Katherine Glick, a resident at Heritage Place in Soldotna, meets with Wendy Rodriguez and Vickie Geer during a resident care conference on Thursday. A funding agreement with the state may open the door for Central Peninsula General Hospital to acquire the nursing facility.
Photo by Joseph Robertia
Central Peninsula General Hospital is ready to purchase Heritage Place, a 60-bed nursing facility in Soldotna not far from the hospital, and Tuesday proposed a time line that would culminate in a borough ordinance authorizing a deal by mid-May.
The hospital plans to use existing plant, replacement and expansion funds to acquire Heritage Place. That will not require any increase in hospital service area property taxes, said David Gilbreath, chief executive officer for CPGH.
A final purchase price is still being negotiated, but it appears the borough would acquire Heritage Place from its owner, Banner Health Systems, for under $1 million. The facility has been valued at around $3 million, Gilbreath said.
Banner is willing to sell for under $1 million to avoid the necessity of a public vote now required for any capital spending by the borough exceeding $1 million, Gilbreath said. Borough voters approved a proposition on the October municipal ballot lowering the cost ceiling requiring a vote from $1.5 million.
Though not imminent, closure of Heritage Place has been considered inevitable without a sale. Banner Health Systems has been losing money operating the nursing home, Gilbreath said. Buying the facility would “ensure continuation of long-term care services in our community,” he said.
The 60-bed nursing facility went up for sale early last year and Banner and CPGH soon signed a memorandum of understanding outlining steps for reaching a purchase agreement.
Since then, hospital and Banner officials also have been meeting with the Alaska Department of Health and Social Services regarding a funding agreement to access federal dollars that would supplement Medicaid services payments and help CPGH operate the facility for two years. According to Gilbreath, because hospitals running what are termed “co-located” facilities are afforded a more favorable Medicaid reimbursement rate than freestanding facilities not associated with a hospital, CPGH would be able to break even or possibly make a profit operating the facility, where Banner could not.
The Health and Social Services funding agreement would provide nearly $1.44 million more in federal dollars for operational expenses through fiscal year 2008. By fiscal year 2009, the hospital would have accumulated its own operating cost data and Medicaid rates for the hospital and Heritage Place would then be based on fiscal year 2007 bench-year costs, Gilbreath said.
Terms and conditions of the funding agreement between CPGH, Banner and the state are to be presented to the hospital’s finance committee on March 22, and to the hospital board on March 30, where approval is expected. The assembly and borough administration would review the proposal in a work session on April 4, and from there the agreement would go to the service area board for final approval on April 10.
Assuming approval of the funding agreement by the board, an ordinance authorizing purchase of Heritage Place would be introduced at the April 18 assembly meeting, with a public hearing either May 2 or May 16, or possibly both.
Gilbreath said the hospital would hire all Heritage Place employees, which includes registered nurses, certified nursing assistants and others, who were in good standing at the time of the purchase, providing wages and benefits comparable to those they now receive.
Hospital nurses are currently unionized and Heritage Place nurses would be given the option of voting to join the Alaska American Nurses Association.
Banner Health spokesperson Bill Byron confirmed the price would be under $1 million to avoid the borough’s spending cap and that the valuation of the facility at around $3 million was correct. He also confirmed that Heritage Place has been operating at a loss, but noted that CPGH would be in a better position to operate the facility with less financial risk.
Banner Health, Byron said, is a nonprofit organization whose primary focus is on hospitals. Some of those have long-term care units attached. Heritage Place’s independence made that facility somewhat unique “an outlier” in Banner’s world, he said.
Banner has operated the facility since 1999 when Lutheran Health System and Samaritan Health merged to become Banner.
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