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CPH expansion funding passes

Assembly approves $43 million bond sale

Posted: October 23, 2013 - 9:06pm

Kenai Peninsula borough Mayor Mike Navarre implored the assembly to vote on a $43 million hospital expansion rather than delay to satisfy a few citizens who said they had no idea bonds would be issued.

“I believe there are a few people who don’t know we are meeting tonight,” Navarre said to the Kenai Peninsula Borough Assembly Tuesday night. “What is it we don’t know now that we will know in two weeks?”

The assembly voted 7-2 to kill an amendment seeking to delay a vote on Resolution 2013-73, which allows Navarre’s administration to sell up to $43 million in revenue bonds to finance an 89,000-square-foot expansion at Central Peninsula Hospital; they followed with a 7-2 vote to allow the planned expansion to go forward.

District 3 assembly member Wayne Ogle and District 1 assembly member Kelly Wolf voted against the bond-based expansion saying that the people needed more time to learn about it.

Still needed before the February bond sale can begin is a Certificate of Need from the Alaska Department of Health and Social Services, which acknowledges the planned specialty clinics as needed and affordable. The CON is expected by mid-December.

Much of the opposition to the bond sale came from citizens concerned that the public was not aware of the plan. Also mentioned was continued fear of government spending. Also criticized was the expansion’s size, which grew over time from 35,000-feet to the presently proposed 89,000 feet.

The three-story addition would open space for up to five clinics, hold a 10,000-square-foot spine center and have one 5,100-square-foot procedure room on each floor. Two hospital-owned clinics and one private spinal surgeon are expected to make the move. Proximity to the hospital is a primary concern for specialty doctors, hospital CEO Rick Davis said.

Dan Green of Mackey Lake criticized the plan saying that taxpayers should have a say in the borough “encumbering” the taxpayer with in debt. With no public input the borough is going to spend $43 million. It should be publicly debated, he said.

“People are outraged,” Green said.

Soldotna resident Norm Blakely said he knew that both sides presenting during the three-hour discussion were honorable and doing what they think is right, but wanted more time so that he too could know more.

While a public vote is needed to issue general obligation bonds, which leverage tax dollars against the bonds, none is required to sell revenue bonds as they are propped against future revenues of the hospital. With annual revenues at $160 million and growing, $43 million in bonds over 20 years is not a big risk, Navarre said.

All those publicly favoring the bond sale work for the hospital or in the local health care industry. Many explained that growth is required to remain relevant and to provide for the aging population.

The hospital’s market share of health care services otherwise provided in Anchorage has grown from 66 percent in 2008 to 73.6 percent in 2013, said CPH chief financial officer and life-long Peninsula resident Shaun Keef. From a monetary point of view that money is benefiting the Central Peninsula community, he said.

Others noted that from a patient care point of view, more local cancer services equal more time near family and at home while being treated.

Prior to the vote, Davis testified that the expansion, known as Phase V in the hospital’s decade-old strategic plan, has been in the works for years as he presented a list of 22 public meetings in 2013 in which plans were presented or discussed, including assembly meetings, local associations and chambers and newspaper advertisements.

Davis warned the assembly that public hospitals that do not compete with the open market and do long-range planning die on the vine.

“Ultimately, the failure to engage in long term planning will result in a large financial burden to taxpayers, a loss of local control of a community asset, or closure of the facility,” Davis wrote in the application seeking a Certificate of Need from the Alaska Department of Health and Social Services.

“Healthcare is an industry just like oil and gas,” Davis said.

After pointing out the resolution was already delayed two weeks, Navarre warned that a delay of two additional weeks could lead to the bond sale and construction being pushed back one year, resulting in increased costs.

The primary reasons behind the specialty clinic expansion are to provide needed cancer care locally, grow the hospital to provide services to the Peninsula’s aging population and group services under one roof to become more efficient as medical payments for services from Medicare, Medicaid and insurance companies continue to shrink.

According to the 2013 Central Peninsula Community Needs Health Assessment — based on a survey results of 599 central peninsula households, health data and an advisory work group — the Central Peninsula population has aged during the last decade and faces a constant increase in retired age citizens during the coming years.

Nearly half the local population is 45 or older and the largest medical needs identified collectively, according to a community perspective, are cancer care, Alzheimer care, cardiology and dialysis services.

Davis’ CON application lists cancer care as the number one priority of the expansion.

Reach Greg Skinner at greg.skinner@paninsulaclarion.com.

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