After more than two hours of testimony Tuesday night, Kenai Peninsula Borough assembly member Hal Smalley took the microphone to speak.
He took a deep breath before addressing the nearly packed assembly chambers filled with residents, officials, surgeons and other medical professionals from Central Peninsula Hospital and Kahtnu Ventures, LLC.
He said he was opposing Kahtnu’s proposal to build an ambulatory surgical center in Kenai not based on the idea’s validity, but rather the borough’s financial responsibility as owner of CPH, which stands to lose outpatient surgery revenue if the proposal is approved.
“Some decisions are tough to make and my decision in this matter is not as difficult as I thought it might be,” he said. “As an elected assembly member, I have a fiduciary responsibility to protect the borough, the taxpayers and to make sure that we protect our community assets and that is the hospital. The (certificate of need) itself will be spoken to and determined by the state.”
Smalley’s words were echoed by many assembly members before they unanimously approved, 7-0, Resolution 2012-003, which opposes the issuance of a certificate of need for the surgery center. Assembly president Gary Knopp and member Ray Tauriainen were absent.
The Alaska Department of Health and Social Services will make the ultimate decision on the CON and the borough’s resolution serves more as a recommendation, along with the likely scores of other input submitted by residents during the public comment period of the process.
Assembly member Linda Murphy said the proposal to build the 8,365 square foot, $9 million surgery center was something that the assembly “must” address.
Bill Smith, assembly member from Homer, agreed.
“I think supporting the Kahtnu CON application is actually not something I can do in spite of being impressed by the idea of freedom of choice and lower prices,” he said. “I think there will be room for both the hospital and the Kahtnu operation with the growth in population (down the road).”
Soldotna resident Brenda Trefren spoke against the ordinance before the assembly made its decision.
“You are really not in the position to have an opinion like you want to have,” she said. “I think it would be better addressed by the state on Thursday as individual personal opinions.”
She said she asked herself if she was starting a business how it “would feel if the assembly ganged up on me.” She also “highly doubt(s)” the reason for Kahtnu — a group made up of eight local, CPH-affiliated surgeons wanting to operate away from the hospital — was “about money.”
“I think this really is a loud cry from them about the management issues that are happening at the hospital,” she said. “These are really good people who need to work in a physician-friendly place and I think the management at the hospital has been failing the last several years.”
Kevin Austin, of Soldotna, said he “strongly” opposed the ordinance because the assembly was “clearly afraid” of competition against a business it owns.
“Our capitalistic system thrives on open competition to ensure consumers the best products and services at the most reasonable price,” he said. “Consumer choice is at the very heart of our system. Consumer choice drives us to do better, to constantly improve our businesses.”
Soldotna resident Will Madison said he supported the ordinance, and contends the timing is wrong for a surgery center, considering CPH is already adding a fourth operating room.
“With the addition of the fourth room, there will be more than enough room for a population of our size,” he said. “That population is not expected to grow significantly in the next five years, neither will the need for additional surgical rooms.”
Both Kahtnu Ventures and CPH officials were given additional time to address the assembly.
Assembly member Sue McClure asked Henry Krull and Jim Zirul, who are both founding members of Kahtnu Ventures, why they thought CPH didn’t want to participate in the surgery center, despite a joint venture proposal.
“I think that might be a better question for CPH, I can only guess,” Krull said after a pause.
“I have the same answer,” Zirul said.
CPH Chief Executive Officer Rick Davis spoke to the same question of why the two sides didn’t enter into discussion more, “rather than (CPH) shutting off the conversation.”
“We are already adding an operating room for $900,000 relative to CON money, so why build one O.R. for $9 million?” he said. “That’s $1,100 a square foot — we don’t want to collaborate on that. That’s not a good business decision.”
Assembly member Brent Johnson asked about the relationship between the Kahtnu staff and CPH administration.
“Some speakers said there were some sour grapes, one used ‘divorce,’ one came and said there had been horrible management prior ... but sort of the atmosphere that had ushered in remained the same but there was some sort of undercurrent between you and the hospital,” he said. “Is there any truth to that?”
“There is always spats within families,” Zirul said.
Central Peninsula General Hospital, Inc. board member Rick Ross said “there is no divorce.”
“There is a spat, there is a difference of opinion on whether or not this is a good thing, or whether or not this is a bad thing,” he said. “But once this decision is made either way the hospital is going to be continuing to work with its fine surgeons.”
Smith said he was “struggling” with how Kahtnu proposes to do 1,800 surgeries per year with one operating room when CPH does 1,700 outpatient surgeries with three operating rooms.
“Apparently with increased efficiencies you could do that,” Zirul said, noting it was a number that “can be done.”
Said Davis later in the meeting, “I don’t know what that means — we are pretty efficient at the hospital.”
“We need operating rooms,” Krull said. “Currently, CPH is operating at 90 percent capacity, according to CON guidelines. This was 90 percent last summer before the addition of three new surgeons that we expect will bring an additional 600 to 800 cases per year putting us well over the volume.
“There currently is a decreased availability of operating time and this decreased time can create increased wait time for both patients and surgeons as well the need for scheduling elective surgical cases after hours.”
Davis later said in response to the charge the rooms were near capacity that “at two o’clock in the afternoon, there are crickets chirping in there some days.”
Krull said surgeons can usually do the surgery they need to at CPH’s facilities, but that “means doing surgery after hours” causing support staff to work overtime.
“You heard tonight about the operating room (staff) getting weary of working 8-, 10-, 12-hour days and then having to take emergency call,” Krull said. “There was mention of a safety issue with that.”
Davis responded later they, “have also brought in a new OR director who has just submitted a new proposal to administration to increase our OR staffing level to give us a permanent afternoon and evening shift ... so our nurses won’t have to work so much overtime.”
He also spoke to the charge that a competing surgery center would add “healthy competition” to the marketplace.
“The truth is that only a physician can schedule a patient for surgery,” he said. “So it is not fair competition when your competitor has control over your business and why would a surgeon or any smart business person ever chose to schedule a case at his competitor’s operating room when you will make more money scheduling it in your own surgery center?”
Both the Kenai and Soldotna City Councils were scheduled to address the issue at their respective meetings Wednesday night as the Clarion went to press.
The state is currently soliciting comments on the proposal through Monday and will host a public hearing on the matter at 5 p.m. Thursday at the Challenger Learning Center in Kenai.