A $4.5 million parking garage stands unfinished on the grounds of the Washington Hospital Center, testament to a battle between the District's largest hospital and the city's health planning laws.
At stake is the ability of the city's health planners to regulate expenses of hospitals' parent organizations, a growing problem because of the national trend of hospitals reorganizing into a group of corporations, some of which are far removed from health care.
The Hospital Center's year-old parent, the Washington Health Care Corporation, has mounted a legal challenge to the city's authority that is "being watched very closely by health planners all around the country who see hospitals evading regulation by reorganizing their structure," said Jim Simpson, an attorney with the Western Center for Health Planning, a federally funded resource for national health planning.
The reorganization was "absolutely not" an effort to evade health planning laws, but an effort to become more efficient, said John Green, vice president for planning and marketing of the Washington Health Care Corporation. The corporation includes the Washington Hospital Center, the Capital Hill Hospital, the National Rehabilitation Hospital, the Center for Ambulatory Surgery, Center Properties Inc. and Washington Hospital Center Management, Inc.
Construction on the corporation's two-story garage was halted July 25 by a U.S. District Court judge who ruled it should have submitted the parking garage plans to city health planners. In June, a Superior Court judge had declined to stop the building.
The District's health planning law requires that all expenses greater than $600,000 "by or on behalf" of health care facilities be approved under a certificate of need application. No one sought approval for the garage, Green said. "Because of the restructuring, it was felt a certificate was not needed," he said. The Washington Hospital Center became part of the corporation in July 1982.
Sherry Cleghorn, a spokeswoman for the corporation, explained that a subsidiary of the corporation, not the hospital, is building the garage. Since the subsidiary, Center Properties Inc., is not a health care facility, it is not bound by the planning laws, Cleghorn said.
Hospitals throughout the country are becoming parts of "multi-systems" in an effort to expand their resources and to consolidate operations with other, similar facilities. The new umbrella organizations often take on related, but new functions, such as building doctors' offices, nursing homes, sports medicine facilities, and senior citizen housing.
As a result, some of these new organizations, both for-profit and not-for-profit entities, argue their expansion and construction plans are outside of the scope of health review.
But health planners have been stung by the mostly successful ploys of hospitals throughout the 1970s to avoid regulation. State planning agencies are wary of hospital reorganizations, said Simpson, because of situations that have occurred in Milwaukee, Wis., for example, where a hospital housed a new CAT scanner in an adjacent one-time hamburger stand, or in Walnut Creek, Calif., where doctors affiliated with a hospital located their non-approved CAT scanner in an office building 18 inches from the hospital.
"These new corporations are promising their projects will have no effect on patient costs, but there's no way they can project that with 100 percent certainty," Simpson said. "The whole point of multi-units are for the corporation and its subsidiaries to have money passed between them. To foreclose that possibility runs counter to the organization."
Green, of the Washington Health Care Corporation, said the corporation is willing to stipulate that "should the parking garage run into difficulty, we would not allow that to affect patient charges and costs."
The corporation has appealed Judge James Washington's injunction against further building, and is running up costs of $50,000 a month while the unfinished garage remains idle, Green said.
The desire by the Washington Health Care Corporation to exempt its parking garage from the city's health care laws comes at a time when the entire package of rules which implement the laws is under legal attack by the Washington Hospital Association.
Officials from both the hospital association and the Washington Hospital Center say there is no connection between their lawsuits, although they say they are supporting one another's aims. Jack Ashby, deputy director of the hospital association, said since few, if any, certificates for non-patient-related items, such as parking garages, are ever denied by health planners, such requirements are "an exercise in bureaucracy."
But Carl Wilson, director of the D.C. State Health Planning and Development Agency, notes, "We have to hold down the rising cost of health care. Any major expense by or on behalf of a health facility may have implications on the amount of money a consumer will pay for health care."
The hospital association's lawsuit was filed Dec. 17, 1982, the day the 97 pages of rules were submitted into law. The 17 member hospitals contest the health planning rules as cumbersome, costly and procedurally inaccurate, according to Cal Simpson, associate executive director of the association.
Wilson said the U.S. District Court judge's order in the parking garage case helped bolster the staff in its larger battle with the Washington hospital establishment. He noted the health planners were not even aware of the garage's construction until a consumer called in last spring "and aroused our curiosity. We drove out there and observed that a structure was going up on the campus of the Washington Hospital Center. We had not been told."
Green, of the corporation, said the final legal outcome of the garage case will have implications for other projects the corporation is considering, such as a hotel, to be used by patients and the public. Deciding whether to submit such projects to health planners "will depend how this issue is resolved," he noted. "The corporation does plan to diversify and be involved in other health-related items." CAPTION: Picture, Corporation that owns Washington Hospital Center has been ordered to halt work on $4.5 million garage. By Ray Lustig--The Washington Post; Map, Washington Hospital Center/Proposed Parking Garage. By Brad Wye for The Washington Post