Recent action by the Kenai Peninsula Borough Assembly will result in Central Peninsula Hospital incorporating additional facilities and offering more services for physical therapy.
The assembly’s thumbs-up reignited an old debate on the merits of the hospital’s continued growth in the community as residents on both sides testified about their perceptions.
One side of the issue contends the hospital is operating in its own, and the community’s, best interest. Hospital officials say they were lured to the deal by the space available — not the service — to make room for an expanding spine surgery program that keeps medical dollars local.
Another side said the action was an example of CPH’s desire to dominate the local health care market by purchasing the competition.
The assembly unanimously approved Ordinance 2012-19-41 after hearing comments from those looking through both lenses. The measure allows the hospital to acquire Frontier Physical Therapy’s business assets, equipment and two properties in Kenai and Soldotna valued at $2.86 million.
The ordinance also allows CPH to pull $3.59 million from the Central Peninsula General Hospital, Inc.’s Plant Replacement and Expansion Fund to pay for the purchase and to do about $700,000 in renovations to the properties.
Representatives from Frontier did not return Clarion phone calls seeking comment.
Rick Davis, CPH Chief Executive Officer, said he hoped the hospital would be able to continue treating all of Frontier’s patients. Davis was unsure how many of Frontier’s therapists the hospital would hire.
“If we get all the patients then we would probably need all the therapists because we don’t have extra capacity in our own physical therapy from a personnel standpoint,” he said. “We’ll have to hire people to take care of those patients.”
Currently, CPH has five employees in a small Kenai therapy space and seven in its Soldotna space. The hospital offers traditional physical therapy in addition to occupational therapy and speech therapy at both clinics.
While the hospital plans to move into Frontier’s much larger Kenai space, it will renovate Frontier’s Soldotna space to house Dr. Craig Humphreys’ spinal surgery practice while waiting for renovations to be completed at the Binkley Medical Plaza to permanently house its therapy service line.
“Our physical therapy areas, neither one of them are ideal,” Davis said. “They are in strip malls and they are just not the best locations for a hospital-based physical therapy and so by getting a little more volume in Soldotna, it gives us justification to expand into the (Binkley Medical Plaza) as we are doing.”
Jim Trombley told the assembly his concerns about the hospital using the Frontier’s Soldotna facility were in part due to its pool and aqua therapy area that would not be available for use.
“By taking over this facility and changing it to the spine therapy, you are going to take away that resource from this community, resources that are greatly needed,” he said. “A lot of the people I deal with use that type of therapy a lot. Has the hospital even considered what they are going to do when it comes to aqua therapy?”
Davis said aqua therapy is a small, but important portion of the physical therapy volume the hospital might see, but it wouldn’t go unserved.
“We don’t offer aqua therapy, but there are a couple of other locations in town,” he said.
The decision to move Dr. Humphreys into the Soldotna facility also plays into the hospital’s desire to build a $35 million medical office space building that would permanently house his practice, in addition to several other service lines. The space’s fate beyond that is up in the air, Davis said.
“We’ll need him there for at least three years and if indeed the medical office project goes forward and we move him into a larger spine center, we will look at our options,” he said.
Borough Mayor Mike Navarre supported that decision during the assembly’s Tuesday meeting.
“The spine center has seen more patients and activity than originally anticipated and they need room to grow,” he said. “It is a good revenue generator for both the community in terms of economic activity and also the hospital. It makes sense to accommodate that spine center expansion there.”
Trombley said he felt that was a “big disservice to the community,” that some physical therapy patients don’t want to be cared for by the hospital and that the deal was set in stone before the assembly caught wind of it.
“(The hospital’s administration) seem to be more interested in expanding and buying up the competition so that they are going to be the big dog in town and nobody else is going to have a lot of options,” he said.
That sentiment was echoed by Diana Zirul, who is the wife of local doctor James Zirul, who last year along with Henry Krull and others pitched the idea of a local surgery center under the banner of Kahtnu Ventures.
“I am very concerned they continue to monopolize medicine and as such when we take up these ordinances, I would appreciate if we had more than one night to discuss these,” she said. “It only came to my attention tonight that this was up.”
Assembly member Brent Johnson asked Davis if the community is losing anything by the hospital growing.
“I don’t know what we are losing,” Davis said. “Maybe we are losing a quaint little hospital and becoming like a regional medical center.”
Charlie Pierce, assembly member from Sterling, said he felt the hospital was acting responsibly and in a prudent manner.
“I’m also on board with the expansion now because this community said, ‘No, we don’t want someone else to do this expansion, to build a heart center, or radiology or a cancer center, we want to do that ourselves,’” he said, referring to a several year old whole hospital joint venture with a private company. “So we are trying to do it ourselves now and you’ve got some folks in the private sector and most of them are private doctors coming in here and saying, ‘Wait. Hold on. What are you doing?’ Tell them to read the health care reform bill.”
Navarre shared a similar sentiment.
“As we move forward with health care changes and we see integrated structures and bundled payments, it makes sense to have it all under one roof in regard to services associated with a complete procedure,” he said.
Davis said Frontier first approached the hospital and the two had talked for more than a year. He said there are seven other physical therapy businesses in Soldotna and Kenai besides CPH and Frontier.
“We get approached on average once a month by a business wanting the hospital to purchase them,” he said. “We are not gobbling everybody up. We look at every opportunity as a standalone opportunity. This one made sense and so we are going to go ahead and go through with it. We just don’t hop on everybody that wants to sell the hospital their business.”
Brian Smith can be reached at firstname.lastname@example.org