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Kahtnu appeals surgery center denial

Posted: May 17, 2012 - 9:45pm

Kahtnu Ventures has appealed the State of Alaska’s denial of its application for a Certificate of Need to build an ambulatory surgical center in Kenai.

In a May 3 letter, Kahtnu through its lawyers, requested a hearing to appeal the April 4 decision by William Streur, State Department of Health and Social Services Commissioner.

Kahtnu alleges in the request, “CON staff appears to have purposefully distorted much of the information to be considered in order to arrive at an outcome-determined result.”

State staff recommended Streur deny the application in late February because “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,” according to state documents.

Kahtnu disputes those claims in its appeal.

“We’ll see,” said James Zirul, one of Kahtnu’s members, when asked if he was optimistic about the appeal. “I’m going to stay absolutely neutral on it.”

Kahtnu 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 Zirul and Henry Krull. 

The state declared Kahtnu’s application complete in late December 2011 and several public meetings were hosted to discuss the matter.

Kahtnu said the center would provide health care consumers with a choice that also would lower the cost of outpatient surgeries and prevent medical out-migration to Anchorage.

Central Peninsula Hospital officials fought the surgery center idea, alleging it would rob the hospital of the more profitable service lines it offers, thus damaging its 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.

More than 800 letters of support were submitted to the state 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.

In regard to the state’s claim that Kahtnu did not clearly outline the cost and size of the project, Kahtnu said it “clearly stated the cost and size of the project and the CON staff’s ‘confusion’ on this issue is contrived.”

Kahtnu said the service area was defined by Kenai Peninsula Borough ordinances despite the state’s claims it was not.

In response to the state’s allegation Kahtnu failed to show need for additional surgical capacity, Kahtnu said it did prove the need.

“When one uses the correct service area and correct input data, the need for additional surgical capacity is established ...,” the appeal reads. Kahtnu also requested a waiver should the state find there was no need.

“Staff’s ‘analysis’ was also incomplete because it failed to even address Kahtnu’s request for a waiver should the staff conclude that their ‘need’ calculation did not demonstrate a ‘need,’” the appeal reads.

Kahtnu claims state staff “cherry-picked” responses and took them out of context in regard to the center’s total square footage, “appears to manufacture a claim” that Kahtnu used three different projected cost figures, tried to “mislead” the commissioner, and in another area claims the state’s confusion about where it will have a transfer agreement with is “another ruse.”

Kahtnu also took issue with the state’s consideration of the surgery center’s service area, which included most of the Peninsula. Kahtnu said the state should not have included the two surgery rooms at South Peninsula General Hospital in its proposed service area.

On Tuesday, the Kenai Peninsula Borough Assembly gave the thumbs up to a joint agreement with Kahtnu and Central Peninsula General Hospital Inc. to dismiss a lawsuit regarding CPH’s fourth operating room.

Kahtnu had taken issue with development and completion of CPH’s fourth operating room, specifically about whether CPH needed to obtain a CON for the project.

“We all agreed to drop it is what it came down to,” Zirul said.

CPH Chief Executive Officer Rick Davis said he wasn’t aware of the details of the appeal, but was disappointed to hear Kahtnu had taken the matter up again.

“I was hoping we could kind of get back to business and not have to keep on worrying about that,” Davis said. “We will just have to hear how it turns out.”

Brian Smith can be reached at

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rock_alaska 05/18/12 - 03:48 pm

You have my support!!

oyster catcher
oyster catcher 05/18/12 - 10:09 pm

Surgical centers will come, it just may take alittle more time. They do have their place but many people have had concerns for the type and complexity of cases at free standing surgical centers. Surgeon owned surgical centers may have very different staff guidelines also (insurance, vacation, rate of pay). These centers are "for profit " facilities, unlike "not for profit" hospitals. They are much more than "same day surgery" institutions.

Scotam 05/19/12 - 10:34 am
Much needed facility

I find it really sad that a much needed facility has to fight so hard to be a part of this community. So for now my family and myself will continue to travel to anchorage to take advantage of the surgery center there. unfortunately in this day and age with the cost of living being so expensive. Finances are a thing on every ones mind. I had a knee surgery done that was the same as a friends that had his done here. I saved thousands of dollars even when we factored in meals travel and lodging.
Would we rather keep our business here and not have a long drive home after surgery. You bet we would, but until something comparable comes to the area we will continue to take our business to Anchorage. I say keep fighting Kahtnu you deserve a chance to serve the community in this capacity!

oyster catcher
oyster catcher 05/19/12 - 11:02 am

Will Kahtnu accept welfare, medicaid, patients? Or will Kahtnu welcome only private insurance patients.

Watchman on the Wall
Watchman on the Wall 05/19/12 - 04:21 pm
More Airmiles for Navarre

GR8 Navarre will pill up more airmiles to places to fight this other than the CPGH business while we pay his way to do so.
It is funny how EVERY other Mayor in Alaska welcomes business's while OUR mayor fights them, or should i say very sad?

Isaiah 1:23

bewildered 05/23/12 - 01:22 pm


Did anyone of you standing up for Kahtnu actually LOOK at the the building plans? They were CLEARLY not the same as what they were "asking" for a clear and total disception!

The state of Alaska did a good thing.

Allen 05/23/12 - 05:18 pm
Figures Don't Add Up

Once again, the Clarion has printed a press release instead of a story. Where's the other side of the Kahtnu allegations? Nowhere.

Kahtnu's figures don't add up and the State of Alaska simply didn't buy it. They will lose their appeal.

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