Borough playing by the rules with Heritage Place


Posted: Sunday, April 16, 2006

Heritage Place is in trouble.

Banner Health Systems is losing money running the 60-bed assisted-living facility in Soldotna. Banner can either sell or close. Running the facility at a loss is not an option — no matter how noble or needed a service it provides.

And it is both noble and needed. The gap between supply of assisted-living facilities on the Kenai Peninsula and demand for them widens as the peninsula’s population drifts more toward the gray end of the age continuum.

Heritage Place residents would be forced to look outside their community to find new homes. It’s bad enough there’s nowhere to be buried in Soldotna; if Heritage closes, those residents wouldn’t even be able to live out the rest of their lives there.

Enter Central Peninsula General Hospital and the Kenai Peninsula Borough. The borough is considering buying the facility and having CPGH run it. Banner has offered to sell Heritage Place, valued at about $3 million, to the borough for just under $1 million.

That’s quite a bargain, but not everyone thinks it’s a great deal.

The borough’s finances are on shaky ground. Years of spending down a once-healthy budget reserve — at voters’ insistence — skyrocketing insurance and retirement costs and constraints placed on raising revenues have sent the borough’s finances into a nosedive. Borough Mayor John Williams’ administration estimates the borough will be $8.9 million in the red by the end of 2009 unless changes are made now.

The situation calls for frugality and those fearing increased taxes bemoan the Heritage Place deal as unrestrained, unnecessary spending.

That fear is misplaced.

Until the borough recovers its financial footing, penny pinching is indeed in order, but not to the extent of passing up a golden opportunity to benefit the community, especially when the money required to do so won’t come from the borough’s tapped-out general fund.

The hospital, unlike the borough, is doing fine financially. David Gilbreath, the chief executive officer for CPGH, has said the hospital can use existing plant, replacement and expansion funds to buy Heritage Place.

What’s more is it will be cheaper for the hospital to run Heritage than it was for Banner, since CPGH will be eligible for a better Medicaid reimbursement rate than Banner got.

That rate wouldn’t kick in until fiscal year 2008. To cover the cost until then, the hospital is working on a funding agreement with the state Department of Health and Social Services that would provide nearly $1.5 million for operational expenses through fiscal year 2008.

Simply stated — the deal won’t exacerbate the borough’s financial crises. It won’t result in taxes being raised.

The $999,999 price tag has generated cries of conspiracy. Proposition 5, passed by voters last November, lowered the cap on how much the borough can spend without a public vote from $1.5 million to $1 million.

Opponents charge that Banner set its price for Heritage Place at just under $1 million in light of Prop 5 to avoid the sale being put to a public vote.

Well, what of it?

Voters set the rules, and Banner and the borough are playing by them — to the tune of $2 million in savings if the deal goes through. If voters want to approve each and every expenditure the assembly considers, whether $999,999 or $99, then an initiative to that effect needs to be drawn up.

If, on the other hand, voters want to allow their representatives do the job they were elected for, then let’s applaud them for finding a creative way to save a facility that provides a vital service to the community.

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