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Borough opposes surgery center

Posted: January 18, 2012 - 8:31pm  |  Updated: January 19, 2012 - 12:24pm
Dr. Henry Krull, right, his wife Mary, and other supporters of a proposed surgery center wait to address the Kenai Peninsula Borough Assembly on Tuesday night before the body voted on a resolution opposing the center.  M. Scott Moon
M. Scott Moon
Dr. Henry Krull, right, his wife Mary, and other supporters of a proposed surgery center wait to address the Kenai Peninsula Borough Assembly on Tuesday night before the body voted on a resolution opposing the center.

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.

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Cogliostro 01/19/12 - 12:20 am
Well thank you nanny state...

Well thank you nanny state... for deciding where the peninsula residents will have their surgery. Of course they don't want the surgery center to open - it'll cut into CPH's monopoly for health care on the peninsula.

Norseman 01/19/12 - 08:03 am
The right decision

The borough came to the right decision. A difficult one, but the right one.

Carver 01/19/12 - 08:44 am
Our representatives?

". . assembly members . . unanimously approved, 7-0, Resolution 2012-003, which opposes the issuance of a certificate of need for the surgery center."

Area residents are quite plainly divided on this issue—some for and some against the proposed surgery center. Especially interesting in that light is the assembly's unanimous decision to oppose the center.

These people represent us? I don't think so. If they did, their vote would not have been unanimous. The public is divided, so should have been the assembly's vote.

If, that is, the assembly really represented the public, which it plainly does not.

spwright 01/19/12 - 09:07 am
"You Charge Too Much $$" 1/19/12

Thur. 1/19/12
There is a Bright & Clear Message being sent to the
Hospital Management BUT They chose to totally ignore that important message :

Our Hospital Charges Too Much $Money$ for the Medical Services Provided.

Our Local Doctors, Patients,Insurance Companies,Private Sector & Public Sector Employees have stated over & over again & again that Our Hospital COSTS TOO MUCH for Services Provided.

Business 101 IF You chose to ignore the concerns of Your
Paying Customers then those Customers will Do Business elsewhere. It's That Simple.

SPW in Sloooooowdotna

colonialpast 01/19/12 - 09:21 am
Plainly, if anyone who

Plainly, if anyone who supports the surgery center and can only site "free enterprise, "CPH monopoly of health care" or "cheaper cost" clearly has not done their research in it at all. I don't think people understand what this will do to their hospital.

The doctors cry foul management at CPH...but who creates this? The doctors are so demanding and want so many perks just b/c their doctors. Sometimes small hospitals have a hard time dealing with these crazy demands.

And Carver...did you attend the open meeting? If not, then you can't complain about not being represented.

Carver 01/19/12 - 11:59 am
And Carver...did you attend the open meeting? If not, . . .

Thanks, but "been there, done that" too many times to not know it's a waste of time.

That such is the case was plainly and unmistakably illustrated by the assembly's unanimous vote which DID NOT represent public opinion.

To my way of thinking, the assembly disgraced itself in front of the voters it claims to represent. Not! It's theater, nothing more.

MathewCannava 01/19/12 - 10:36 am
Specific savings?

I agree charges at CPGH (and most hospitals in the US) can be incomprehensibly high.

I'd be interested in Kahtnu laying out specifics in terms of savings. Same surgery, same much does it cost at much would it cost in the surgery center? If the savings are truly there, this shouldn't be a difficult process.

McGuire and others who've bought in to the surgery center in ANC have made millions.

I don't disparage someone (especially a colleague) wanting to participate in the process, especially if they can save us time and money. But can you demonstrate the savings?

Disclaimer: There may be administrative issues working with CPGH that I'm not aware of...if I operated at CPGH I might be singing a different tune.

chalaskan 01/19/12 - 11:39 am
Promises are just that

We have all these promises from the proposed surgery center, but there is no backing to it. How do you think they will cover the overhead for this $9 MILLION facility?

What exactly are the advantages to the surgeons to work in their own facility? Is this a public service they are "banking" on? Is it currently so horrible for the surgeons to work in the CPH operating rooms that they must do this? If so, why were they proposing a joing venture with the same administration they are running from?

How will they still do surgeries for the Medicare/Medicaid patients with such an overhead, yet no mandate to do so? Are those the surgeries they will be doing at the hospital?

We have a lot of promises coming from the proposed venture of cheaper pricing, and no changes, on top of their being little to no impact on our PUBLICLY owned hospital.

Everyone realizes the hospital isn't subsidized by taxes currently, yet if this new surgery center opens your property taxes will almost be guaranteed to rise?

All this talk about choice, and saving money is a bag of empty promises in my humble opinion. Don't let the talk snowball you, instead please research what these surgery centers have done to their respective communities, (where publicly owned healthcare facilities are).

Educate yourselves without bias on the matter before forming an opinion based on speculation, and what are most likely empty promises.

Carver 01/19/12 - 11:50 am

". . charges at CPGH . . can be incomprehensibly high.

". . interested in Kahtnu laying out specifics in terms of savings. Same surgery, same much does it cost at much would it cost in the surgery center? If the savings are truly there, this shouldn't be a difficult process."

An excellent point! Does anyone know whether such price comparison/savings projections are part of the CON filing? They should be. If Kahtnu would be cheaper, the savings would be reflected in Medicare and Medicaid expense to the public.

colonialpast 01/19/12 - 12:34 pm

Food for Thought...I don't think Kahtnu is accepting medicaid or medicare. They don't pay much for surgery...known as low profit. They will leave those, the ones who can't pay at all and high risk surgeries for the hospital to do. The hospital can not choose who to treat like a private for profit organization can.

Carver 01/19/12 - 01:10 pm
"I don't think Kahtnu is accepting medicaid or medicare."

Can anyone substantiate this? Will Kahtnu accept Medicare and Medicaid or not?

One of the physicians with Kahtnu is a urologist, and surely a significant portion of his business comes from old men with Medicare.

Let's have facts rather than guesses.

MNC 01/19/12 - 01:29 pm
Consumer choice means for ALL not just those with good insurance

The artical said: “Consumer choice is at the very heart of our system. Consumer choice drives us to do better, to constantly improve our businesses.”
Shouldn't Medicare and low income and uninsured patients ALSO have that choice? I don't think that the surgury center would be taking the Medicare patients or accept payment based on income, and I don't think that the community needs the surgury center.
HOWEVER, when the state considers the CON, IF it was possible for them to REQUIRE THE CENTER TO TAKE MEDICARE PATIENTS I think one of two things would happen if approved...
1. With the Medicare requirement making it less lucritive the center would either not open or have to raise prices... or
2. The center being required to take Medicare patients could lighten that burden from the hospital.

colonialpast 01/19/12 - 02:30 pm
NO law to make them...

As it stands right now the ACS claims that they will accept Medicaid/Medicare but there is no public reporting requirement for them to do so. So it's purely speculation at this point. Most ACSs severely limit their Medicare and Medicaid business and do pretty much zero no-pay patients.
So, they basicly only want patients that can fatten their bottom line and thats it. What community needs that and it is NOT worth taking it away from our PUBICLY owned hospital.

colonialpast 01/19/12 - 02:36 pm
Well, Carver...

Well, Carver just about every comment I have read and heard so far has been spectulation/guesses. That is why I made the comment early on about Kahtnu is being very disceptive and unclear about the whole thing. Can't help to make one raise their eye brows at it. That has been way too much left unanswered for anyone to make a clear cut choice.

sparky 01/19/12 - 02:46 pm

When Lowe's,another private enterprise,came to Kenai,there were no Government Agencies telling them they couldn't build & operate here,even if their largest competitor was right across the street from them.In fact the city of Kenai & the Burough applauded them coming to town,because of the revenue they would create.If Home Depot had publically opposed,it would have still happened.Now we have several Government Agencies opposing Kahtnu LLC,another private enterprise,that would create revenue for both the city of Kenai & the Burough.
If these Agencies can STOP this venture from happening,isn't that Communism ??? The Government telling the people what they can or can't do...

akal 01/19/12 - 03:44 pm
not communism this is fascism

the borough has no right to tell anyone if they can run a business here .when the government tells you if you or their good buddies can do business it subverts your right to make a living. it is quite obvious the hospital has a lot of problems with the way it is being run, so a group of doctors wish to strike out on their own to make a better value for the people, and the all seeing all knowing government says no. this is not what this country was founded on. this was a place where free enterprise was practiced and that made the USA great, now all over the country we have restrictions on who can do what. this may also be called crony capitalism.let the good doctors do what they are trained for healing people.

bewildered 01/19/12 - 04:13 pm
There will be NO way of

There will be NO way of finding that out if that is what they will do they can say they won’t but If they open we will NEVER know if this is happening. They are a for profit entity and not required to do so!! Is this not clear enough? Even Krull himself stated as a fact they have no figures to substantiate.

This is not just another business opening up across the street. This is a business of healthcare that potentially could take revenue away from a community owned not for profit hospital. Let’s just say the Hospital losses 50% of revenue; will that then be a 50% loss of jobs? 50% loss of community services such as Serenity house treatment or how about the Sexual Assault Response team. With rape on the rise on the peninsula and an ever growing chemical dependency can we as a community stand to lose these services?

The Certificate of Need is that: Is there a NEED in this community for an ADDITIONAL surgery room? bottom line question here. Kahtnus's application states ONE surgery room. The hospital has currently 4 on line with an up coming 5 none of these are being used at capacity. Let the facts stand.

colonialpast 01/19/12 - 04:33 pm

Bewilder hit the nail on the head. Yes, CPH will loose Serenity House and all branches that do not generate their own revenue but depend on the revenue made off of outpatient surgery. It has already been estimated at about 100 jobs lost at the hospital due to cut backs that would be necessary. THERE ISN'T A NEED. That's how we can tell that this is purely for Kahtnu's own gain and no one else's.

looseleif 01/19/12 - 05:06 pm
Some thoughts both sides

CPH had no legal choice - they must accept anyone brought into the Emergency Room, whether they pay or not. And the prices at CPH are NOT incomprehensible if you think, read the papers, listen to the news. Kahtnu won't be under that legal obligation.
1/4 of the country can't afford Medical Insurance. Now the Borough Assembly decides to deny that population access to health care? Yes, they have a "fidicuary duty", but they also in this case have a contradictory duty to their constituents. I've had 2 day-surgeries in Anchorage, and the cost savings caused my Insurance Company to dictate i go to the Day Surgery there. Even the gas or airfares don't negate the savings. So who is the "communist" (Fascist?!?) dictator in those cases?
Okay, CPH goes to great lengths to "Negotiate" payment plans, gives deep discounts for "cash on the barrel-head", and my family, for one, has had to take advantage of that.
This country's Medical Care's ills are not the fault of CPH or the Boro Assembly and they can't fix it. It won't be fixed until the American people decide when and how it will be fixed. But i find it unconscioncable that the Assembly essentially denies health care to those without insurance or lots of reserves in the bank.
Day-Surgery is sometimes called "optional" by the Insurance Companies. Right. I had a "choice" of getting my hand "fused" (arthritis) or living not only with a great deal of pain but with a strong disability. Rightly or wrongly, i went to Anchorage to the Day-Surgery facility, denied Alaska Regional and Providence the "profits" and had my hand fused. And the Insurance (and Medicare) paid, though not for the transportation. Now i have a hand that is pain-free and works (95% of function, pain-free, is fine with me!). So where does that leave the person without Insurance or only Medicare? They won't be able to afford CPH. Maybe they can afford Kahtnu. Maybe.
By-the-by, i had to go through AK Regional's Emergency Room -- where even the receptionists have to be behind bullet-proof glass and you hand across documents through a pass-through like a bank's Drive-In window! My God!
So isn't it time we fixed this country's Health Care System?

Happy_Lady 01/19/12 - 09:34 pm
In it for the money...

The article states that Kahtnu plans to do 1800 surgeries per year with one operating room (OR) and CPH currently does 1700 per year with the current three ORs. Dr. Krull is quoted as saying that the recent addition of three surgeons will increase surgeries by 600-800 additional surgeries per year. With CPH adding an additional OR (four total), there will be more than enough available operating rooms to accommodate the needs of the surgeons. This entirely removes the validity of their argument that there isn't enough OR time.

Do people know that if you pay your bill in full within 60 days, CPH gives a 25% discount! While this really helps those with the means to pay in full, it really can help everyone. Even those with smaller bills qualify. My son attends speech therapy through CPH and sometimes our portion after insurance is around $20...we only have to pay $15 with the discount; there is no minimum threshold. I believe this says a lot about the hospital. Some may say this shows services are 25% too high, but it doesn't. More profitable departments have to help pay for the less profitable; this is true in any business. Finally, does anyone think Kahtnu is going to operate on anyone that cannot pay in full immediately? They won't be taking emergency patients (stated in a previous article), and will have time to assure pre and full payment for their services. CPH allows people to still receive services and make payments when they can't pay in full right away. Again, think Kahtnu will do that?

RaySouthwell 01/22/12 - 12:53 pm
Mathew Cannava

You stated
"Disclaimer: There may be administrative issues working with CPGH that I'm not aware of...if I operated at CPGH I might be singing a different tune."

You are absolutely correct

So ask the question. Why are the surgeons willing to risk $9 million to build and Ambulatory Surgery center?

Answer- to keep control of their medical practices. The Hospital Corporate Board gave the surgeons a choice. “Our way or the highway.”

The independent surgeons have found another choice. A large percentage of the population support the surgeons because the community understands the abusive management style at CPH.

Politicians do not have a clue and refuse to listen to the root cause of the problems at our public community hospital.

With a divided healthcare community, we all lose in the end.

jlmh 01/22/12 - 01:00 pm
Exploiting the sick

I don't see the problem with a surgery center that doesn't treat all patients. If you are an emergency patient, a freeloader, or whatever, you can still go to CPH for your treatment - just like now. But those who self-pay, or incur burdensome deductibles and co-pays (which are responsible for some 1/3 of personal bankruptcies in this country), it would sure be nice to have a cheaper option.

I think it's pretty telling that the borough assembly is willing to gouge CPH surgery patients in order to subsidize other costs. How is it okay to exploit the sick to pay for your borough asset? If it's a publicly owned facility and can't pay for itself, then yes, you have to levy taxes. I find it disgusting that the borough is willing to price-gouge sick people to pay its bills, rather than spread that cost out throughout the community and upset its tax payers. A surgery patient at CPH should be no more responsible for another person's unpaid bill than any one else in the community.

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