Island Health leaders urge Committee to support critical-access designation for rural hospital

Megan Morris briefed the committee on substitute Senate Bill 5923, which would allow a rural hospital on an island in Skagit County to receive cost-based reimbursement as a critical access hospital upon federal certification. Morris said there would be no immediate fiscal impact until federal designation occurs but cited potential state costs if the hospital becomes eligible for cost-based reimbursement.

Elise Cutter, superintendent and CEO of Island Health, described the hospital as "the safety net for this diverse geographic area," serving more than 45,000 patients a year and providing emergency care, inpatient care, surgical services and obstetrics. Cutter told the committee the hospital is licensed for 43 beds but has an average daily census of 19–20, which would leave it under the 25-bed critical-access threshold. "We are currently licensed for 43 beds. But our average daily census...is 19 and 20," she said when asked about capacity. Cutter and other witnesses described the hospital's payer mix—roughly 75% government payers—and said Medicaid reimbursements have not kept pace with the cost to deliver care.

Dr. Jason Hogue, a family physician at Island Health, and community witnesses emphasized that losing sustainable reimbursement would risk local obstetrics and other essential services. Daryl Hicks, a retired nurse and Island Health Foundation board member, noted Island Health's high CMS star rating and warned that without critical access status "essential services could be diminished and provider response times could be adversely affected." The committee asked about bed counts and timing; staff said they would follow up with more precise details. No committee action occurred at the hearing.