Task force weighs in on CPH: Change may be needed, group finds

Posted: Thursday, April 28, 2011

To protect its future, it's clear that the way Central Peninsula Hospital currently operates has to change. Exactly how, though, is still not so clear.

The Health Care Task Force, which was created to assess the future governance and ownership possibilities for Central Peninsula Hospital, had its final meeting Tuesday night and forwarded its recommendation of amending the current lease and operating agreement to the Kenai Peninsula Borough Assembly.

The task force, established last October and compromised of various community members and public officials, has met six times over the last several weeks to discuss the pros and cons of several business options, including an outright sale of the hospital. The meetings essentially culminated in the task force telling the borough assembly to do something, without actually saying what that something is.

As it stands, the borough owns CPH and leases it to a nonprofit group, Central Peninsula General Hospital Inc., which has to go to the borough assembly every time it wants to make any big financial decisions. But while this set-up is working spectacularly at the moment -- CPH is almost completely independent of taxpayer dollars and has the funds to hire some of the best professionals around -- the concern is that this arrangement will not be financially viable in the long-term.

"The bottom line here is that we can continue this hospital the way it is, and margins are going to slip; the value of the hospital is going to slip because the margins are going to slip," said John Hoyt, a member of the board. "And at some point if somebody comes back here in five years and says, 'Maybe we should revisit this,' this hospital will be worthless."

Ultimately, hospitals are a business, Hoyt argued, and profitability needs to come into consideration when deciding how CPH should be governed and run.

"We cannot continue to run a hospital and not consider the business aspects of it," he stated. "It would be a fiduciary violation and it would be completely insane not to think about what's happening on the business side of medicine."

Doctors, nurses, and concerned citizens addressed the board, railing against the possibility of relinquishing local control or ownership. Many of them claimed quality of care should not take a back seat to profits and padding the pockets of administrators, a change they see as imminent if a merger or sale were to take place.

"When my patients come to see me in my office," said Kristin Mitchell, a board-certified general internist at CPH, "they are not as concerned with taxpayer burden and profitability as they are concerned with having a good, functioning hospital in their community.

"In our community we had an aging hospital, we needed capital, we went to the voters, we passed a bond measure, and we raised a lot of money. And we now have a beautiful new facility that patients really appreciate. But we no longer have an urgent need for capital."

Still, Hoyt contended that if things stay as they are, there will indeed be another urgent need for capital, and when that happens, residents won't be so happy to see their taxes skyrocket.

"We're not talking about the potential of half a mill or a quarter of a mill here," Hoyt said of the potential increase. "We're talking about real money potentially being needed to at some point to subsidize this hospital. I would much rather shift that potential to somebody besides the taxpayer."

Revenue and the fear of tax increases shouldn't be the driving forces behind this kind of decision, Mitchell argued. She pointed to CPH's Serenity House, a drug and alcohol treatment facility, to demonstrate that business moves can be ethically correct but not financially advantageous.

"That's just one example in heath care of how sometimes you have to do the right thing even if it's not the best thing for the bottom line," Mitchell said.

The task force's recommendation of opening up contract negotiations between CPGH and the borough will need to be introduced either as an ordinance or a resolution by an assembly member, Borough Mayor Dave Carey said. The assembly would then discuss whether to comply with the recommendation or not, and public hearings would be scheduled.

"In the end, things are going to change," Hoyt said near the end of the meeting. "They're not going to be the same, whether this hospital stays with its current lease and operating agreement arrangement or whatever, it's going to change.

"Change is inevitable in medicine and it's going to get tighter, and we're all going to have to suck it up."

Karen Garcia can be reached at karen.garcia@peninsulaclarion.com.

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