Proposal for surgery center in Kenai denied

A proposal to build an ambulatory surgical center in Kenai has been denied by the Alaska Department of Health and Social Services.


Kahtnu Ventures, LLC recently filed an application for a certificate of need with the department for an 8,365 square foot “ambulatory surgical center.”

However, that application was denied for “untimely submission of information,” said Karen Lawfer, health and social services planner for the state.

After the public notice phase — which allowed others interested in providing the same service to submit an application for a certificate of need — was completed, the state determined the application was missing information.

The deadline to submit that information was Nov. 9. Lawfer said the state needed to see certified construction cost estimates and bid quotes for equipment from suppliers. Those estimates Kahtnu submitted were not certified, she said.

“We need to have some sort of bid quote or something that we could verify that those would in fact be the estimated costs,” she said.

Lawfer noted there was no required waiting period before Kahtnu could re-apply, potentially for the same project.

According to the previous application, the company planned to build the estimated $8 million facility by spring of 2013 and serve the Kenai and Northern Kenai Peninsula area. Further details about the proposed project haven’t been released to the public.

The proposal caused uncertainty in the local medical community and forced Central Peninsula Hospital officials to examine a counter-proposal. CPH staff performs about 3,000 outpatient surgeries each year and the number of those surgeries that could be taken away as a result of the surgery center would have been influenced on which, and how many surgeons signed on as partners in the venture.

Surgery centers are one of the more profitable areas of healthcare. Former CPH CEO Ryan Smith said he was concerned about the hospital’s ability to fund the parts of the hospital that don’t generate profit if the Kahtnu venture pulled profit away from CPH.

Smith said up to 80 percent of outpatient surgeries are usually pulled from a hospital in areas where a surgery center opens, which would have amounted to about $12 to $18 million in revenue from CPH.

Interim CPH CEO Rick Davis said the Kahtnu denial doesn’t much change the hospital’s approach to the proposal — it will still fight against it.

Davis added those surgeons and people behind Kahtnu are still somewhat of a mystery.

“We don’t even know who Kahtnu Ventures is really, there is nothing online or available anywhere that we have been able to find that lists out who is in Kahtnu Ventures,” he said adding the only listed parties are an Anchorage-based consulting firm, and an attorney in Seattle who set up the LLC. “We kind of know who it is but none of them have admitted it and we don’t have anything in writing.”

Also in the mix are CPH’s plans to open up a fourth surgical operating room, which was previously shelled in at the hospital. At the time of the Kahtnu proposal, CPH submitted a conditional letter of intent to file a competing certificate of need, but it was later determined by the state a CON wasn’t needed for the CPH project.

The fourth operating room addition will likely be taken into account in the calculation of future surgical demand, which could be a foreseeable speed bump for Kahtnu, if the group proposes a similar project.

“It makes it harder for them to make a case for the need for additional space because there is 25 percent more (surgical capacity) than there was yesterday,” Davis said.