Judge snarls Centegra hospital plan

A Will County, Ill., judge Tuesday ordered the Illinois health facilities board to explain why it approved Centegra Health System's plan for a new $233 million hospital in Chicago's northwest suburbs even though the panel's staff found that the proposal didn't meet state standards.

The judge's ruling gives new hope to nearby medical centers that also objected to the new hospital.

In July 2012, Illinois Health Facilities and Services Review Board approved a Centegra proposal for a 128-bed hospital in Huntley, an abrupt reversal of an earlier decision to reject the plan. The staff of the facilities board found the proposal did not meet state standards.

On July 15, Judge Bobbi Petrungaro sent the case back to the facilities board for an explanation. In her order, the judge cited a July 12 opinion by the Illinois Appellate Court that sent a separate case back to the facilities board for an explanation. The nine-member board reviews health care projects to prevent duplication of services.

By requiring explanations, the courts could upend a common board practice: approving projects questioned by the staff. If the decisions are widely followed, they could increase the staff's influence over the pace of health care construction.

As a result of the decisions, “the board may in fact be more diligent in reviewing applications and paying attention to staff reports,” said Ed Parkhurst, principal at Glen Ellyn-based Prism Consulting Services Inc., which represents health care providers before the board.

Judge Petrungaro found the board's approval of the Centegra plan by a 6-3 vote difficult to reconcile with the board staff report, which found that the project failed to meet certain state criteria.

“The administrative record contains over 9,000 pages of materials,” she wrote. “However, the (board's) decision contains no findings of fact, no adoption of the (state agency report), no indications as to which criteria and standards were met or were not met, no indication as to why the board must have disagreed with the (state agency report) and no conclusions by the board.”

In reaching her decision, Judge Petrungaro cited the appellate court decision, which ordered the facilities board to provide a “reasoned opinion” explaining why it approved construction of a $16.3 million nursing facility in Pecatonica, about 17 miles west of Rockford. The staff found that the project did not meet key state criteria.

The appellate court rejected two earlier appellate court cases that ruled that the facilities board need only provide a boilerplate explanation.

Frank Urso, general counsel for the facilities board, said it appears that Judge Petrungaro wants the board to address the staff report findings more definitively.

“We're trying to determine exactly what the court is looking for so we can respond appropriately,” he added.

Susan Milford, Centegra's senior vice president of strategy and development, downplayed the Judge Petrungaro's decision, saying it didn't conclude the case but was merely a request for additional information, which the Crystal Lake-based health system supports.

Centegra's plan was opposed by Elgin-based Sherman Hospital Health Systems, which was later acquired by Advocate Health Care, and by Advocate's Good Shepherd Hospital in Barrington. Janesville, Wis.-based Mercy Health System, which put forward a rival, smaller plan for a hospital in Crystal Lake, also opposed Centegra's plan. Mercy sued the facilities board in Will County Circuit Court in August 2012, seeking to overturn the decision.

In September 2012, the board rejected Mercy's proposal to build a $115 million hospital in Crystal Lake.

Richard Gruber, a vice president at Mercy, praised Judge Petrungaro's decision, saying, “Transparency is a very important aspect of public review, and sometimes that needs to be enforced.”

Judge snarls Centegra hospital plan originally appeared on Crain's Chicago Business.