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Assembly preps for full docket

Health care costs, Kahtnu litigation top borough agenda

Posted: February 12, 2012 - 9:13pm

The Kenai Peninsula Borough Assembly will address a full plate of issues at its Tuesday night meeting, many of which center around the expanding cost of health care and Kahtnu Venture’s litigation against Central Peninsula Hospital.

The assembly is scheduled to introduce Ordinance 2011-19-17, which seeks to appropriate $35,000 to help pay for outside legal counsel to defend the borough against a lawsuit filed by Kahtnu, which seeks an injunction against the Alaska Department of Health and Social Services, with Central Peninsula Hospital and now the borough listed as parties.

The group of eight surgeons who want to build an 8,365 square foot, $9 million ambulatory surgery center in Kenai is taking issue with the development and completion of CPH’s fourth operating room, which has become a point of consideration surrounding whether or not Kahtnu’s proposal is needed in the area. 

The state is currently considering whether to issue Kahtnu a Certificate of Need after gathering what state officials say is a record amount of public testimony on the issue.

“Kahtnu seeks an order from the court enjoining the construction of the fourth operating room at Central Peninsula Hospital and asks the court to prohibit the State of Alaska from considering that fourth operating room when determining whether or not to issue a CON to Kahtnu,” a section of language in the borough ordinance reads. 

Kahtnu originally filed a lawsuit in Anchorage superior court to have the state and CPH listed as parties, but amended that complaint to include the borough recently.

“I’m sure they wanted to make sure everything was covered,” said Mike Navarre, Kenai Peninsula Borough mayor, noting the borough’s ownership of the hospital.

Navarre said the borough has already authorized the construction contract for CPH’s fourth operating room to Steiner’s North Star Construction for the low bid of $391,328.

“We have already got plans in place, the money has been appropriated, the notice that we had from the state is that the CON isn’t required and we think that the amount for completing the fourth OR is under the amount required anyway,” Navarre said. “So if we don’t go forward, we ... base our decision on them saying they don’t think it should go forward when all the communication we have up to this point says, ‘Go ahead.’ We have proceeded down that path and we are not going to put the brakes on now. That would likely be sort of a bad precedent for borough operations.”

The borough’s legal department currently has $32,500 budgeted to spend on outside legal expertise, but according to borough information, those funds would fall short of all the needs of the department before the close of the fiscal year if used for the Kahtnu litigation.

“If this litigation drags on and it is more than $35,000, that would probably be into next year’s (budget),” Navarre said. “It is really the first estimate of what we are likely to need for that particular case.”

Assembly President Gary Knopp said he hates to see the borough “drug” into the litigation.

“But I think it is just a technical issue by nature,” he said.

In mid January, the borough unanimously approved Resolution 2012-003, which opposed the issuance of a CON for the surgery center. Many assembly members cited the borough’s financial responsibility as owner of CPH, which stands to lose outpatient surgery revenue if the proposal is approved, as reason for the opposition.


Mayor continues push for health care investigation

Also on the borough assembly’s docket is Ordinance 2011-19-70, which seeks to hire a consultant to assist the borough in finding a way to curb the rising cost of health care in the area.

The ordinance has been introduced by Navarre and would allocate $200,000 for the cause, if approved.

Since last June, the borough administration began meeting with representatives from the Kenai Peninsula Borough School District, various local cities, Central Peninsula Hospital and South Peninsula Hospital to identify health care costs and perhaps form a coalition, which would allow the borough to better negotiate lower health care costs.

“It is anticipated that expertise will be needed in several areas, including knowledge of legal changes in the health care industry for providers and patients, programs that have been tried or considered throughout the nation, preferred mechanisms for implementation and financing preferred options, and other areas in the health care and insurance industries,” the ordinance reads.

Currently the borough spends more than $18,660 per employee for health care and the school district $17,436.

“We are expecting costs to go up another 20 percent this year ... and so not doing anything is not really an option,” Navarre said.

The borough’s initial focus will be on public employees, but the goal is to hopefully expand savings it to other areas of the health care services in the area. However, that might have unintended consequences if the issue isn’t handled with care, Navarre said.

“(The public) might see an impact on the other end where their charges might be higher,” he said. “So you have got to be careful and do some analysis of it. There might be some savings, but we just can’t keep stumbling along in the way that we are.”


Brian Smith can be reached at

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Points 02/13/12 - 02:26 pm
Kahtnu Venture

I am thoroughly disappointed in Mike Navarre with his decision on the Kahtnu Venture. It's a proven fact that outpatient operation facilities are 47% cheaper than hospitals. And now he's spending money to hire a consultant to find a way to curb health care costs!!!! How absurd is that? To the tune of $200,000! That's spending our money wisely. What is he doing, consulting with Obama on how to manage health care?

Allen 02/13/12 - 04:07 pm
Who's Anti-Competition Now

Kahtnu Ventures supporters have been very vocal about accusing the Borough and hospital operating company of being anti-competition in the last few weeks, but this lawsuit proves that it's the Kahtnu Ventures doctors that are anti-competition.

If the Kahtnu project is so great, why do the doctor-owners have to sue the Borough to stop construction of the additional operating room? And the cost of their lawsuit gets passed back to Borough taxpayers. This is dirty pool.

corinnep 02/13/12 - 06:08 pm
"Hospital operators in the

"Hospital operators in the state are sharply critical of a state consultant's report highlighting PROFIT MARGINS AT LARGE PRIVATE HOSPITALS as a factor in driving up costs of medical care in the state" (of Alaska).

"The report, by Seattle-based Milliman Inc., a respected health care actuarial firm, also said PHYSICIAN'S FEES IN ALASKA ARE SIGNIFICANTLY HIGHTER THAN IN OTHER STATES, 60 PERCENT AGOVE THE AVERAGE in a group of comparison states, mainly because of lack of competition. For commercial, meaning non-government health care payers, the difference in physicians' fees is 69 percent, Milliman said."

The comparison was for physicians in private practice, not salaried physicians employed by institutions."

Source: Tim Bradner, Alaska Journal of Commerce Feb. 9, 2012,

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