PHD Fact Accordion

PHD Fact Sheet

Special election on April 24th, 2018 to vote on whether to:
  • Create an Orcas Island Public Hospital District.
  • Elect five commissioners to manage this District, if it passes.
50% plus one vote of those voting is necessary for the measure to pass. There needs to be at least 977 votes in the election for the measure to be valid. If the measure receives fewer than 977 votes, then the measure fails. This is the case even if the majority of those voting want it to pass. The 977 votes is based on 40% of the previous general election, which was the November 2017 election. In that election, 2,442 voters participated. The number of people who needed to sign the petition to place this on the ballot was based on the 2016 election and required a larger number.
  • There are five districts. All candidate positions are “at large,” meaning every voter on the island votes for the candidates for all five districts. One candidate will be elected from each district. The districts have no geographical reference. They are there for the purpose of staggering the terms of the commissioners.
  • The terms are for six years, with the exception of the first set of commissioners (in order to stagger the terms). District elections are in the odd years, so every other year. The candidate with the fewest number of votes will serve through 2019. That office would be on the 2019 General Election ballot. The next two commissioners (the 3rd and 4th place finishers) would serve through the 2021 General Election. The top two vote-getters would serve through the 2023 General Election ballot.
  • One commissioner will be elected for each district. Richard Fralick, Pegi Groundwater, and Patricia Miller are running unopposed. Each candidate chose which district in which they wanted to run. Each candidate could see who else had registered before they did.
No. The contract between UW Medicine and Orcas Medical Foundation is between those two entities. They cannot bind a third party that does not exist yet. You can read the existing contract between OMF and UW Medicine on the OMF web site. If and when the public hospital district passes, then the new commissioners can choose to negotiate a new contract with UW Medicine, find a new provider other than UW Medicine, or forgo partnering with any hospital system. It will be up to the commissioners to decide. The commissioners' only obligation is to those who elected them, not to anyone else. It doesn't matter what the OMF / UW Medicine contract says; the new commissioners are free to assume that contract or not, as they deem best.
If the maximum allowed hospital district tax is levied, the hospital district would collect $1,614,400. The commissioners have the ability to levy up to $0.75/$1,000 in property valuation. Orcas Island has an assessed property valuation for 2018 of $2,152,529,000. A mill levy of $0.75 would generate $1,614,400. The commissioners could go to the voters in the future and request additional funding of up to another $0.75. That is available only if approved by the voters in a separate vote. The commissioners do not have to levy the full $0.75. They can set the levy at different amounts each year but at no more than $0.75/$1,000. The levy could not be imposed prior to the 2019 tax year, meaning that tax money would not be received until April of 2019. The commissioners have the authority to borrow money and repay that with future tax revenues. Keep in mind that the $0.75/$1000 is not a fixed number. It can be affected by various state laws such as those that limit any increases to 1% year-over-year growth plus new construction, Prop 747, and changes in property valuation. As a result, the $0.75/$1000 is an approximation.
  • The mill levy for most of Orcas Island for 2017 was $7.14/$1,000.
  • The mill levy for most of Orcas Island for 2018 is $7.88/$1,000.
  • If the voters pass the hospital district, the mill levy for 2019 could increase by up to another $0.75.
If the full amount allowed is levied, the PHD would cause the mill levy to increase by 9.5%. This assumes that no other taxing district has a change in the amount they levy. See the notes on how much taxes have changed over the years.
The property tax paid is a function of two variables: 1) The assessed value, and, 2) The mill levy. Current and historical tax data can be found on the Assessor’s site. How much have taxes changed each year.   The Orcas property tax burden increased by 21.7% from 2017 to 2018. If the PHD passes, then the mill levy will increase between 0% to 9.5%, depending on what the commissioners decide. If you assume they will set it at the highest level possible, then the mill levy will increase by 9.5% between 2018 and 2019. This assumes all other taxing districts remain the same and we are only looking at the increase caused by the new PHD. We do not know what the assessed value for 2019 will be. We do not know what the mill levy will be for the other taxing districts in 2019. Without those data points, we cannot estimate the tax burden for 2019. To do so would be a guess. Most of the large increase from 2017 to 2018 is due to a combination of the increasing market value of property and the changes in the money spent on education. The education increases are caused by the Legislature increasing taxes to comply with the Washington State Supreme Court ruling stating more money must be spent on education and on the local voters' approval of the school improvement bond.
State law allows for a property tax. State law does not allow for other types of taxes, such as sales taxes, to be used for supporting health care needs.
The commissioners can use the money they levy for medically-related expenses on behalf of the island. The commissioners have wide latitude in what that means. Basically, any choices that are medically-related are eligible for financial support. The voters control this by carefully choosing who the commissioners are. Eligible services might include: UW Medicine clinic Orcas Family Health Center Someone else’s clinic Weekend clinic hours Extended clinic hours Naturopathic physicians Alternative medicine clinics Therapists of various specialties Reproductive health clinics Substance abuse clinics Mental health clinics Assisted living facility Children’s health Health screening At-home care visits Dental care Eye care Medical buildings (either donated, purchased, or leased) Ambulance services Taxis to and from medical care Ferry rides to and from medical care Clinics in Anacortes or Friday Harbor The list could go on. The point is that virtually anything medically-related can be subsidized. It is up to the commissioners to decide what is most important and to balance that with the concerns of the taxpayers. They will not be able to fund everyone who needs help. Again, it is up to us — the voters — to choose the commissioners wisely. Most commissioner candidates have indicated that their priority is to provide support for primary care and, if funds are available, urgent care on a 24/7 basis. Some are willing to consider supporting other types of care, if there are available funds and if the community shows support. We asked the candidates about this, and it is helpful to look at each of their answers. See Candidate Statements.
Those who circulated the petition to put the public hospital district on the ballot were able to choose whether to have 3, 5, or 7 commissioners. They were also able to choose whether to make the districts geographic in nature or at large. They opted to make all five districts at large so that everyone on Orcas Island votes on every district. Everything else about how the process works is set by State law. That there have to be districts is State law. That candidates have to choose one of the districts to run in is set by State law. Many want the vote to be for the top five regardless of district, but that isn't what the law allows for.
The Coalition for Orcas Health Care recruited candidates that they thought would be good commissioners. They recruited five individuals who all filed on the first day possible. Other individuals who wanted to run could look at the County website and see who had filed, then choose the district in which they wanted to compete. Each person decided on their own why they thought the district they filed for was the one that made the most sense for them. Some felt that they could not win against person "x" but that they had a chance against person "y." Some wanted to compete against a specific individual. Some felt they had a better chance in a large field.
Steve Hulley's name will be on the ballot, but he has asked people not to vote for him. You can see his statement here.
We don't know until we have a vote. The Madrona Voices survey showed 62% saying that they will probably vote for the district, 29% undecided, and 7% saying they plan to vote against. We won't know if these percentages are representative of the population until the vote is counted. We believe that the demographics of the 750 people who completed the survey match the demographics of the island and believe that the survey is probably representative. But, we don't know that for sure. Also, keep in mind that most people completed the survey in the last couple of weeks of February. The vote isn't held until April 24th, with voting beginning a couple of weeks ahead of that. People can change their mind. We will conduct another survey close to the election to see if the undecideds will share what they are planning to do.
We asked both UW Medicine and Orcas Family Health Center this question. You can see their replies in the Clinic Answers page of this site.
Unless we talk to the doctors and ask them directly, we cannot know. We would also have to know how doctors who are not here now but who might come here would make their decision. I have personally asked the question of Dr. Shinstrom. He has said that, without financial assistance, his clinic cannot stay open. UW Medicine has said that it will leave if the community does not agree to cover its operational losses. Primary care clinics lose money without financial help from donors or tax dollars. Will the clinics continue to find people who will donate the several hundred thousand dollars a year to cover the losses? UW Medicine projects losses of about $550,000 a year. Orcas Island Family Health projects a need of $330,000 a year to meet its needs. Do you believe donors will give the $880,000 a year necessary to keep the clinics open? In the past, a few donors have given these kinds of sums so that the island could continue to have primary care. With several of the very generous donors no longer present, you will need to decide if you think enough new donors will step up to fill the gap. If you don’t think that will happen, you need to decide if you want the tax payers to fill the gap. Many communities around the nation are offering doctors $200,000 a year plus benefits to move to their community. Many of those say, "We will also take care of the staffing and accounts receivable for you." Put yourself in the shoes of a doctor who might want to practice medicine on Orcas without enough donors or without a tax district. Things you would have to decide: How much do you and your family love Orcas Island? Do you like to manage the staff and accounts receivable in addition to practicing medicine? Do you like to be on after-hours call most nights of the week as compared to sharing that duty with other health professionals? Is it acceptable to base your income on the generosity of donors? Do you want to accept seafood or other bartered services and goods as partial payment in lieu of cash? Will we lose our doctors, if the PHD doesn’t pass? We don’t know. We can guess, and many do. Your guess is probably as valid as anyone else's.
The clinics report the following percentages of clients by payment types:

The UW Medicine numbers are for September of 2017 through February of 2018 and do not include the patients of Dr. Russell who have not yet visited the clinic.
Kaiser provides coverage for primary care at both the UW Medicine clinic on Orcas Island and the Orcas Island Family Health clinic.

About 50% of the island residents are eligible for Medicare. Those who work for companies or groups, such as the County or schools, may be able to access health insurance not available to individuals. For those who pay for their own insurance, there is one health insurance option -- Kaiser Permanente. Carriers such as United, Premera, and Aetna do not offer options for individuals.

According to Wikipedia, Kaiser insures 11.7 million people, operates 39 medical centers and 720 medical facilities, and employs over 21,000 physicians. Why this matters is that if you are insured by Kaiser, Kaiser prefers that you go to one of their facilities or specialists. This allows them to better control their costs and to keep the insurance dollars within their own organization. If you use one of the island clinics, need a referral, and Kaiser is your insurer, then Kaiser will require that you get prior authorization, if you want to see a non-Kaiser specialist. This will be true no matter what health provider you’re seeing. It doesn’t matter if it is a private practice, UW, Peace Health, or Island Hospital that runs a clinic. Kaiser will preferentially direct those they insure to their own network.

People who have a Kaiser Medicare Advantage Plan or a Kaiser HAS plan are required to use doctors in the Kaiser system or who have a contractual agreement with Kaiser when they are available in the area where the patient lives or are as close to the patient as other providers. Patients can request non-Kaiser providers in the second scenario, but the decision is up to Kaiser.

Since Kaiser has no doctors in San Juan, Skagit, or Whatcom counties, people who have Kaiser insurance rarely have problems with non-Kaiser referrals that are closer than a Kaiser affiliate.

Note: Kaiser provides coverage for primary care at both the UW Medicine clinic and the Orcas Island Family Health clinic.

The issue is with Kaiser and not with UW Medicine. The issue would be the same regardless of who operates the clinic.

Note: Kaiser provides coverage for primary care at both the UW Medicine clinic and the Orcas Island Family Health clinic.
The health insurance plans that many islanders have with Kaiser are actually with the Kaiser Foundation Health Plans and these are not-for-profit. The following is from the Wiki page: Please refer to National Structure section under The two types of organizations that make up each regional entity are:
  • Kaiser Foundation Health Plans (KFHP) work with employers, employees, and individual members to offer prepaid health plans and insurance. The health plans are not-for-profit and provide infrastructure for and invest in Kaiser Foundation Hospitals and provide a tax-exempt shelter for the for-profit medical groups.
  • Permanente Medical Groups are physician-owned organizations, which provide and arrange for medical care for Kaiser Foundation Health Plan members in each respective region. The medical groups are for-profit partnerships or professional corporations and receive nearly all of their funding from Kaiser Foundation Health Plans. The first medical group, The Permanente Medical Group (TPMG), formed in 1948 in Northern California. Permanente physicians become stockholders in TPMG after three years at the company.[7]
In addition, Kaiser Foundation Hospitals operates medical centers in California, Oregon, Washington and Hawaii, and outpatient facilities in the remaining Kaiser Permanente regions. The hospital foundations are not-for-profit and rely on the Kaiser Foundation Health Plans for funding. They also provide infrastructure and facilities that benefit the for-profit medical groups.
According to UW Medicine, they are changing their policy on Orcas Island and will begin doing courtesy lab draws for non-UW Medicine doctors. This new policy takes effect in early April 2018. The individual does not need to be a UW Medicine patient. The individual must register with UW Medicine. That way, UW Medicine knows where to send the lab results. OFHC does courtesy lab draws as long as the patient has an order. They do not have to be a regular patient.  Statement from OFHC: "Everyone who receives any service has to fill out a demographic form which gives us their billing information, acknowledges our privacy practices, and gives us their consent to treat (take their blood). We don't call that registering, and unless they wanted us to, we wouldn't ask to get their other records or their health history which are things we would do in addition to the above if someone were transferring their care to OFHC."
The x-ray machine at UW Medicine was present before UW began providing service. As we understand, the machine is not working reliably. According to UW Medicine, the cost to replace the machine, including installation, is about $200,000. The machine likely will needs replaced, at some point. Currently under debate is, who will pay for the replacement? Orcas Family Health Center also has an x-ray machine. They say it works well and has no problems. It was paid for by OFHC. Some have suggested that the clinics work together and share a machine. Some say a new machine should be purchased at UW's clinic.  Who should pay for a new machine to be used at UW Medicine? The coalition has budgeted for the PHD to pay for a new machine. OFHC, during our interview with them, expressed an objection to public money being used to buy a machine for the competition when they had to pay for their own machine. If the PHD passes, the commissioners will be an important party to the decision on how to resolve this issue.
Yes. Most of the candidates have said that their goal is to support primary care and potentially add additional hours that the clinics are open. If additional money can still be levied within the $0.75/thousand allowance, they will consider adding other services. What those services are would be determined, in part, by asking the public what they want. The law allows them to fund anything related to health care.