In an effort to curb its spending, Central Peninsula General Hospital officials will more closely control the Kenai Peninsula Borough-owned hospital's marketing and graphic design expenses.
The CPGH Inc. board, the governing body of the nonprofit organization that manages the hospital, voted last month to minimize the hospital's use of Christianson Communications LLC, the Juneau-based firm responsible for designing the hospital's current logo and graphic presence, as well as handling public relations and devising the facility's overall marketing plan.
After reporting an operational revenue loss last year for the first time in seven years, hospital leadership began exploring ways to cut costs. They identified professional fees as one of the largest expenses needing reduction, accounting for $2.9 million of 2002 expenses.
At its final meeting of the year, the board received for approval the proposed 2003 expenses from Christianson Communications' owner and president, Susan Christianson.
The proposal called for the hospital to enter a contract with the firm in the amount of $98,500, not including preapproved travel expenses for airfare, hotel and car rental for on-site visits. This amount included $60,000 in graphic support for the CPGH marketing plan -- a document that outlines the hospital's public relations strategy -- at $100 per hour for 600 hours.
The proposal called for $24,500 for writing and editing support for the hospital's marketing director, Bonnie Nichols. This was to be billed at $140 per hour for approximately 175 hours.
The document also billed 100 hours for public relations support for the facility's administration at a rate of $140 per hour for a total of $14,000, as well as travel reimbursement.
Board member William Kelly said although Christianson's support in the previous year was greatly needed and appreciated, the hospital needed to become self-sufficient in regards to marketing itself.
"Susan has done an excellent job," he said. "But somewhere, the baton needs to be handed off."
Between December 2001 and 2002, CPGH Inc. contracted Christianson Communications for a total of $110,290. The cost covered development of public relation support for the board and administration, graphic support for all of the hospital marketing material -- including designing the logo and patient brochures, developing graphic standards and enhancing the Web site -- and subcontracting of Craciun Research Group of Anchorage to do focus groups and community and staff surveys to plan the facility expansion.
Another contract for $35,000 was agreed upon in May 2002 to work with the board on board education issues, Nichols said.
"She was giving advice on hospital expansion," she said of Christianson. "I really learned a lot, and she's been really beneficial to the hospital."
But board member Tom Boedeker said in spite of the favorable results Christianson's firm produced, the hospital needed to reel in its spending. He said this was a particular issue in the wake of the hospital's $2.4 million in operational losses, recent raises approved for nonunionized staff, and a 13 percent pay increase for nurses.
"I understand that we've got to have a professional look," Boedeker said. "But we're talking 2 to 13 percent in wage increases and the nurses package. We're losing money. Where does it end?"
Board member Steve Hoogland said he needed a clearer picture of what services would be provided for the proposed fee.
"If we're going to do it, I'd like to know specifically what we're getting," he said. "Don't get me wrong, she's done a good job. But we have issues with controlling costs, and certainly with contract work."
Hospital CEO David Gilbreath suggested that the board amend the proposal to scale back the amount of graphic work so as not to exceed 250 hours, reducing the expense for that component to $25,000. He then suggested that the hospital employ Christianson's services for only six months while monitoring the need for these services, and revisit the contract in June.
"We'll reevaluate at the end of the fiscal year for the following year," Gilbreath said. "She needs to understand that we just lost $2.4 million."
The nine board members present at the Dec. 31 meeting voted unanimously to follow Gilbreath's suggestion, and the resulting change reduced the total amount of the contract to $36,750 for a six-month period.
Monday, Christianson commented the board's decision, saying she was in full support of the reduction in her services.
"I actually totally understand that the hospital is really looking at keeping all of their costs under control," she said. It's a good step forward for them."
Nichols said she was happy Christianson's services would still be available to the hospital.
"I'm glad that even though they've limited the use of her firm, I still have access to her," Nichols said.
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