposed elective PCI program.

To assist in the evaluation of this sub-criterion, the Department of Health’s Hospital/Finance and Charity Care Program (HFCCP) reviewed the pro forma financial statements submitted by MHS for Valley Hospital. To determine whether MHS would meet its immediate and long range capital costs, HFCCP reviewed fiscal year 2018 and 2019 balance sheets for MHS. MHS’s fiscal year is January 1 through December 31. MHS does not prepare balance sheets at the single hospital level, as a result, the information shown in Table 7 is for MHS as a whole for most recent year 2019. [source: HFCCP analysis, p2]

Department’s Table 7 MultiCare Health System Balance Sheet for Year 2019 Assets Liabilities Current Assets $ 20,241,812 Current Liabilities $ 2,348,750 Board Designated Assets ------Other Liabilities ------Property/Plant/Equipment $ 48,192,138 Long Term Debt $ 107,984,743 Other Assets $ 72,469,058 Equity $ 30,569,515 Total Assets $ 140,903,008 Total Liabilities and Equity $ 140,903,008

Page 41 of 65

For hospital projects, HFCCP provides a financial ratio analysis which assesses the financial position of an applicant, both historically and prospectively. The financial ratios typically analyzed are 1) long-term debt to equity; 2) current assets to current liabilities; 3) assets financed by liabilities; 4) total operating expense to total operating revenue; and 5) debt service coverage. Historical and projected balance sheet data is used in the analysis. MHS’s 2018 balance sheet is used to review applicable ratios and pro forma financial information.

Table 8 compares statewide data for historical year 2018 and MHS’s historical data for projected fiscal years 2021 through 2023. [source: HFCCP analysis, p3]

Department’s Table 8 Current and Projected Debt Ratios MultiCare Health System and Valley Hospital Trend State MHS Valley Valley Valley Valley Category * 2018 2018 2019 FY2021 FY2022 FY2023 Long Term Debt to Equity B 0.442 0.494 3.532 N/A N/A N/A Current Assets/Current Liabilities A 2.729 1.882 8.618 N/A N/A N/A Assets Funded by Liabilities B 0.389 0.386 0.783 N/A N/A N/A Operating Expense/Operating Revenue B 0.973 0.942 0.897 0.897 0.897 0.889 Debt Service Coverage A 5.376 5.071 8.053 8.130 8.173 8.628 Definitions: Formula Long Term Debt to Equity Long Term Debt/Equity Current Assets/Current Liabilities Current Assets/Current Liabilities Assets Funded by Liabilities Current Liabilities + Long term Debt/Assets Operating Expense/Operating Revenue Operating expenses / operating revenue Debt Service Coverage Net Profit+Depr and Interest Exp/Current Mat. LTD and Interest Exp * A is better if above the ratio; and B is better if below the ratio.

After reviewing the financial ratios above, staff from HFCCP provided the following statements. [source: HFCCP analysis, p2] “Some of the debt-related ratios for MultiCare Health System and MultiCare Valley are outside the desired range for 2018 and 2019, respectively, and cannot be calculated for future years because the applicant did not provide pro-forma balance sheets. Because the project is not using any debt financing and represents a very small portion of the facility’s reserves, review of these ratios is not crucial to this evaluation.

Review of the financial and utilization information show that the immediate and long-range capital expenditure as well as the operating costs can be met.”

In the ‘need’ section of this evaluation, the department discussed that the numeric methodology outlined in WAC 246-310-745 calculates no need for an additional provider in PCI planning area #1. Given that WAC 246-310-720(2) requires numeric need in a planning area before a new PCI provider can be approved, the application failed the need criteria under WAC 246-310-210(1).

The Certificate of Need program concurs with the HFCCP analysis – that the financial feasibility of this proposal is largely contingent on need for the project. Based on the lack of numeric need for the project, the department cannot conclude that the immediate and long-range operating costs of the project can be met. This sub-criterion is not met.

Page 42 of 65 (2) The costs of the project, including any construction costs, will probably not result in an unreasonable impact on the costs and charges for health services. WAC 246-310 does not contain specific WAC 246-310-220(2) financial feasibility criteria as identified in WAC 246-310-200(2)(a)(i). There are also no known recognized standards as identified in WAC 246- 310-200(2)(a)(ii) and (b) that directs what an unreasonable impact on costs and charges would be for a project of this type and size. Therefore, using its experience and expertise the department compared the proposed project’s costs with those previously considered by the department.

Department Evaluation There are no costs associated with this project. After reviewing the pro forma revenue and expense statement provided by MHS for Valley Hospital with the proposed PCI services, staff from HFCCP provided the following statements. [source: HFCCP analysis, p4]

“MultiCare’s rates are within the Washington statewide averages. Contingent upon a demonstration of need, this project should not result in an unreasonable impact on the costs and charges for health services. This criterion is satisfied.”

(3) The project can be appropriately financed. WAC 246-310 does not contain specific source of financing criteria as identified in WAC 246-310- 200(2)(a)(i). There are also no known recognized standards as identified in WAC 246-310-200(2)(a)(ii) and (b) that directs how a project of this type and size should be financed. Therefore, using its experience and expertise the department compared the proposed project’s source of financing to those previously considered by the department.

Department Evaluation There are no costs associated with this project. This sub-criterion is not applicable to this project.

C. Structure and Process (Quality) of Care (WAC 246-310-230), General (PCI Program) Requirements (WAC 246-310-715(3), (4), and (5); Physician Volume Standards (WAC 246-310-725; Staffing Requirements (WAC 246-310-730); Partnering Agreements (WAC 246-310-735) and Quality Assurance (WAC 246-310- 740)

Based on the source information reviewed, the department determines that MultiCare Health System does not meet the applicable cost containment criteria in WAC 246-310-230.

(1) A sufficient supply of qualified staff for the project, including both health personnel and management personnel, are available or can be recruited. For adult, elective PCI projects, specific WAC 246-310-230(1) criteria is identified in WAC 246-310- 715(3), (4) and (5); WAC 246-310-725; and WAC 246-310-730 (1) and (2).

WAC 246-310-715(3) Submit a plan detailing how they will effectively recruit and staff the new program with qualified nurses, catheterization laboratory technicians, and interventional cardiologists without negatively affecting existing staffing at PCI programs in the same planning area.

MultiCare Health System MHS provided the following information regarding recruitment of staff necessary for the adult, elective PCI program. [source: Application, pdf 30]

“Valley Hospital currently operates a diagnostic catheterization program with qualified, trained and experienced nurses, radiology, and cardiac technicians (RCIS) and interventional cardiologists. The interventional cardiologists that currently perform cath procedures at Valley and Deaconess will continue Page 43 of 65 to practice at both hospitals. One of the registered nurses and two RCIS technicians have previous PCI experience. During the initial training period, Valley Registered Nurses and technicians will have an immersive training schedule at Deaconess Hospital and follow up monthly shifts at Deaconess to refine proficiency as needed. In 2020, Valley hospital began participating with the local Cardiovascular Tech training school. Valley cath lab intends to use this relationship to recruit new CVTs as the needs arise. Additionally, Valley is working with critical care nurses within the hospital to cross train nurses with an interest in cath lab for additional FTE opportunities or as per diem during times of peak volume. Finally, the Pulse Heart Institute is recruiting two additional interventional cardiologists. These strategies will not negatively affect existing staffing at PCI programs in this area”

MHS also provided clarification regarding specific staffing for the cardiac catheterization laboratory. [source: Application, pdf 29]

“Valley hospital operates one (1) cardiac catheterization/ interventional radiology lab and one (1) cardiac catherization lab which provide services for interventional radiology procedures and diagnostic cardiac catheterization procedures. These procedures are performed by RCIS and radiology technicians and registered nurses trained in both interventional radiology (IR) and cardiac catheterization procedures. The two existing labs are operated with an integrated staffing model which supports these programs and provides full staff coverage 24 hours per day, 7 days per week, 365 days per year. The addition of elective PCI services will only require a modest increase in FTEs. Please see Exhibit 8 for estimated incremental increases in FTEs given project approval.

Due to the limited scope of the elective PCI program, we do not expect this to have a significant impact of other areas of the hospital or cost centers, with the exception of the emergency department who will be caring for acute cardiovascular events and the Coronary Care Unit (CCU) RNs who may be caring for post PCI patients.

Supporting departments, such as the ICU/PCU, are familiar with post catheterization procedures as Valley hospital currently performs diagnostic cardiac catheterization and interventional radiology procedures. Some additional training will be required to include potential PCI complications. Training will also include STEMI and NSTEMI care as Valley Hospital intends to provide PCI for appropriate patients experiencing acute cardiovascular events. Emergency Department FTEs equal 48.9. This includes RNs, Hospital Unit Coordinators (HUCs), & ER Techs. The total FTE RNs in the CCU is currently equal to 25.2.”

The proposed adult, elective PCI services would be operated within the same cost center as the cardiac catheterization/interventional radiology lab at the hospital. Table 9 provides a breakdown of current and projected FTEs [full time equivalents] for the cost center. For this table, current year is calendar year 202020 and projection years begin with calendar year 2021 through 2024. Full year three of the projection years is fiscal year 2023. [source: May 12, 2020, screening response, Exhibit 17]

Department’s Table 9 Valley Hospital Current and Proposed FTEs for Cardiac Catheterization Cost Center CY 2020 CY 2021 CY 2022 CY 2023 CY 2024 FTE by Type Total FTEs Current Increase Increase Increase Increase Management FTE 1.0 0.0 0.0 0.0 0.0 1.0 Nursing FTEs 0.0 2.0 2.0 1.0 0.0 5.0 Technical FTEs 0.0 3.5 2.0 0.0 0.0 5.5 Paid time Off 0.0 1.3 0.8 0.2 0.0 2.3 Total FTEs 1.0 6.8 4.8 1.2 0.0 13.8

Page 44 of 65 In addition to the table above, MHS clarified that physicians are not in the shown in the FTE table because they are employees of Pulse Heart Institute, not Valley Hospital or MHS.

Public Comments None

Rebuttal Comments None

Department Evaluation This section of the evaluation focuses on the staffing of the proposed project. Valley Hospital is currently licensed for 123 acute care beds. The addition of adult, elective PCI program does not require the addition of acute care beds, but may require an increase in staff appropriate to the program.

MHS intends to use the strategies for recruitment and retention of staff it has successfully used in the past. The strategies identified by MHS are consistent with those of other applicants reviewed and approved by the department for general hospital projects and specific adult elective PCI projects.

Information provided in the application demonstrates that MHS is a well-established provider of healthcare services Spokane County and surrounding areas. The application demonstrates that MHS has the ability and expertise to recruit and retain a sufficient supply of qualified staff for this project. This sub-criterion is met.

WAC 246-310-715(4) Maintain one catheterization lab used primarily for cardiology. The lab must be a fully equipped cardiac catheterization laboratory with all appropriate devices, optimal digital imaging systems, life sustaining apparati, intra-aortic balloon pump assist device (IABP). The lab must be staffed by qualified, experienced nursing and technical staff with documented competencies in the treatment of acutely ill patients.

MultiCare Health System To demonstrate compliance with this sub-criterion, MHS provided specific line drawings of the catheterization labs at Valley Hospital. There are no alterations required to implement the proposed project. [source: May 12, 2020, screening response, Exhibit 18]

Public Comments None

Rebuttal Comments None

Department Evaluation Documentation provided demonstrates that catheterization laboratory staff and equipment meet the standards outlined in WAC 246-310-730(2). This sub-criterion is met.

WAC 246-310-715(5) Be prepared and staffed to perform emergent PCIs twenty-four hours per day, seven days per week in addition to the scheduled PCIs.

MultiCare Health System MHS provided the following information related to this sub-criterion. [source: Application, pdfs 29-30] “Valley Hospital's current staffing model will support emergent PCIs twenty-four hours per day, seven days per week. Valley has two teams that provide on-site staffing of the two (2) cath/interventional

Page 45 of 65 radiology labs from 0700 to 1730 Monday through Friday. A call team provides coverage after hours and on weekends. The on-call staff must be on the premises within 30 minutes of being contacted. Table 13 identifies Valley's current staffing plan which details this 24-hour coverage schedule. This coverage model will remain in place with the addition of an elective program.”

Applicant’s Table 13

Public Comments None

Rebuttal Comments None

Department Evaluation Based on the documentation provided, the department concludes that all identified staff will be available 24/7 and will be appropriately trained as required by the standards. This sub-criterion is met.

WAC 246-310-725 Physicians performing adult elective PCI procedures at the applying hospital must perform a minimum of seventy-five PCIs per year. Applicant hospitals must provide documentation that physicians performed seventy-five PCI procedures per year for the previous three years prior to the applicant's CON request.

MultiCare Health System MHS identified four primary physicians associated with Pulse Heart Institute that would be providing PCI services at Valley Hospital and provided documentation in the form of an attestation of PCI volumes for the four physicians. The four physicians are: Elie E. Mueller, MD; Douglas G. Wysham, MD; Mohit Jain, MD; and Joel R. Galloway, MD. Below is the attestation for all Pulse Heart Institute providers from 2017 through 2019. [source: Application, p12 and Exhibit 12]

Page 46 of 65

MHS also provided the required documentation and information for three new cardiology physicians that were recently recruited by Pulse Heart Institute. The three physicians are Angelo S. Ferraro, MD, Nathan Spence, MD, and Stephen T. Thew, MD. [source: July 10, 2020, screening response, p2 and Exhibits 22 and 23]

Public Comments None

Rebuttal Comments None

Department Evaluation This standard requires documentation of historical volumes for the physicians that would perform PCI procedures at the applying hospital. Based on the information above and documents provided in the application, the department concludes that this sub-criterion is met.

WAC-246-310-730(1) Employ a sufficient number of properly credentialed physicians so that both emergent and elective PCIs can be performed

MultiCare Health System MHS provided the following information for this sub-criterion. [source: Application, pdf32] “Please see Table 5 for a listing of properly credentialed physicians currently employed by the Pulse Heart Institute, ready to perform emergent and elective PCIs at Valley Hospital. In addition, the Pulse Heart Institute is currently recruiting two additional interventional cardiologists.”

Applicant’s Table 5

Page 47 of 65 MHS also provided the required documentation and information for three new cardiology physicians that were recently recruited by Pulse Heart Institute. The three physicians are Angelo S. Ferraro, MD, Nathan Spence, MD, and Stephen T. Thew, MD. [source: July 10, 2020, screening response, p2 and Exhibits 22 and 23]

Public Comments None

Rebuttal Comments None

Department Evaluation Documentation provided by MHS demonstrated Valley Hospital will have access to a sufficient number of cardiologists to meet its projected number of PCIs. This sub-criterion is met.

WAC 246-310-730(2) Staff its catheterization laboratory with a qualified, trained team of technicians experienced in interventional lab procedures. a. Nursing staff should have coronary care unit experience and have demonstrated competency in operating PCI related technologies. b. Staff should be capable of endotracheal intubation and ventilator management both on-site and during transfer if necessary

MultiCare Health System MHS provided the following description and qualification detail for the FTEs referenced in its FTE table. [source: Application, pdfs 30-31] “Valley cath lab currently performs diagnostic services in its cardiac catheterization lab. Pulse cardiology has four interventional cardiologists that currently provide 24/7 coverage to perform emergent and elective PCIs at Deaconess Hospital and will also provide coverage at Valley Hospital. Our staff are experienced in the treatment of patients experiencing chest pain and other symptoms of coronary artery disease experienced in interventional lab procedures and have demonstrated skills and competency in diagnostic and interventional related technologies and equipment.

Valley currently has two (2) techs and one (1) nurse, with previous training and experience in PCI procedures. Experienced staff will have competency confirmed at Deaconess Hospital. Techs and staff without previous PCI experience will have comprehensive training and preceptorship and will subsequently float to Deaconess Hospital twice per month or as needed to refine and maintain competency.

Any new nursing or technical staff assigned to Valley's PCI program will be required to receive specific training and competency testing related to the cath lab and will fully comply with the requirements in the relevant job description. Please see Exhibit 11 for the MultiCare's Position Specific Orientation Checklist for Registered Nurses.

All of Valley's cath lab nurses are certified in Advanced Cardiac Life Support that ensures training in performing endotracheal intubation and ventilation management has occurred. In addition, all nursing staff have completed training and certification in conscious sedation. However, Valley does not routinely rely on the cath lab staff to perform these emergency procedures in a non-emergency lab situation. Rather, our protocol requires that we stat-call our 24/7 in-house emergency room physicians and respiratory therapists to immediately respond to a respiratory code in the cath lab.

If a patient needs ventilator management during transfer, our cath lab nurses and/or respiratory therapists are available to accompany the patient during the transfer.”

Page 48 of 65 Applicant’s Table 13

Public Comments None

Rebuttal Comments None

Department Evaluation Documentation provided demonstrated that catheterization laboratory staff meets the standards outlined in WAC 246-310-730(2). This sub-criterion is met.

For the entire sub-criterion of 246-310-230(1), the department concludes that if there is need for the additional PCI services at Valley Hospital, the application meets the sub-criterion.

(2) The proposed service(s) will have an appropriate relationship, including organizational relationship, to ancillary and support services, and ancillary and support services will be sufficient to support any health services included in the proposed project. As an operating facility, Valley Hospital has long-established and well-functioning relationships with health and social service providers in the area. For PCI projects, specific WAC 246-310-230(2) criteria is identified in WAC 246-310-735(1)-(13).

WAC 246-310-735(1) Coordination between the nonsurgical hospital and surgical hospital's availability of surgical teams and operating rooms. The hospital with on-site surgical services is not required to maintain an available surgical suite twenty-four hours, seven days a week.

MultiCare Health System MHS provided a copy of the executed Patient Transfer Agreement between MultiCare Valley Hospital and MultiCare Deaconess Hospital, both in Spokane. Page 1 of the agreement includes a stated purpose, which is quoted below. [source: May 12, 2020, screening response, Exhibit 20] A. The Transferring Hospital seeks to provide elective percutaneous coronary interventions ("PCI") for its patients and has applied for a certificate of need pursuant to WAC 246-310-700 et. Seq. C. The Transferring Hospital recognizes that it may, on occasion, need to transfer a patient, with elective PCI complications, to a hospital with on-site open-heart surgical services. D. The Transferring Hospital has identified the Receiving Hospital, located at 800 W 5th Ave Spokane, Washington, as a health care facility qualified to provide the open-heart surgical services backup needed by the Transferring Hospital.

Page 49 of 65 E. The Receiving Hospital agrees to accept all referred PCI patients from the Transferring Hospital under the terms set forth herein.”

In its July 10, 2020, screening responses, MHS clarified that the omission of ‘B’ in the Recital Section of the Patient Transfer Agreement, was a typographical error; nothing is omitted from the agreement. [source: July 10, 2020, screening response, p3]

Section 3.1 of the Page 1 of the Patient Transfer Agreement states: “Coordination. The Transferring Hospital and Receiving Hospital shall coordinate the availability of surgical teams and operating rooms.”

Public Comments None

Rebuttal Comments None

Department Evaluation Specific to this sub-criterion, the executed Patient Transfer Agreement submitted by MHS demonstrated compliance with this standard. This sub-criterion is met.

WAC 246-310-735(2) Assurance the backup surgical hospital can provide cardiac surgery during all hours that elective PCIs are being performed at the applicant hospital.

MultiCare Health System Section 2.2 of the Patient Transfer Agreement states: “Hours of Operation. The Receiving Hospital shall ensure that it is available to provide cardiac surgery during the hours that elective PCIs are available at the Transferring Hospital.”

Public Comments None

Rebuttal Comments None

Department Evaluation Specific to this sub-criterion, the executed Patient Transfer Agreement submitted by MHS demonstrated compliance with this standard. This sub-criterion is met.

WAC 246-310-735(3) Transfer of all clinical data, including images and videos, with the patient to the backup surgical hospital.

MultiCare Health System

Section 1.3 of the Patient Transfer Agreement states: “Transfer of Clinical Data. The Transferring Hospital shall transfer all clinical data including images and videos, with the patient to the Receiving Hospital.”

Public Comments None

Page 50 of 65 Rebuttal Comments None

Department Evaluation Specific to this sub-criterion, the executed Patient Transfer Agreement submitted by MHS demonstrated compliance with this standard. This sub-criterion is met.

WAC 246-310-735(4) Communication by the physician(s) performing the elective PCI to the backup hospital cardiac surgeon(s) about the clinical reasons for urgent transfer and the patient's clinical condition.

MultiCare Health System

Section 1.5 of the Patient Transfer Agreement states: “Communications between Physicians. The Transferring Hospital shall coordinate communications between the physician performing the elective PCI and the cardiac surgeon at the Receiving Hospital regarding the reasons, for urgent transfer and the patient's clinical condition.”

Public Comments None

Rebuttal Comments None

Department Evaluation Specific to this sub-criterion, the executed Patient Transfer Agreement submitted by MHS demonstrated compliance with this standard. This sub-criterion is met.

WAC 246-310-735(5) Acceptance of all referred patients by the backup surgical hospital.

MultiCare Health System Section 2.1 of the Patient Transfer Agreement states: “Acceptance of Transfers. The Receiving Hospital agrees to accept all patients referred by the Transferring Hospital under this Agreement.”

Public Comments None

Rebuttal Comments None

Department Evaluation Specific to this sub-criterion, the executed Patient Transfer Agreement submitted by MHS demonstrated compliance with this standard. This sub-criterion is met.

WAC 246-310-735(6) The applicant hospital's mode of emergency transport for patients requiring urgent transfer. The hospital must have a signed transportation agreement with a vendor who will expeditiously transport by air or land all patients who experience complications during elective PCIs that require transfer to a backup hospital with on-site cardiac surgery.

Page 51 of 65 MultiCare Health System Section 1.2 of the Patient Transfer Agreement states: “Emergency Transport. The Transferring Hospital shall arrange for appropriate and safe transportation to the Receiving Hospital. Before the Effective Date, the Transferring Hospital shall have an agreement with a transport vendor. The emergency transport staff shall be advanced cardiac life support certified and have the skills, training, and equipment necessary to monitor and treat the patient during transport and to manage an intra-aortic balloon pump. The Emergency transport shall commence within twenty (20) minutes of the initial identification of a complication.”

MHS also provided a copy of the Executed Transportation Agreement between MultiCare Health System and American Medical Response. The agreement includes an executed ‘First Amendment to Customer Agreement’ that specifically incorporates Valley Hospital into the executed agreement. [source: May 12, 2020, screening response, Exhibit 21]

Public Comments None

Rebuttal Comments None

Department Evaluation Specific to this sub-criterion, the executed Patient Transfer Agreement submitted by MHS demonstrated compliance with this standard. Additionally, the executed Transportation Agreement also demonstrated compliance with this standard. This sub-criterion is met.

WAC 246-310-735(7) Emergency transportation beginning within twenty minutes of the initial identification of a complication.

MultiCare Health System

Section 1.2 of the Patient Transfer Agreement provides the following statements. “Emergency Transport. The Transferring Hospital shall arrange for appropriate and safe transportation to the Receiving Hospital. Before the Effective Date, the Transferring Hospital shall have an agreement with a transport vendor. The emergency transport staff shall be advanced cardiac life support certified and have the skills, training, and equipment necessary to monitor and treat the patient during transport and to manage an intra-aortic balloon pump. The Emergency transport shall commence within twenty (20) minutes of the initial identification of a complication.”

Public Comments None

Rebuttal Comments None

Page 52 of 65 WAC 246-310-735(8) Evidence that the emergency transport staff are certified. These staff must be advanced cardiac life support (ACLS) certified and have the skills, experience, and equipment to monitor and treat the patient en route and to manage an intra-aortic balloon pump (IABP).

MultiCare Health System Section 1.2 of the Patient Transfer Agreement provides the following statements. “Emergency Transport. The Transferring Hospital shall arrange for appropriate and safe transportation to the Receiving Hospital. Before the Effective Date, the Transferring Hospital shall have an agreement with a transport vendor. The emergency transport staff shall be advanced cardiac life support certified and have the skills, training, and equipment necessary to monitor and treat the patient during transport and to manage an intra-aortic balloon pump. The Emergency transport shall commence within twenty (20) minutes of the initial identification of a complication.”

Section (1)(b)(2) of the First Amendment to Customer Agreement associated with the Executed Transportation Agreement between MultiCare Health System and American Medical Response provides the following statements. “Staff must be advanced cardiac life support (ACLS) certified and have the skills, experience and equipment to monitor and treat the patient en route and to manage an intra-aortic balloon pump (IABP). In the event, AMR does not have a crew member with the required competency and/or training in regard to a required medical intervention, for the situation, a Registered Nurse (RN) who has been oriented to the transport environment and has the required competency and/or training for the required medical intervention will be supplied by the sending facility, and accompany the transport crew to the receiving facility. AMR will subsequently provide transport of the RN, within a reasonable time frame, back to the sending facility once the transfer of care (hand off) has been completed. Transport of RN back to facility will be arranged through available LFYT transportation which AMR will be reimbursed for.”

Public Comments None

Rebuttal Comments None

WAC 246-310-735(9) The hospital documenting the transportation time from the decision to transfer the patient with an elective PCI complication to arrival in the operating room of the backup hospital. Transportation time must be less than one hundred twenty minutes.

MultiCare Health System Section 1.4 of the Patient Transfer Agreement provides the following statements. “Documentation of Transfer. The Transferring Hospital shall document the reason(s) for recommending the transfer in the patient's medical record, a copy of which shall be sent with the patient to the Receiving Hospital. The Transferring Hospital shall document the transport time from the decision to transfer the patient to arrival in the operating room of the Receiving Hospital, which shall be less than one hundred and twenty minutes.”

Public Comments None

Page 53 of 65

Rebuttal Comments None

Department Evaluation Specific to this sub-criterion, the executed Patient Transfer Agreement submitted by MHS demonstrated compliance with this standard. This sub-criterion is met.

WAC 246-310-735(10) At least two annual timed emergency transportation drills with outcomes reported to the hospital's quality assurance program.

MultiCare Health System Section 1.7 of the Patient Transfer Agreement provides the following statements. “Transportation Drills. The Transferring Hospital shall conduct at least two (2) annual timed emergency transportation drills with outcomes to be reported to the hospital's quality assurance program for review.”

Section (1)(b)(1) of the First Amendment to Customer Agreement associated with the Executed Transportation Agreement between MultiCare Health System and American Medical Response provides the following statements. “AMR shall perform at least two annual timed emergency transportation drills with outcomes reported to the hospital's quality assurance program. As such, AMR shall be compensated at UCR standby rates, subject to change, to include preparation and commute time to and from location.”

Public Comments None

Rebuttal Comments None

WAC 246-310-735(11) Patient signed informed consent for adult elective (and emergent) PCIs. Consent forms must explicitly communicate to the patients that the intervention is being performed without on-site surgery backup and address risks related to transfer, the risk of urgent surgery, and the established emergency transfer agreements

MultiCare Health System Section 1.1 of the Patient Transfer Agreement provides the following statements. “Informed Consent. The Transferring Hospital shall secure the patient's signed informed consent for the PCI. The consent form shall indicate that the Transferring Hospital does not have on-site surgical backup and shall address the risks associated with transfer and urgent surgery under this Agreement and the transfer agreement in place with the Receiving Hospital.”

MHS also provided a copy of a Patient Informed Consent form that is used at all MHS hospital’s that provide PCI services with no on-site open heart surgery. [source: Application, Exhibit 15] The form provides the information to the patient in the following areas: • Explanation of the PCI Procedure • Risk of Procedure, including any additional risk not directly associated with the PCI procedure Page 54 of 65 • Alternatives to the Procedure • Benefits of the Procedure • Care Team Description • Possibility of Observers during the Procedure • Pathology Information

Public Comments None

Rebuttal Comments None

Department Evaluation Specific to this sub-criterion, the executed Patient Transfer Agreement submitted by MHS demonstrated compliance with this standard. Additionally, the example Informed Consent Form also demonstrated compliance with this standard. This sub-criterion is met.

WAC 246-310-735(12) Conferences between representatives from the heart surgery program(s) and the elective coronary intervention program. These conferences must be held at least quarterly, in which a significant number of preoperative and post-operative cases are reviewed, including all transport cases.

MultiCare Health System Section 3.2 of the Patient Transfer Agreement provides the following statements. “Conferences. Representatives from the heart surgery program and the elective coronary intervention program shall hold conferences, at least quarterly, during which a significant number of preoperative and postoperative cases are reviewed, including all transport cases.”

Public Comments None

Rebuttal Comments None Department Evaluation Specific to this sub-criterion, the executed Patient Transfer Agreement submitted by MHS demonstrated compliance with this standard. This sub-criterion is met.

WAC 246-310-735(13) Addressing peak volume periods (such as joint agreements with other programs, the capacity to temporarily increase staffing, etc.).

MultiCare Health System Section 3.3 of the Patient Transfer Agreement provides the following statements. “Peak Volume Periods. The parties shall address peak volume periods, as necessary, if capacity issues arise.”

Public Comments None

Rebuttal Comments None

Page 55 of 65 Department Evaluation Specific to this sub-criterion, the executed Patient Transfer Agreement submitted by MHS demonstrated compliance with this standard. This sub-criterion is met.

For the entire sub-criterion of 246-310-230(2), the department concludes that if there is need for the additional PCI services at Valley Hospital, approval of this project would not negatively affect existing healthcare relationships within the planning area. Under these circumstances, this sub-criterion is met.

(3) There is reasonable assurance that the project will be in conformance with applicable state licensing requirements and, if the applicant is or plans to be certified under the Medicaid or Medicare program, with the applicable conditions of participation related to those programs. WAC 246-310 does not contain specific WAC 246-310-230(3) criteria as identified in WAC 246-310- 200(2)(a)(i). There are known recognized standards as identified in WAC 246-310-200(2)(a)(ii) and (b) that a facility must meet when it is to be Medicare certified and Medicaid eligible. Therefore, using its experience and expertise the department assessed the applicant’s history in meeting these standards at other facilities owned or operated by the applicant.

MultiCare Health System The specific question in the application form related to this sub-criterion requests the applicant to identify if the owner, operator, or physician(s) identified in this application has had any of the following in this state or other states: a. Decertification from Medicare b. Decertification from Medicaid c. Convictions related to the competency to practice medicine or own or operate a hospital. d. Denial of a license e. Revocation of a license f. Voluntary withdrawal from Medicare or Medicaid while decertification processes were pending.

In response to the specific question above, MHS provided the following statement. [source: Application, pdf34]

“MultiCare has not experienced any of the above listed actions.”

Public Comments None

Rebuttal Comments None

Department Evaluation As part of this review, the department must conclude that the proposed services provided by an applicant would be provided in a manner that ensures safe and adequate care to the public.13 To accomplish this task, the department reviewed the quality of care compliance history for the healthcare facilities owned, co-owned, operated, or managed by MultiCare Health System or its subsidiaries. Additionally, the department reviewed the credentialing history of the medical professionals associated with Valley Hospital’s PCI services.

13 WAC 246-310-230(5). Page 56 of 65 Washington State Survey Data As stated in the applicant description section of this evaluation, MHS is a current provider in Washington State with facilities operating throughout the state. The Department of Health’s Office of Health Systems Oversight (OHSO) conducted surveys for the facilities owned or operated by MHS. Using its own internal database, the department reviewed the historical survey data for the healthcare facilities associated with MHS. Since 2017 MHS’ facilities have been surveyed 3114 times with no significant noncompliance reported. [Source: DOH Office of Health System Oversight]

CMS Survey Data Using the Center for Medicare and Medicaid Services Quality, Certification & Oversight Reports (QCOR) website, the department reviewed the historical survey information for all available MHS facilities. A QCOR review shows that since 2017, ten MHS facilities had surveys resulting in actions.

Department’s Table 10 MultiCare Health System’s Facilities and Survey History Number of Surveys Facility Citations Issued Since Year 2017 MultiCare Auburn Medical Center 2 Standard Multicare Cascade Surgical Center 1 Condition, standard MultiCare Good Samaritan Hospital 5 Standard MultiCare Mary Bridge Children’s Hospital 2 Standard Multicare Rockwood Eye Surgery Center 1 Standard MultiCare Tacoma General Hospital 4 Condition, standard MultiCare Valley Hospital 2 Standard MultiCare Deaconess Hospital 3 Standard Navos 1 Condition, standard Wellfound Behavioral Health Hospital 2 Standard

All of the hospitals and ASFs owned and operated by MHS are located in Washington State. Of the hospitals three have received condition-level deficiencies since 2017. The citations were corrected at all three facilities prior to its follow-up visit15. Since 2017 an ASF owned and operated by MHS received seven condition-level deficiencies in a standard survey. These citations were also corrected prior to its follow-up visit.

Of the 23 hospital surveys since 2017, eight of them had no deficiencies. And surveys with any deficiencies, standard or condition-level were all remedied prior to a follow-up visit.

In addition to the facility review above, MHS provided the names and provider credential numbers for known physicians and/or PCI staff. The listing includes a total of 16 staff, which includes seven physicians, four registered nurses, four cardiovascular invasive specialists, and one radiology technicians. The review of each provider’s credential revealed no sanctions.

Based on the above information, the department concludes that MHS demonstrated reasonable assurance that its existing healthcare facilities would continue to operate in compliance with state and federal

14 This count includes times facilities were surveyed by the Department of Social and Health Services prior to behavioral health agencies being licensed and surveyed by the Department of Health. 15 There are two different types of citations that CMS can issue. The more serious, known as “condition-level” mean that a healthcare facility is not in substantial compliance with Medicare’s Conditions of Participation. A “standard-level” deficiency means that the healthcare facility may be out of compliance with one aspect of the regulations, but is considered less severe than condition-level. Page 57 of 65 guidelines if this project is approved. MHS further demonstrated that known staff of its proposed PCI program at Valley Hospital are in compliance with state requirements. This sub-criterion is met

In addition to the general quality of care sub-criterion above, WAC 246-310-740(1)-(4) identify specific quality assurance/quality improvements requirements for adult, elective PCI programs.

WAC 246-310-740(1) A process for ongoing review of the outcomes of adult elective PCI’s. Outcomes must be benchmarked against state or national quality of care indicators for elective PCIs.

MultiCare Health System MHS provided a copy of the draft Quality Assurance Performance Improvement Plan specific for Valley Hospital. Page 1 of the draft plan includes a stated purpose, which is quoted below. [source: Application, Exhibit 16] “The purpose of the plan is: 1. Provide for a process for ongoing review of the quality outcomes for adult elective and emergent PCIs. 2. Provide a system of patient selection that will result in outcomes that are equal to or better than benchmark standards. 3. Provide a process for review of care pre- and post-operative patient care with partner surgical backup hospital(s) including all patients transferred for surgical intervention. 4. Provide a process for reporting elective PCI information to the Washington State Department of Health or entity designated by the Washington State Department of Health. 5. Document, assess, and improve the emergency transport processes and timeframes.”

MHS states that page 139 of the draft document addresses this standard with the following language. [source: May 12, 2020, screening response, pdf 24]

Elective PCI case submission will be included in the Washington State Clinical Outcomes Assessment Program (COAP). Outcomes will be benchmarked against the statewide outcome data and included in the STEMI meetings and presented at the Coronary Center of Excellence meetings including recommendation on how to resolve any identified problems.

Specific benchmarks will be consistent with Level I and Level II indicators consistent with those of COAP- PCI. • Level I Indicators • In-hospital mortality • Median door-to-balloon time

• Level II Indicators • Bleeding event within 72-hours • Unplanned CABG”

Public Comments None

Rebuttal Comments None Page 58 of 65 Department Evaluation MHS provided a draft Quality Assurance Performance Improvement Plan specific for Valley Hospital to meet many of the PCI standards. If this project is approved, the department would attach a condition requiring MHS to submit a copy of the executed Quality Assurance Performance Improvement Plan. The executed plan must be consistent with the draft plan provided in the application that was relied upon in this evaluation. While many of the standards in this evaluation rely on the draft plan, this condition will not be repeated throughout this evaluation.

Specific to this sub-criterion, the draft Quality Assurance Performance Improvement Plan submitted by MHS demonstrated compliance with this standard. This sub-criterion is met.

WAC 246-310-740(2) A system for patient selection that results in outcomes that are equal to or better than the benchmark standards in the applicant's plan

MultiCare Health System MHS states that page 139 of the draft document addresses this standard with the following language. [source: May 12, 2020, screening response, pdf 24]

Specific benchmarks will be consistent with Level I and Level II indicators consistent with those of COAP- PCI. • Level I Indicators • In-hospital mortality • Median door-to-balloon time

• Level II Indicators • Bleeding event within 72-hours Unplanned CABG

Cardiologists will use the Society for Cardiovascular Angiography and Interventions (SCAI) guidelines for patient, lesion and case selection to determine which patients are suitable candidates for elective PCI.”

Public Comments None

Rebuttal Comments None

Department Evaluation Specific to this sub-criterion, the draft Quality Assurance Performance Improvement Plan submitted by MHS demonstrated compliance with this standard. This sub-criterion is met.

Page 59 of 65 WAC 246-310-740(3) A process for formalized case reviews with partnering surgical backup hospital(s) of preoperative and post-operative elective PCI cases, including all transferred cases

MultiCare Health System MHS states that pages 138 and 139 of the draft document addresses this standard with the following language. [source: May 12, 2020, screening response, pdfs 24-25]

“Pulse Heart Institute has an established STEMI Committee that oversees all QA/PI activities as they relate to the Elective PCI Program. This will include a review for all pre- and post-procedure Elective PCI cases involving complications including any that involve patient transfers and 100% of all Cardiac activations. Specifically, the committee: • Meets at least quarterly • Is comprised of the following participants: • Deaconess Pulse Cath Lab Director • Valley Pulse Cath Lab Director • Deaconess Cath Lab Supervisor • COE Medical Director • Deaconess Emergency Department Medical Director • Valley Emergency Department Medical Director • Deaconess Critical Care Director • Valley Critical Care Director • Coronary COE Director • Deaconess 7 Tower Manager • Representative from the partner surgical hospital • Quality representative • Local emergency services representative • EMS Liaison • Designated staff as committee deems appropriate • Reports to the Coronary Center of Excellence • Cases requiring peer review are reviewed in a peer protected environment in the Critical Care/Medical Interdisciplinary Team Committee. • Quality and performance issues identified at the STEMI Committee will be addressed at that level unless further discussion is needed in a peer protected environment. In that case, they will be forwarded to the Critical Care/Medical Interdisciplinary Team meeting for review. • Approved recommendations will be forwarded for inclusion in Pulse Heart Institute’s performance improvement program. Additional actions will adhere to Valley Hospital’s Quality, Peer Review, and Medical Executive processes. • The STEMI Committee and its work will be protected by Washington Statute RCW 70.41.200.”

Public Comments None

Rebuttal Comments None

Department Evaluation Specific to this sub-criterion, the draft Quality Assurance Performance Improvement Plan submitted by MHS demonstrated compliance with this standard. This sub-criterion is met.

Page 60 of 65 WAC 246-310-740(4) A description of the hospital's cardiac catheterization laboratory and elective PCI quality assurance reporting processes for information requested by the department or the department's designee. The department of health does not intend to require duplicative reporting of information.

MultiCare Health System MHS states that page 139 of the draft document addresses this standard with the following language. [source: May 12, 2020, screening response, pdf 25] “Elective PCI case submission will be included in the Washington State Clinical Outcomes Assessment Program (COAP). Outcomes will be benchmarked against the statewide outcome data and included in the STEMI meetings and presented at the Coronary Center of Excellence meetings including recommendation on how to resolve any identified problems.”

Public Comments None

Rebuttal Comments None

Department Evaluation Specific to this sub-criterion, the draft Quality Assurance Performance Improvement Plan submitted by MHS demonstrated compliance with this standard. This sub-criterion is met.

For the entire sub-criterion of 246-310-230(3), the department concludes that if there is need for the additional PCI services at Valley Hospital, MHS has demonstrated the services would be operated in compliance with both state and federal guidelines. Provided MHS agrees to a condition requiring submission of the executed Quality Assurance Performance Improvement Plan, this sub-criterion is met.

(4) The proposed project will promote continuity in the provision of health care, not result in an unwarranted fragmentation of services, and have an appropriate relationship to the service area's existing health care system. WAC 246-310 does not contain specific WAC 246-310-230(4) criteria as identified in WAC 246-310- 200(2)(a)(i). There are also no known recognized standards as identified in WAC 246-310-200(2)(a)(ii) and (b) that directs how to measure unwarranted fragmentation of services or what types of relationships with a services area’s existing health care system should be for a project of this type and size. Therefore, using its experience and expertise the department assessed the materials in the application.

MultiCare Health System MHS provided the following statements related to this review criteria. [source: May 12, 2020, screening response, pdf 6]]

“WAC 246-310-230(4) states: “The proposed project will promote continuity in the provision of health care, not result in an unwarranted fragmentation of services, and have an appropriate relationship to the service area's existing health care system.”

It is our understanding the Department’s question concerns the potential impact on MultiCare Deaconess Hospital if this project is approved. As stated above, cardiac care at Valley Hospital is provided by Pulse Heart Institute physicians, the same cardiology group that provides cardiac care at Deaconess. There would not be fragmentation of care since the same physician group would continue to provide the same care as presently. What would change is the site of care for elective PCIs—or those Spokane Valley residents who wish to receive this care closer to home, they would have the option to choose Valley.

Page 61 of 65

In summary, the project will improve access and flexibility regarding where elective PCIs can be performed. It is not anticipated future volumes would fall across the two MHS hospitals, thus, avoiding fragmentation of PCI care. The requested project would simply allow Pulse Heart Institute physicians to offer their patients the option to receive elective PCIs at Valley Hospital. In addition, by increasing the number of PCIs performed at Valley Hospital above emergent PCIs, this will improve efficiency and staff skillsets, reducing the potential for fragmentation of PCI care at Valley.”

Public Comments Below are the public comments submitted for this review criterion.

Andrew Taylor, Chief Strategy Officer, Providence Health & Services-WA/MT Region “In order for its application to be approved, MultiCare must demonstrate that its proposal satisfies structure and process of care sub-criterion 4: “The proposed project will promote continuity in the provision of health care, not result in an unwarranted fragmentation of services, and have an appropriate relationship to the service area’s existing health care system.”

As discussed above, MultiCare proposes to carve out a self-created “Spokane Valley Service Area” in an attempt to show “need” for an elective PCI program at MultiCare Valley. As discussed in Section IV below, in addition to being in contravention of the Department’s PCI need methodology (which precludes the use of MultiCare’s proposed institution-specific “Service Area”), MultiCare’s stratagem is a perfect example of how the approval of an elective program based upon institutional “need” in a self-created “Service Area” will not “promote continuity in the provision of health care,” will “result in an unwarranted fragmentation of services,” and will not “have an appropriate relationship to the service area’s existing health care system.” Thus, MultiCare’s application does not satisfy sub-criterion 4.”

Rebuttal Comments MHS provided the following responses to the public comments above.

MultiCare Health System September 4, 2020, Rebuttal Comments “As we stated in our May 11, 2020 screening responses, the proposed project would not result in a fragmentation of care since the same physician group would continue to provide the same care as presently. The proposed project would only affect the site of care for elective PCIs. Spokane Valley residents who wish to receive this care closer to home would have the option to choose Valley. The proposed project is thus distinct from an outside organization ‘carving out’ a segment of the PCI market share and reducing provider volumes. Rather, Pulse Heart Institute provider volumes are expected to remain the same or grow, thus avoiding fragmentation of PCI care. The requested project would simply allow Pulse Heart Institute physicians to offer their patients the option to receive elective PCIs at Valley Hospital. The Pulse Heart Institute is an existing provider but wishes to provide elective PCI care at two locations rather than one to increase patient convenience.

In further comments, Providence seeks to distinguish between its concepts of “institutional need” and “community need,” defining the former as including balancing of OR (operating room) utilization across hospitals and the latter as including patient access. However, these concepts are not independent. Crowded hospitals impact scheduling flexibility and lead to longer patient wait times at both the scheduling and waiting room phases. We find Providence’s disregard of the relationship between these concepts odd given the current healthcare environment. Physical distancing and patient separation and isolation are vital in preventing the spread of COVID 19 and rely on a hospital’s capability for additional cleaning time, staggering of patient arrivals, and other measures to impede virus spread.

Page 62 of 65 Within the letters of opposition, Guy Katz, MD, John Peterson, MD, and Michael Ring, MD all express concerns that Valley Hospital will be able to provide high quality PCI services. Dr. Katz, towards this end, recounts his negative experiences at Valley Hospital over the period 1991-2012 and the inability of Valley to maintain experienced cath lab personnel. However, the experiences of Dr. Katz occurred at Valley Hospital 10 to 20 years ago, before MultiCare or the Pulse Heart Institute were involved in providing cardiac services. With the growth of Spokane Valley, the Pulse Heart Institute now has a local clinic able to accommodate seven to eight providers and will have full coverage in the hospital by a provider during daytime hours. Dr. Peterson and Dr. Ring, for their part, compare the proposed project to the recently closed PCI program at Holy Family Hospital and argue that low volumes of patients made it difficult for nurses and other care givers to become familiar with the necessary protocols. However, this criticism is not relevant for MultiCare Valley as the cardiac staff will be able to rotate and cross-train at both the Deaconess and Valley locations. It is clear from the letters of opposition that the Providence cardiologists did not support the Holy Family PCI program. It is further clear from the letters of support for the proposed project, that the Pulse Heart Institute cardiologists do.

MultiCare entered the market in Q1 of 2018 and by March of 2019, the Rockwood cardiologists were partnered with Pulse Heart Institute. Over this period of time, the quality of PCI care has increased. Please see Table 2, below, which provides COAP data for 2017, 2018 and 2019 for Deaconess Hospital and COAP, overall. It clearly demonstrates the Deaconess quality measures, e.g., cardiogenic shock, or PCI in-hospital mortality-observed, have improved since MultiCare and the Pulse Heart Institute have been providing PCI care at Deaconess Hospital.”

Department Evaluation This evaluation takes into consideration the letters of support and opposition submitted for the project. It also takes into consideration the numeric methodology and rules related to the establishment of a new adult, elective PCI program within a planning area.

As noted in the need section of this evaluation, the department’s methodology concluded no need for an additional PCI program in planning area #1. WAC 246-310-720(2) provides the following clarification when the methodology calculates no numeric need for an additional provider in the planning area.

Page 63 of 65 WAC 246-310-720 (2) The department shall only grant a certificate of need to new programs within the identified planning area if: (a) The state need forecasting methodology projects unmet volumes sufficient to establish one or more programs within a planning area; and (b) All existing PCI programs in that planning area are meeting or exceeding the minimum volume standard.”

Further, PCI Planning Area # 1 includes nine counties, including Spokane County. As previously noted in this evaluation, MHS’s Spokane Valley ‘planning area’ is a sub-set of a sub-set of the PCI planning area. This approach is not allowed by the PCI rules.

For those reasons, the department concludes that approval of this project during this review cycle may result in unwarranted fragmentation of PCI services in the planning area. This sub-criterion is not met.

(5) There is reasonable assurance that the services to be provided through the proposed project will be provided in a manner that ensures safe and adequate care to the public to be served and in accord with applicable federal and state laws, rules, and regulations.

This sub-criterion is addressed in sub-section (3) above and is met.

D. Cost Containment (WAC 246-310-240) Based on the source information reviewed, the department determines that MultiCare Health System does not meet the applicable cost containment criteria in WAC 246-310-240.

(1) Superior alternatives, in terms of cost, efficiency, or effectiveness, are not available or practicable. To determine if a proposed project is the best alternative, in terms of cost, efficiency, or effectiveness, the department takes a multi-step approach. First the department determines if the application has met the other criteria of WAC 246-310-210 thru 230. If the project has failed to meet one or more of these criteria then the project cannot be considered to be the best alternative in terms of cost, efficiency, or effectiveness as a result the application would fail this sub-criterion.

If the project has met the applicable criteria in WAC 246-310-210 through 230 criteria, the department then assesses the other options considered by the applicant. If the department determines the proposed project is better or equal to other options considered by the applicant and the department has not identified any other better options this criterion is determined to be met unless there are multiple applications.

If there are multiple applications, the department’s assessment is to apply any service or facility superiority criteria contained throughout WAC 246-310 related to the specific project type. The adopted superiority criteria are objective measures used to compare competing projects and make the determination between two or more approvable projects which is the best alternative. If WAC 246-310 does not contain any service or facility type superiority criteria as directed by WAC 246-310-200(2)(a)(i), then the department would look to WAC 246-310-240(2)(a)(ii) and (b) for criteria to make the assessment of the competing proposals. If there are no known recognized standards as identified in WAC 246-310-200(2)(a)(ii) and (b), then using its experience and expertise, the department would assess the competing projects and determine which project should be approved.

MultiCare Health System Step One For this project, MHS did not meet the applicable review criteria under WAC 246-310-210, 220, and 230. Therefore, the department concludes this sub-criterion is not met.

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(2) In the case of a project involving construction: (a) The costs, scope, and methods of construction and energy conservation are reasonable; (b) The project will not have an unreasonable impact on the costs and charges to the public of providing health services by other persons.

Department Evaluation There are no costs associated with this project. This sub-criterion is not applicable to this project.

(3) The project will involve appropriate improvements or innovations in the financing and delivery of health services which foster cost containment and which promote quality assurance and cost effectiveness.

MultiCare Health System In response to this sub-criterion, MSH provided the following information. [source: Application, pdfs 37-38] “As stated earlier, Valley Hospital has already made the organizational commitment to develop/operate an enhanced cardiology program. It has two cath labs, and will have all necessary support space available for PCI patient care. In addition, it will have necessary direct and support staff already hired and providing necessary care for PCIs. The addition of an elective PCI program simply increases the number of cases and this will be beneficial in a number of ways. (1) All equipment and much of the needed direct and ancillary support staff will already be in-place, given an emergent PCI program, thus, any incremental volume will necessarily lower average operating costs per case, which improves efficiency. This simply reflects improved ability to capture economies of scale.

Without the project and with fewer CPI cases on-site, Valley Hospital trained staff may be required to rotate to other locations, notably Deaconess, to retain/improve clinical competencies and continuously improve quality of care. The requested project helps avoid this disruption to staff.

With increased PCI volumes, all direct and support staff will benefit from staffing "economies of scale," i.e., increasing the number of cases improves skillsets.

MultiCare Health System operates an integrated delivery system, from ambulatory care to inpatient facilities as required for patient care. The Pulse Heart Institute is an excellent example of this integration, working in clinics and across MultiCare hospitals. The project extends this clinical integration, which will benefit patients through improved access to excellent clinical care at both Deaconess and Valley Hospitals. Clinical integration promotes system efficiency, access, and quality of care.”

Public Comments None

Rebuttal Comments None

Department Evaluation For this project, MHS did not meet the applicable review criteria under WAC 246-310-210, 220, and 230. Therefore, the department concludes this sub-criterion is not met.

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APPENDIX A

Department of Health 2019-2020 Percutaneous Coronary Intervention Numeric Need Methodology UPDATED September 16, 2020 Only change to PSA 4 Using COAP Data 2018 Current PCI 2018 PCI WA pts Total 2023 PCI 2023 2023 Projected # of New Planning 2018 15+ PCIs 2018 Use 2023 15+ 2023 Use Capacity County Pop./1000 in PSA Pop./1000 Projected Projected Need/200 Programs Area Pop (COAP Rate (1b) Pop Rate (3d) (1a) Oregon PCIs (1a) Demand (2a) Net Need (4) (5a) (5b) ONLY)

PSA 1 Adams 13,818 22 14,845 Asotin 18,572 <10 19,235 Ferry 6,626 15 6,705 Grant 74,681 128 81,892 Lincoln 9,008 25 9,075 Pend Oreille 11,565 29 12,081 Spokane 410,046 933 <10 431,466 Stevens 37,680 89 39,440 Whitman 41,890 46 42,430 Total: 623,886 623.89 1296 2.08 657,170 657.2 2.08 1,365 1,667 -302 -1.51 0

PSA 2 Benton 153,983 45 165,435 Columbia 3,433 14 3,355 Franklin 68,109 14 <10 78,776 Garfield 1,913 <10 1,895 Walla Walla 50,305 82 <10 51,449 Total: 277,743 277.74 160 0.58 300,911 300.9 0.58 173 753 -580 -2.90 0

PSA 3 Chelan 62,066 122 65,081 Douglas 33,535 60 36,418 Okanogan 34,369 93 35,349 Total: 129,971 129.97 275 2.12 136,848 136.8 2.12 290 337 -47 -0.24 0

Source: County_Age Pop. Projections OFM August 2017 Sub county Pop Claritas 2018-2023 DOH 260-030 September 2020 Page 1 2018 COAP PCI Data Department of Health 2019-2020 Percutaneous Coronary Intervention Numeric Need Methodology UPDATED September 16, 2020 Only change to PSA 4 Using COAP Data 2018 Current PCI 2018 PCI WA pts Total 2023 PCI 2023 2023 Projected # of New Planning 2018 15+ PCIs 2018 Use 2023 15+ 2023 Use Capacity County Pop./1000 in PSA Pop./1000 Projected Projected Need/200 Programs Area Pop (COAP Rate (1b) Pop Rate (3d) (1a) Oregon PCIs (1a) Demand (2a) Net Need (4) (5a) (5b) ONLY) PSA 4 Kittitas 38,193 81 40,723 Klickitat East 6,644 10 <10 6,946 Yakima 191,227 440 201,845 Total: 236,064 236.06 536 2.27 249,515 249.5 2.27 567 235 332 1.66 1

PSA 5 Clark 385,597 525 142 424,453 Cowlitz 87,366 226 51 91,074 Klickitat Wes 11,941 <10 15 12,692 Skamania 10,001 <10 <10 10,566 Wahkiakum 3,498 20 <10 3,499 Total: 498,403 498.40 997 2.00 542,284 542.3 2.00 1,085 895 190 0.95 0

PSA 6 Grays Harbor 61,045 275 <10 62,104 Lewis 64,619 241 <10 67,396 Mason 55,216 208 59,754 Pacific 18,232 39 16 18,305 Thurston 232,119 684 <10 252,997 Total: 431,230 431.23 1473 3.42 460,556 460.6 3.42 1,573 1,170 403 2.02 2

PSA 7 Pierce East 313,630 470 336,832 Total: 313,630 313.63 470 1.50 336,832 336.8 1.50 505 337 168 0.84 0

PSA 8 Pierce West 383,943 773 <10 404,409 Total: 383,943 383.94 775 2.02 404,409 404.4 2.02 816 1,519 -703 -3.51 0

Source: County_Age Pop. Projections OFM August 2017 Sub county Pop Claritas 2018-2023 DOH 260-030 September 2020 Page 2 2018 COAP PCI Data Department of Health 2019-2020 Percutaneous Coronary Intervention Numeric Need Methodology UPDATED September 16, 2020 Only change to PSA 4 Using COAP Data 2018 Current PCI 2018 PCI WA pts Total 2023 PCI 2023 2023 Projected # of New Planning 2018 15+ PCIs 2018 Use 2023 15+ 2023 Use Capacity County Pop./1000 in PSA Pop./1000 Projected Projected Need/200 Programs Area Pop (COAP Rate (1b) Pop Rate (3d) (1a) Oregon PCIs (1a) Demand (2a) Net Need (4) (5a) (5b) ONLY) PSA 9 King East 987,724 1801 1,063,175 Total: 987,724 987.72 1801 1.82 1,063,175 1063.2 1.82 1,939 1,810 129 0.64 0

PSA 10 King West 837,532 1333 895,491 Total: 837,532 837.53 1333 1.59 895,491 895.5 1.59 1,425 2,483 -1,058 -5.29 0

PSA 11 Snohomish 652,976 1732 <10 710,455 Total: 652,976 652.98 1734 2.66 710,455 710.5 2.66 1,887 1,444 443 2.21 2

PSA 12 Island 68,708 192 71,582 San Juan 14,811 46 15,531 Skagit 103,312 247 <10 110,921 Total: 186,832 186.83 486 2.60 198,033 198.0 2.60 515 216 299 1.50 1

PSA 13 Clallam 63,318 250 <10 65,209 Jefferson 28,526 111 29,992 Kitsap 220,987 625 233,522 Total: 312,831 312.83 988 3.16 328,724 328.7 3.16 1,038 790 248 1.24 1

PSA 14 Whatcom 184,458 420 <10 198,554 Total: 184,458 184.46 422 2.29 198,554 198.6 2.29 454 557 -103 -5.14 0

Source: County_Age Pop. Projections OFM August 2017 Sub county Pop Claritas 2018-2023 DOH 260-030 September 2020 Page 3 2018 COAP PCI Data Department of Health -- 2019-2020 Percutaneous Coronary Intervention Numeric Need Methodology UPDATED September 16, 2020 Only change to PSA 4 Using CHARS and DOH Survey Data

2023 2018 2018 Current 2023 2018 PCI WA pts Total 2023 PCI Projecte Projected # of New Planning 2018 15+ Inpatient Outpatient 2018 Use 2023 15+ 2023 Use PCI Projected County Pop./1000 in PSA Pop./100 d Need/200 Programs Area Pop PCIs PCIs Rate (1b) Pop Rate Capacity Net Need (1a) Oregon PCIs 0 (1a) Demand (5a) (5b) CHARS SURVEY (3d) (4) (2a)

PSA 1 Adams 13,818 14 12 14,845 Asotin 18,572 <10 <10 19,235 Ferry 6,626 14 <10 6,705 Grant 74,681 94 48 81,892 Lincoln 9,008 13 11 9,075 Pend Oreille 11,565 12 <10 12,081 Spokane 410,046 608 313 <10 431,466 Stevens 37,680 45 43 39,440 Whitman 41,890 26 11 42,430 Total: 623,886 623.89 1285 2.06 657,170 657.2 2.06 1,354 1,290 64 0.32 0

PSA 2 Benton 153,983 218 211 165,435 Columbia 3,433 <10 <10 3,355 Franklin 68,109 76 70 <10 78,776 Garfield 1,913 <10 1,895 Walla Walla 50,305 72 39 <10 51,449 Total: 277,743 277.74 704 2.53 300,911 300.9 2.53 763 694 69 0.34 0

PSA 3 Chelan 62,066 79 37 65,081 Douglas 33,535 48 <10 36,418 Okanogan 34,369 69 27 35,349 Total: 129,971 129.97 269 2.07 136,848 136.8 2.07 283 327 -44 -0.22 0

PSA 4 Kittitas 38,193 28 17 40,723 Klickitat East 6,644 <10 <10 <10 6,946 Yakima 191,227 230 41 201,845

Source: County_Age Pop. Projections OFM August 2017 Sub county Pop Claritas 2018-2023 2018 Survey Data (Outpatient) DOH 260-030 September 2020 Page 4 2018 CHARS Data (Inpatient) Department of Health -- 2019-2020 Percutaneous Coronary Intervention Numeric Need Methodology UPDATED September 16, 2020 Only change to PSA 4 Using CHARS and DOH Survey Data

PSA 5 Clark 385,597 368 10 142 424,453 Cowlitz 87,366 140 86 51 91,074 Klickitat Wes 11,941 <10 <10 15 12,692 Skamania 10,001 <10 <10 10,566 Wahkiakum 3,498 10 <10 3,499 Total: 498,403 498.40 841 1.69 542,284 542.3 1.69 915 664 251 1.26 1

PSA 6 Grays Harbo 61,045 130 120 <10 62,104 Lewis 64,619 135 78 <10 67,396 Mason 55,216 111 77 59,754 Pacific 18,232 21 12 16 18,305 Thurston 232,119 372 205 <10 252,997 Total: 431,230 431.23 1287 2.98 460,556 460.6 2.98 1,375 989 386 1.93 1

PSA 7 Pierce East 313,630 431 248 336,832 Total: 313,630 313.63 679 2.16 336,832 336.8 2.16 729 305 424 2.12 2

PSA 8 Pierce West 383,943 509 298 <10 404,409 Total: 383,943 383.94 809 2.11 404,409 404.4 2.11 852 1,202 -350 -1.75 0

PSA 9 King East 987,724 998 624 1,063,175 Total: 987,724 987.72 1622 1.64 1,063,175 1063.2 1.64 1,746 1,467 279 1.39 1

PSA 10 King West 837,532 697 506 895,491 Total: 837,532 837.53 1203 1.44 895,491 895.5 1.44 1,286 2,309 -1,023 -5.11 0

Source: County_Age Pop. Projections OFM August 2017 Sub county Pop Claritas 2018-2023 2018 Survey Data (Outpatient) DOH 260-030 September 2020 Page 5 2018 CHARS Data (Inpatient) Department of Health -- 2019-2020 Percutaneous Coronary Intervention Numeric Need Methodology UPDATED September 16, 2020 Only change to PSA 4 Using CHARS and DOH Survey Data

PSA 11 Snohomish 652,976 909 598 <10 710,455 Total: 652,976 652.98 1509 2.31 710,455 710.5 2.31 1,642 1,254 388 1.94 1

PSA 12 Island 68,708 112 56 71,582 San Juan 14,811 35 <10 15,531 Skagit 103,312 162 32 <10 110,921 Total: 186,832 186.83 400 2.14 198,033 198.0 2.14 424 196 228 1.14 1

PSA 13 Clallam 63,318 120 116 <10 65,209 Jefferson 28,526 45 53 29,992 Kitsap 220,987 274 276 233,522 Total: 312,831 312.83 886 2.83 328,724 328.7 2.83 931 685 246 1.23 1

PSA 14 Whatcom 184,458 234 12 <10 198,554 Total: 184,458 184.46 248 1.34 198,554 198.6 1.34 267 333 -66 -0.33 0

*The following hospitals did not return surveys. As a result, their outpatient volumes are not captured in this methodology. PSA Hospital PSA 4 Astria Regional Medical Center PSA 5 PeaceHealth Southwest Medical Center PSA 6 Capital Medical Center PSA 9 Overlake Hospital Medical Center PSA 12 Skagit Regional Hospital PSA 14 PeaceHealth St Joseph Medical Center

Source: County_Age Pop. Projections OFM August 2017 Sub county Pop Claritas 2018-2023 2018 Survey Data (Outpatient) DOH 260-030 September 2020 Page 6 2018 CHARS Data (Inpatient)