Future of St. Joseph’s Hospital is in jeopardy after a recent Health Care Authority decision

Katie Kuba
July 11, 2023

BUCKHANNON – A decision by the West Virginia Health Care Authority in favor of Stonewall Memorial Jackson Hospital’s proposed new $56-million-dollar hospital project could impact the long-term financial viability of St. Joseph’s Hospital.

On June 15, 2023, the Health Care Authority – a five-member governmental board that evaluates proposed new health care services in West Virginia – issued a decision paving the way for Stonewall Memorial Jackson Hospital to begin construction on a 29-bed acute care hospital it plans to build on Staunton Drive behind Sheetz in Weston, close to Interstate 79.

But the move, if it happens, would set off a chain of events that could cause St. Joseph’s Hospital to lose millions in federal funding, putting the very future of the Buckhannon hospital at risk.

At issue are two regulations:

Certificate of Need reviews are regulatory mechanisms established by the West Virginia Legislature that ensure health care services aren’t duplicated and are developed efficiently. They are required for many large health care projects, but a bill passed this spring substantially changed the review criteria.
Critical Access Hospital is a designation given to eligible rural hospitals by the Centers for Medicare and Medicaid Services in response to several rural hospital closures during the 1980s and early 1990s. Critical Access locations — like St. Joseph’s Hospital — are paid a higher rate for Medicare and Medicaid reimbursements.

Stonewall, a subsidiary of Mon Health, says its current facility on the west side of Weston is 50 years old, and the cost of renovations and upgrades at that location would exceed the cost of constructing a new facility. So in 2021, they applied for a Certificate of Need to build a new hospital about four miles away, near Exit 99 on Interstate 79.

However, because the new SJMH would be less than 15 miles from Buckhannon, St. Joseph’s Hospital would lose its Critical Access designation — and without that financial lifeline, the result could be severe, according to Skip Gjolberg, the hospital’s president and CEO.

“The loss of CAH status would bring into question the long-term viability of St. Joseph’s Hospital,” Gjolberg told My Buckhannon in a recent email. “Becoming a Critical Access Hospital back in 2014 was key to St. Joseph’s Hospital’s long-term sustainability. In five of the seven years prior to becoming a CAH, we had negative margins.”

“St. Joseph’s Hospital was down to 14 days of cash and was heading toward closure,” he added. “Congress created the Critical Access Hospital (CAH) designation through the Balanced Budget Act of 1997 (Public Law 105-33) in response to over 400 rural hospital closures during the 1980s and early 1990s because of the DRG payment (diagnosis-related payment system) model introduced by CMS (Medicare/Medicaid) in 1983.”

Typically, CAH status is granted when there’s not another hospital within a 35-mile radius; however, in more mountainous terrain, a facility can qualify for CAH status as long it’s 15 miles or more away from another hospital.

While Stonewall Jackson Memorial Hospital is currently located toward the western end of Weston — about 16.7 miles from St. Joseph’s Hospital – the relocation would put it within 11.8 miles.

“In the Balanced Budget Act of 1997, when they established Critical Access status, there was a mileage requirement that [a hospital] had to be so many miles from another hospital,” Gjolberg said previously. “In typical terrain, it’s 35 (miles), but in West Virginia, you can apply for a mountainous terrain exemption, which we did and were granted, and that reduces [the requirement] to 15 miles.”

When asked for comment about the proposed SJMH location, Kevin Stalnaker, Chief Administrative Officer at Mon Health Stonewall Jackson Memorial Hospital, said the new hospital in Weston will provide a state-of-the-art facility for the region.

“Mon Health Stonewall Jackson Memorial Hospital looks forward to providing a new, state-of-the-art facility that will feature technology and equipment minimizing the need for patients to travel outside the region for healthcare,” Stalnaker said in an email. “The new hospital will represent a significant investment in healthcare in our state as well as provide opportunities to retain and recruit healthcare professionals.”

The effort to relocate Stonewall Jackson Memorial Hospital started two years ago on April 26, 2021, when the hospital filed a Certificate of Need application with the Health Care Authority requesting to move from its current location on the west side of Weston to Staunton Drive, where it would build a new hospital at a cost of nearly $56 million. According to the application, the hospital would primarily serve Lewis and Gilmer county residents, although it would also see patients from Braxton, Upshur and Harrison counties.

At the time, St. Joseph’s Hospital, which is owned by WVU Medicine, opposed the filing, arguing that the application did not meet CON criteria. The HCA sided with St. Joseph’s Hospital, and on June 13, 2022, it issued a decision denying Stonewall a Certificate of Need, with the agency determining that SJMH “had failed to demonstrate that superior alternatives to the services in terms of cost efficiency and appropriateness did not exist within the state and the development of alternatives was not practicable,” according to documents on the HCA website.

Stonewall filed an appeal with the West Virginia Intermediate Court of Appeals, but the court sided with the Health Care Authority’s original decision denying the application.

“Stonewall appealed this to the Intermediate Court of Appeals,” Gjolberg explained via email. “Last week, the Intermediate Court of Appeals affirmed the Authority’s original decision in favor of STJ.”

However, while that process was playing out, state legislators passed Senate Bill 613 during its 2023 Regular Session. That bill substantially altered the law, raising the minimum capital expenditure needed to trigger a CON review from $5.4 million to $100 million. The bill was approved overwhelmingly in both the House and Senate, with all of Upshur County’s lawmakers voting in favor.

Following those legislative changes, on March 29, 2023, Stonewall filed a Request for Determination of Reviewability. In the filing, Stonewall said it no longer believed the relocation project was subject to a CON review because the total expenditure was estimated at $56 million.

Stonewall also said the Health Care Authority has never “subjected the complete relocation of existing health care facilities within the same service area to a Certificate of Need review unless the relocation would cost more than the expenditure minimum,” now $100 million.

In response, St. Joseph’s Hospital countered that the change in bed capacity from 70 to 29 would also trigger the CON review, as would Stonewall’s on-campus services being moved to a new off-campus location. St. Joseph’s Hospital also emphasized that if Stonewall were allowed to proceed with its plans, it would lose its classification as a Critical Access Hospital.

In its most recent June 15 decision, the HCA ruled in favor of Stonewall, saying its proposal for a complete relocation to Staunton Drive in the hospital’s service is not subject to CON review “because their project is a replacement and relocation of the same services, in the same service area and does not exceed the minimum capital expenditure.”

The HCA also ruled that it would not normally take up a matter that had already been appealed to the Intermediate Court “but for the change in the CON law.” The board reasoned that since the change to West Virginia Code Chapter 16, Article 2D, Section 2 (15) “substantially increased the minimum capital expenditure from $5.4 million to $100 million … this significant change means large facilities such as hospitals may now be able to have their relocation/replacement costs come under the minimum threshold for CON review.”

Finally, the HCA said a change in bed capacity generally wouldn’t be considered unless the project topped the $100 million threshold or involved moving to a new service area.

St. Joseph’s Hospital has filed an appeal with the Intermediate Court of Appeals, the timeline for which will likely be in the first half of 2024, Gjolberg said.

“The recent ruling, which St. Joseph’s believes was in error, means their project does not need to be reviewed by the Healthcare Authority and can proceed,” he said. “That is why St. Joseph’s filed an appeal because we feel that decision was made in error and that there are other triggers in the CON statute that require this project be reviewed.”

Gjolberg said the hospital, which is more than a century old and has a rich history, was taken aback by the ruling.

“We were very surprised by the ruling,” he wrote. “There are several triggers that call for a project to be reviewed under the CON law; cost is only one of them. On Stonewall’s original CON application, the Healthcare Authority found in favor of [St. Joseph’s Hospital]. Stonewall appealed this to the Intermediate Court of Appeals. Last week the Intermediate Court of Appeals affirmed the Authority’s original decision in favor of STJ.”