Borough buys Heritage Place

Assembly OKs having hospital run nursing facility

Posted: Friday, May 19, 2006

The Kenai Peninsula Borough will acquire Heritage Place in Soldotna, ensuring that skilled-nursing home availability will continue in the central peninsula area.

At its Tuesday meeting, the borough assembly approved a $999,999 deal with Arizona-based nonprofit corporation Banner Heath System to purchase the 60-bed facility.

The nursing home will be operated by Central Peninsula General Hospital.

Banner Health, which has been losing money running the home, approached the borough earlier this year offering to sell Heritage Place to the borough, saying inadequate Medicaid reimbursement rates were contributing to annual operating losses.

Company and borough officials have said the deal is beneficial to both parties — Banner eliminates a losing business and the borough picks up a desirable asset for a third of its real value.

Negotiations led to the under-$1 million price tag that avoids the capital expenditure ceiling voters placed on borough purchases last fall.

Running the facility as a “co-located” nursing facility, such as South Peninsula Hospital’s Long-Term Care Unit, Central Peninsula General Hospital will qualify for higher Medicaid reimbursement rates than Banner was able to get. Those higher payments are expected to begin in 2008. That and CPGH’s eligibility for state Disproportionate Share Hospital (DSH) payments of $1.45 million per year in fiscal years 2006 and 2007 are expected to help make the acquisition a winning proposition, according to CPGH Chief Executive Officer Ryan Smith.

The $999,999 cost will be appropriated from the CPGH plant replacement and expense fund.

Vince O’Reilly, a resident of Heritage Place, urged the assembly to go ahead with the purchase provided certain standards desired by the Heritage Place Resident Council were maintained. While clearly important, O’Reilly’s delivery produced more than a few chuckles.

“One, there shall be no reduction in the ratio of resident assistants to residents as are available on May 16,” he said. “That is, we don’t want a drastic reduction in the staff. Second, the provision of food service will be maintained as to quality and quantity — another very important item. Third, all of the current daily activities that add so much to the quality of life for residents shall be continued. Fourth, the operations of Heritage Place skilled nursing facility shall be continued by the borough and its operator, Central Peninsula General Hospital.”

O’Reilly said when he first heard of the proposition he was skeptical, but came to see it as a beneficial move for all sides.

Asked later if he could guarantee O’Reilly’s criteria, CEO Smith said O’Reilly had also brought those issues before the service area board.

“We have said all along that we do not anticipate making any staffing changes at Heritage Place,” he said. “The same people will be preparing food, so hopefully that will be as good. I think we can meet those requirements.”

The assembly voted 8-1 to make the purchase. Paul Fischer, of Kasilof, voted no, arguing that operating costs would eventually grow to need support directly from the general fund.

Tuesday’s agenda also included assembly action on a proposed increase in the borough’s motor vehicle tax that would have raised license costs for all vehicle classes in initial and out-years, but especially for big commercial rigs. Testimony from operators opposed increases in the tax rate.

The assembly eventually voted unanimously against the increase sought by Mayor John Williams, who said the decision was disappointing. He said operating an 18-wheel commercial truck likely costs hundreds of dollars a day just to put it on the road. The tax increase, which would have generated hundreds of thousands of dollars annually, was tiny by comparison, he said. But the assembly listened to the operators.

“It never ceases to amaze me that elected officials can have their minds swayed so quickly,” he said.

In other action Tuesday, the assembly:

· Postponed an ordinance adding certain length of residency requirements to eligibility for the borough’s unlimited property tax exemption for seniors and disabled veterans until June 11. Further, it would tie eligibility to eligibility for the Alaska Permanent Fund dividend.

· Postponed a measure that would change rules regulating material site permitting, until Aug. 1.



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