Despite pandemic-related money woes, the leaders of the WhidbeyHealth Public Hospital District are moving forward with a hospital renovation project estimated to cost $22.5 million.

At a March 8 public meeting, hospital officials will be opening bids from prospective construction management firms that will present preliminary maximum allowable construction costs, according to hospital officials.

CEO Ron Telles explained that the hospital district received a USDA loan with “an extremely low” interest rate for the long-planned-for project before the pandemic hit and officials hope to go forward with the work before the loan sunsets, although he said the federal agency would likely be flexible with the timetable.

“The goal is to improve patient care, patient satisfaction and the patient experience,” he said.

Like rural hospitals across the nation, WhidbeyHealth is facing a chicken-and-egg dilemma. On the one hand, the hospital needs to update and modernize equipment, services and the facility in order to attract more patients and earn more revenue.

On the other hand, it needs more revenue and more patients to pay for upgrades and modernization.

Tim Waldner, director of facilities and plant engineering, explained that officials are also seeking state and federal grants to fund some of the more basic improvements that are needed, such as replacing the HVAC system.

Telles explained that the renovation project is the second phase of the hospital’s improvement plan. The first was the hospital wing that added 39 beds to the facility. Voters passed the $50-million bond measure in 2013 and it opened in 2017.

Waldner said the second phase, which is dubbed Operation Sea Lion, is guided by the facility master plan. He explained that the first step was to determine the needs for each department.

“After you figure out how big departments need to be,” he said, “then you put it together like a jigsaw puzzle.

The lab, for example, needs to double in size to make room for equipment.

Space set aside in the new wing will be used for an expanded cancer care unit. Telles pointed out that it is next to the pharmacy so patients will be able to quickly get chemotherapy drugs, which have a limited shelf life after being mixed.

Likewise, imaging needs be expanded to accommodate new, upgraded machines, and it will be closer to the ER.

The labor and delivery department will get its own C-section room. This will free up all four of the hospital’s operation rooms since currently one always needs to be available in case of an emergency C-section.

The sleep center currently on Goldie Road will be moved to the hospital. The center has limited staff overnight, which was a security risk and means staff would have to call for help if there’s a medical emergency, officials said.

Last month, Telles told hospital commissioners that the district was in a “cash poor situation” due to COVID-19 related costs and was operating in the red, which negative 1.7 days of cash on hand.

The hospital lost $3.5 million in 2020, although officials submitted a grant application to the federal government for reimbursements of costs related to COVID-19.

Yet Telles said the hospital would be able to afford the project with the USDA loan, which comes from a program dedicated to investments in essential facilities in rural areas. Also, grant money wouldn’t hurt.

Hospital officials are using the “general contractor-construction manager” process, as opposed to the usual “design-bid-build” procedure. Under the process, which is known as GC/CM, a contractor is brought on early and provides construction management services throughout the project.

The city of Oak Harbor used this process to construct the sewage treatment plant. The ultimate cost of $150 million far exceeded estimates and elected officials were repeatedly surprised by cost jumps.

At one point, Oak Harbor Mayor Bob Severns said he questioned the GC/CM process and its lack of specificity about costs.

Both Telles and Waldner, however, have had positive experiences with GC/CM. They said the process controls costs in several ways, including limiting change orders and identifying efficiencies.

The city of Seattle has a manual for city departments that outlines the GC/CM process. It points out that GC/CM allows better budget control, value engineering and time savings. Yet the document also stresses the need for staff members to have experience with the complex process; unintended costs could result if the contractor is experienced and staff members are not.

Hospital officials will open the professional service bids March 8, but they aren’t required to select the lowest bid under the process.

Officials will interview candidates and choose a construction manager based on several measures, according to the hospital.

Waldner said the earliest construction could start is next spring.