Kahtnu denied CON

Zirul: group will take time to consider options
Eight local doctors make up Kahtnu Ventures. From left to right are Ted Barton, Bobbie Behrens, Gary Schoenrock, James Zirul, Henry Krull, Pete Ross, Roger Hoebelheinrich and David King.

The State of Alaska on Wednesday denied the Certificate of Need application filed by Kahtnu Ventures LLC for building an ambulatory surgical center in Kenai.


State Department of Health and Social Services Commissioner William Streur wrote in a letter that he “determined that the application has not met the applicable criteria for approval to the satisfaction” of the state.

Streur wrote Kahtnu is entitled to a hearing if it is not satisfied with the decision. The request for a hearing needs to be received in writing no later than 30 days from Wednesday.

The state’s Certificate of Need staff issued a recommendation on Feb. 21 advising the commissioner to deny the application.

“It is recommended that the Kahtnu Ventures, LLC application for a CON for construction of a one-suite ASC in Kenai be denied based on the fact that the applicant did not clearly outline the cost and size of the project, did not define a service area and failed to show need for additional surgical capacity,” the state wrote.

According to the staff’s recommendation, more than 800 letters of support were submitted from all sources in regard to the application. About 200 letters were received in opposition to the project, including those from Central Peninsula Hospital, the city of Soldotna and the Kenai Peninsula Borough Assembly.

Kahtnu Ventures proposed building the $9 million, 8,365-square-foot ambulatory surgery in Kenai in hopes of performing 1,800 outpatient surgeries per year with a group of eight local surgeons headed by James Zirul and Henry Krull.

Kahtnu promoted its proposal as a choice for health care consumers that would lower the cost of outpatient surgeries and prevent medical out-migration to Anchorage.

Central Peninsula Hospital officials fought the surgery center idea on the grounds it would take away one of the more profitable service lines it offers, thus damaging their less profitable areas and the hospital overall. CPH currently does 1,700 outpatient surgeries with its three operating rooms.

CPH officials said losses could total $20 million from surgery charges from a total $150 million the hospital realizes in total charges among all services if the surgery center were built.

Zirul said Wednesday the group was disappointed by the decision and did not agree with the state’s findings.

“Although we have not yet had time to fully review the department’s analysis we do not feel it was correct for the state to count the two operating rooms from the South Peninsula Hospital as part of the inventory to determine need, which would require patients from the Central Peninsula Hospital service area to travel 90-plus miles for surgical care,” Zirul said. “We think that the residents of the Central Peninsula deserve their own free-standing ambulatory center and we stand ready to fill that need. We will be contemplating our options over the next few days.”

Zirul said applying for a hearing would be among the options the group considers. He said he thought Kahtnu’s application was good and it had good support.

“It’s very obvious there was significant public support for our project and again we are very disappointed the state did not approve the Certificate of Need,” he said. “I imagine the people who supported our project will also be disappointed.”

Central Peninsula General Hospital Inc. board president Lore Weimer said in a press release she was pleased with Streur’s decision.

“At CPH, we will continue to offer our award-winning surgical services to our patients and to provide a state-of-the-art facility and highly-trained personnel to support our community’s surgeons in our efforts to uphold the mission, vision, and values of the organization,” she said.

CPH Chief Executive Officer Rick Davis said the hospital will “continue to work diligently to improve the efficiency and functionality of our surgical services department.”

“We have added second and third shifts to staff the operating rooms around the clock, and our fourth operating suite comes online in May giving CPH plenty of surgical capacity to respond to the growing health care needs of our community,” he said in the release.

Commissioner William Streur's letter of denial for Kahtnu's CON application.


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