PORT TOWNSEND — Jefferson Healthcare stands at a crossroads, according to the CEO.

The tax district of 29,000 residents will face key issues in 2022 that will include considering a range of options from solely replacing an earthquake-challenged administration building to dramatically expanding facilities and services with taxpayer dollars, CEO Mike Glenn said this week.

At a minimum, challenges presented by a 36,000-square-foot administrative services center known as the 65 building — for the 1965 year that is was constructed — must be addressed, Glenn told a Port Townsend Noon Rotary Club meeting via Zoom.

“The 1965 building is a seismic disaster and must be replaced [or] significantly retrofitted within the next 10 years,” according to Glenn’s presentation, which was accompanied by a 2015 letter from then-Port Townsend Building Official Michael Hoskins, who said hospital buildings are non-compliant.

“The building codes now hold hospital and other essential buildings and structures to a much higher standard to resist seismic activity together with our communities demanding that essential buildings and services remain functional and open during these times,” Hoskins said.

City Development Services Director Lance Bailey said Wednesday he is unfamiliar with Hoskins’ letter.

“I’m sure the building is not up to current code,” Bailey said. “The conclusion that it has to be replaced in 10 years, that’s where I’m a little uncomfortable really commenting on one way or another.”

The new “infill building” would include a linear accelerator, an express clinic, a cardiac-pulmonary rehabilitation area and an MRI suite, along with a new kitchen and staff and public dining areas, according to a request for qualifications (RFQ) from Puget Sound-area contractors for progressive design-build services.

The RFQ includes a “conceptual project budget” of $112.7 million, including $75 million for a design-build contract and $9 million for equipment and furnishings.

At maximum, 100,500 square feet of new hospital campus would be built that would include “comprehensive phasing” of new facilities, according to the RFQ.

A 54,000-square-foot office building of two to three stories would include an ancillary surgery center, relocation of primary care office, and women’s heath, dermatology, urology and sub-specialties relocated from the existing hospital. It would include new ear-nose-throat, pulmonology and neurology services.

Three of the five applicants have been asked to follow up with requests for proposals, hospital board member Kees Kolff, who introduced Glenn to the Rotary Club audience, said Wednesday.

According to the RFQ, a design-build contract would be executed in February, with “bond referendum $ released” in January 2023, construction beginning in February 2023 and “final completion (potential)” in June 2024.

Glenn, Jefferson Healthcare CEO for 11 years, said in a later interview that public input on the project’s scope would be sought through a series of open forums and during hospital board meetings.

“That $112 million is not cast in concrete,” Kolff said in a separate interview.

The current hospital district levy is 7.7 cents per $1,000 of valuation that consists of a non-voted bond and levy.

‘Go to community’

“I think it’s probably safe to say that if we do anything beyond replacing the hospital [administrative building], we will have exceeded our ability to self finance, so we will need to go to the community if the project footprint grows beyond just replacement of the 65 building.”

Glenn said in recent years, the hospital district has acquired a primary care practice and surgery practice, “stood up” the Port Ludlow clinic, introduced new programs such as dermatology and cardiology services, and expanded existing services such as orthopedics and oncology.

“If I were to guess, probably 15 to 20 percent of that growth was the result of acquiring practices,” he told the Rotary members.

“I think what happened is that community members who were leaving our community seeking care, whether hospital care or specialty care or, in some cases, primary care, they’re not doing so now, and I think that’s been the foundations of the growth of the last 10 years,” Glenn said.

“The question is, how much more is there? How many trips to Bremerton or Seattle that are being made today could be stopped if we increase new services or did a better job of what we’re doing?”

The tax district has applied to the state Department of Enterprise Services to design-build the project, Kolff said.

In design-build projects, a single contract covers architectural and construction services and a district employee is assigned to oversee the effort, which has been done, Kolff said.

During a later interview, in response to how the district will deal with a severe worker shortage as it expands services, Glenn said efforts continue on the federal, state and local levels to address the issue with expansion of programs to encourage students to seek careers in health care.

Kolff said the hospital is considering adding child care services as an inducement to draw new workers to Jefferson Healthcare, adding that, if grants set up the program, the cost to run it may be minimal.

Glenn said district taxpayers need to ponder if the hospital district should proceed on its present course, even while being set upon by soaring inflation.

“I think it’s a matter of, does the community want the hospital to continue to invest in expanding?” he said.

“The second part is, does the community wish to tax themselves to provide even more services? We won’t know the answer to that until we go through the process.”

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Senior Staff Writer Paul Gottlieb can be reached at 360-452-2345, ext. 55650, or at pgottlieb@peninsuladailynews.com.