The Redwood Memorial Hospital Foundation may undertake the construction of a federally qualified health center and physician offices on a 10-acre site opposite the hospital in Fortuna.

The "federally qualified" designation is given to safety net providers such as community health centers, public housing centers, outpatient health programs and Indian Health Services. Qualified centers provide services to migrants, homeless and the uninsured. In exchange for enhancing the provision of primary care services in underserved rural and urban communities, an FQHC receives greater Medicare reimbursement for services, access to cheaper money for construction and access to loan forgiveness to attract young physicians.

"It's a big project -- a win-win-win for the community, the physicians and the hospital," said John Egan, chairperson of the foundation's Renner Property committee and owner of a Coldwell Banker branch in the city. "If everything goes smoothly and the physicians buy into it, it could be done in three years."

The RMH Foundation is the fundraising arm for the hospital. It owns the Renner property and does not need the approval of the owners of Redwood Memorial Hospital -- the Sisters of St. Joseph of Orange -- to pursue the project.

"Right now, with the way the economy is, we can't afford to add new primary care physicians, can't offer loan forgiveness and the cost of doing business is increasing although reimbursements are going down, down, down," said Dr. Don Baird, a primary care physician who sits on the RMH Foundation board. "We are stalemated and can't replace ourselves - and about three-quarters of us are 55 and older Even physicians against nationalized health care are ready to throw in the towel."

If the plan goes forward, physicians would have to give up some independence to whoever administers the FQHC. One possible candidate: the Open Door Community Health Centers, which worked with the community in Crescent City and Del Norte County to open a wellness center in summer 2007. That center provides preventive, mental health, and dental care in 20 exam rooms spread throughout 16,000 square feet of space. It utilizes telehealth technology to reach remote areas in Del Norte County.

Hermann Spetzler, executive director of the Open Door system, said last month a survey revealed 3,300 Open Door clients come from south of Eureka. "We were looking at the Eel River Valley to see if they needed a community health center," he said. "We have a large portion coming from a distance."

Last Thursday, Egan outlined three separate steps for the 10-acre site.

Step one: Double the size of the gravel parking lot for staff at the hospital. "Some days you go by and it's filled," he said. "The Foundation has approved the funding and the plans are with the city engineer. They want to look at drainage." The parking expansion should be complete by June, he said.

Step two: Sub-divide the 10 acres into large parcels with a road meandering through them.

Step three: Figure out what to do with it. Redwood Memorial Hospital is need of major renovation to meet new seismic requirements. Talk of building anew on the 10 acres ended with news that the shift would cost the hospital the critical access designation that increases Medicare reimbursement. Few in the Redwood Memorial community would want to see the hospital's healthy bottom line injured. "We made $100,000 to $200,000 more last year than St. Joseph Hospital and it's four times bigger," Baird said.

And some see a new federally qualified center as a key to insuring that the hospital, and with its critical care facilities, stay relevant and profitable. Egan called existing physician offices "old" and "a little tired"; the RMH master plan calls for those offices to be moved to make way for renovation and expansion.

Becoming an FQHC is "where we get into a little controversy," Egan said. "That will be driven by the physicians."