Washington state must now assume costs covered by the loss of $53 million in annual federal funding for Western State Hospital, which is Washington's largest psychiatric facility.

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OLYMPIA — Years of boosted spending and extra attention at Western State Hospital weren’t enough to stop decertification and loss of federal funding for Washington’s largest psychiatric facility.

Officials for the U.S. Centers for Medicare and Medicaid Services on Monday said the hospital, located in Lakewood, Pierce County, will lose $53 million a year in federal money.

The hospital, which has been at risk of losing federal funding since a 2015 inspection, holds about 850 beds for patients who are involuntarily committed due to psychiatric disorders as well as criminal defendants whose competency is in question.

Washington officials say the funding loss — which comprises less than 20 percent of Western State’s annual budget — won’t disrupt its operations.

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The state will assume those costs beginning July 9 and lawmakers and Gov. Jay Inslee plan to press on with sweeping changes to both the hospital and Washington’s troubled mental-health system.

Monday’s announcement shines a light on the monumental and expensive task ahead for lawmakers and Inslee, who in recent years have poured $360 million into Western State and Eastern State Hospital, located near Spokane.

Despite that, and more than $560 million in other mental-health spending, Washington has struggled to comply with court rulings ordering it to better care for psychiatric patients. Fines against the state in one of those cases, known as the Trueblood decision, have already topped $55 million.

Two GOP state senators Monday blasted the hospital’s leadership for failing to comply with federal regulators, and criticized Inslee for not doing enough.

“He’s got to get into this thing and get his hands dirty,” said Sen. Steve O’Ban, R-University Place.

The Western State spending has included big pay raises to help attract nurses and other psychiatric workers. Authorities re-keyed doors at the hospital’s aging, sprawling campus to improve safety and prevent patient escapes. Officials entered into improvement agreements with federal regulators to help come into compliance.

It wasn’t enough.

In an inspection late last month, federal officials found issues with the hospital’s quality assessment and improvement program, its nursing services, and with fire detectors in some buildings that could pose a risk to patients trying to hurt themselves.

While Washington officials moved quickly to address the fire detector issues, those improvements weren’t enough to pass muster, according to the letter by federal officials.

Cheryl Strange, secretary of the state Department of Social and Health Services, which oversees the hospital, said in an interview Monday that federal regulators had noted many improvements at the hospital.

But, she said, Western State faced too many problems to fix in time.

“We knew this was going to be a heavy lift,” said Strange, who before becoming secretary served as chief executive officer for Western State as part of its turnaround effort. “It’s a very disappointing day for me.”
Strange on Monday afternoon said she hadn’t yet reviewed the federal findings, and DSHS didn’t respond to requests for a copy.

Western State has had problems in the past with measuring quality assessment, she said, and the facility was still working on creating a new staffing model that would make sure enough workers are available to care for patients at all times.

The state could at some point reapply for certification for all or part of Western State, she said, which might restore some of the funding.

Strange also highlighted the hospital’s campus as a substantial stumbling block. There have been times when the state had dozens of contractors on site “working around the clock on the physical plant,” she said.

Sen. John Braun, R-Centralia, blasted Inslee and the hospital’s leadership for failing to take the hundreds of millions in new state funding and make it work.

“I’m disappointed that our executive branch can’t seem to focus on an issue that we’ve been working on for years,” said Braun, who described several of the May inspection findings as a result of management problems. Lawmakers must “stop just handing over bucketfuls of money” without having ways to improve the system, he said.

Braun and O’Ban acknowledged the problems with the hospital’s campus.

They blamed Inslee for the loss of federal funding that is likely to make improvements to the mental-health system more expensive. If the state winds up losing all its federal funding for four years, for example, Washington would have about $210 million less for mental health, O’Ban said.

Shortly before the May inspection findings, Inslee, O’Ban and other legislators announced a renewed push to reduce the number of civilly committed patients at Western State and Eastern State.

Though short on details, that plan would  divert near all civilly committed patients from the two hospitals and send them to smaller facilities to be built in communities throughout Washington. The two large state institutions would then focus on treating patients in the criminal-justice system.

By 2023, nearly all of the roughly 560 civilly committed patients at Western State Hospital would be placed in community beds.

There’s no cost estimate for that plan — the governor’s office has said details will come in December, with Inslee’s state budget proposal.