By CRAIG FREILICH

POTSDAM – Canton-Potsdam Hospital has received approval for a new two-story building at its Leroy Street campus that will hold outpatient procedure rooms and physician offices.

The village’s Planning Board gave the go-ahead after reviewing the site plan at its meeting Thursday night.

Before any work actually begins, the state Department of Health must approve St. Lawrence Health System's Cetificate of Need application.

Two houses owned by the hospital at 56 and 58 Leroy St. will be torn down to make room for the structure.

It will be a free-standing building on the driveway at the hospital’s Center for Cancer Care.

The contractors will temporarily use some space in the parking lot on Leroy Street between Cottage and Broad streets, while project work is underway.

The parking lot will expand after a hospital-owned bungalow in poor condition on Grove Street is torn down to make way for the spaces, according to Planning Board Chairman Jim Corbett. That plan will “square off the hospital lot” occupying the space between Leroy Street on the east side, Waverly Street to the west, Grove Street to the North and Cottage Street to the south. That plan will be sent to the village’s Zoning Board of Appeals with the Planning Board’s recommendation.

The new building will have a footprint of about 10,000 square feet for a total of 20,000 square feet of space with outpatient procedural rooms for ambulatory surgical services on the first floor and physician’s offices on the second floor.

The Planning Board approved the project’s site plan and a special use permit to accommodate the development’s total density on the hospital campus’s lot, Corbett said.

The ambulatory surgery suites will take some of the load off of the hospital’s full surgical suites to allow less complicated procedures to be done without tying up the operating rooms.

This will help fulfill the hospital’s plans for outpatient facilities that were destined for St. Lawrence Health System’s new Canton building but which did not come to fruition there due to a change in rules for reimbursement from federal medical programs.

Their plan was undermined when the ambulatory surgical center envisioned for one floor of the $23 million three-story Canton facility was no longer achievable.

The change in plan was due to regulations approved in 2015 that made the outpatient surgery plan uneconomical. Those regulations were implemented after St. Lawrence Health System’s plans in Canton were underway.

The new federal law “radically changes the reimbursement for new off-campus Ambulatory Surgery Centers, making the planned use of the 1st floor financially difficult at this time,” said Canton-Potsdam Hospital Corporate Communications Director Rebecca J. Faber said at the time.

The change limited Medicaid reimbursements for treatment at new ambulatory surgical centers that were not within 250 yards of a hospital. Faber said that the law was fashioned with urban medical centers in mind, not hospitals in rural settings.

The higher rates paid to hospitals that own a nearby ambulatory surgical center previous to the new federal law would no longer be paid if the center was more 250 yards from the hospital.

The higher rate had been paid because “hospitals face a markedly different regulatory environment than do private doctors’ offices,” which the extra money was intended to offset, Faber said.

Unfortunately, plans for the new medical facility were made and announced several months before the law was negotiated, passed and signed in Washington.

St. Lawrence Health System said at the time that they then began exploring options at the Potsdam campus.

At the time the hospital announced its plans for Canton, CEO David Acker said the four outpatient surgery rooms planned for Canton were badly needed because surgical facilities at Canton-Potsdam Hospital were often used to capacity.