Psychiatric hospital firm appeals denial of Vancouver project

A California-based company is appealing the state Department of Health’s decision to deny its application to build a 100-bed psychiatric hospital in Vancouver and approve another company’s proposal.

Signature Healthcare Services submitted a certificate of need application to build a hospital in east Vancouver on Nov. 10, 2014. The next month, Springstone of Louisville, Ky., submitted an application to build the 72-bed Rainier Springs Hospital in Salmon Creek.

The health department reviewed both applications and, in October 2015, approved Springstone’s application and denied the application submitted by Signature. Clark County can only support one facility, said Karen Nidermayer, the state certificate of need analyst who evaluated the applications.

“There isn’t enough population and need for psychiatric services in Clark County to warrant a 172-bed addition,” she said. “It has to be one or the other.”

Signature is appealing the Department of Health decision, requesting an adjudicative hearing before a health law judge. The hearing is set for May 16 to 18, but a ruling may not be issued until this fall, Nidermayer said.

Signature argues the state denied its application over a technicality, said Greg McBroom, an attorney representing Signature. The draft lease document submitted as part of the application did not include the lease amount or include a duration of at least 20 years, McBroom said. But the lease amount was included in another part of the application, he said.

“The Certificate of Need program’s done a cursory review of the applications and has made this arbitrary selection based on that one technicality,” McBroom said.

The state, however, contends that failing to provide lease information — even after the state made a second request for the information — is not a technicality, Nidermayer said.

“That’s a barrier for us to review the feasibility of the project,” she said. “I understand their position that it’s a technicality. From our standpoint, it was not a technicality. It was significant information.”

In addition to appealing the state’s denial of its application, Signature is appealing the department’s decision certificate of need approval to Springstone.

Signature argues that the state didn’t do a thorough review of Springstone’s financials and questions the feasibility of the project, McBroom said. Other Springstone hospitals have failed to make money, he said.

Springstone, however, is firing back at those claims.

“Signature’s claims regarding the financial viability of Springstone and the Rainier Springs project are baseless and ignore the facts,” said Jill Force, Springstone’s general counsel and chief administrative officer, in an email to The Columbian.

Springstone’s other hospitals are showing profits following expected startup losses after the initial opening of each new hospital, Force said. Six of the seven Springstone hospitals open more than two years are profitable and have been profitable for more than a year, she said.

“Consistent with that experience, we expect that Rainier Springs will be profitable after a brief initial ramp-up phase,” Force said.

The Department of Health is standing by its review and decision.

“Their position, as I understand it, is we did not do a thorough review of the project,” Nidermayer said of Signature. “We don’t agree with that position for a variety of reasons.”

The adjudicative hearing next month could lead to a variety of outcomes, Nidermayer said. The judge could agree with the health department decision as is, or agree with the decision but impose additional conditions on the Springstone approval. The judge could also overturn the department’s decision, denying both projects, or overturn the Springstone approval and award certificate of need approval to Signature. Another possibility is to overturn the decisions and send the applications back to the department for further review.