Three months after winning property tax relief by arguing that its market had deteriorated, a Virginia hospital is arguing that it deserves certificate-of-need approval for renovations because its market is booming.
"The two positions (in the tax case and in the CON application) are diametrically in opposition to each other," charged Dean Montgomery, executive director of the Northern Virginia Health Planning Agency in Arlington.
Executives of 121-bed Reston (Va.) Hospital said they don't see a contradiction in the arguments.
"We're doing this to streamline the way we provide patient care," said Reston Hospital spokeswoman Claudia Smith. "The tax case is a separate issue unrelated to the certificate-of-need application."
In September 1998 Reston Hospital's owner, Columbia/HCA Healthcare Corp., sued Fairfax County, Va., over the county's property tax assessment of the 13-year-old facility, claiming that fixed managed-care payments, a shift from inpatient to outpatient care and lower-than-expected Medicare reimbursement drove down the value of the hospital.
Columbia argued that because the hospital was becoming "increasingly obsolete" as a result of these industry trends, the company shouldn't have to pay as much in property taxes.
In June Fairfax County Judge Jane Marum Roush sided with Columbia, ordering the county to return nearly $690,000 in property taxes to the Nashville-based hospital chain (Aug. 16, p. 6). The decision attracted widespread attention because it was believed to be the first time a hospital had argued successfully that it was worth less because of Medicare spending restraints.
Fairfax County filed a notice of appeal with the Virginia Supreme Court Aug. 20 and was expected to file a detailed petition with the court late last week. It is unclear when the state supreme court will decide whether to review the case.
Now Reston Hospital is justifying its plans for a $35.2 million renovation by arguing that the patient population in its market is flourishing. Fairfax County, home to high-tech firms and the lucrative Tysons Corner shopping complex, is one of the nation's richest counties.
Montgomery said the hospital was planning the renovation before Roush ruled on the tax case, but another source close to the legal proceedings could not recall any mention of that intention in the court documents and was surprised when informed about the CON application.
"They were preparing this application and refining it internally for months (before the June 29 court decision)," Montgomery said. "Clearly that was going on while the case was still active in court."
James Downey, the lawyer who represented Columbia in the tax case, and hospital officials did not return calls for comment by deadline.
In its CON application submitted to the Northern Virginia Health Planning Agency in August, the hospital seeks to:
* Expand two operating rooms to accommodate larger equipment.
* Relocate three additional operating rooms and add a minor-procedures room.
* Build a three-story addition that will house a maternity center.
* Convert the semiprivate patient rooms to fully private rooms.
* Establish a four-bed critical-care unit.
* Build an additional parking garage.
Montgomery said the hospital's arguments in the tax case raise questions about how the renovations will affect its future assessments and charity-care obligations.
However, he added that most of Reston Hospital's proposal has "considerable merit" for fast-growing Fairfax and Loudoun counties.
Montgomery's regional agency approved the proposal Oct. 4, and state regulators last week gave it a tentative nod. A final decision by the state is expected within 30 days.