CPGH takes step toward expansion

Posted: Monday, June 02, 2003

The first step toward literally growing Central Peninsula Gener-al Hospital was taken Thursday evening when the hospital's board of directors approved a resolution to move forward with a hospital expansion and remodeling plan.

The CPGH Inc. board, the governing body for the nonprofit organization that manages the hospital, voted unanimously to go ahead with expansion plans.

The move eventually could ask taxpayers to vote for a bond referendum as early as this fall to pay for a new building widely considered by hospital staff and board members to be much needed.

"The changes will address the needs of the medical staff, the hospital and the community as a whole," said Henry Krull, the hospital chief of staff. "The medical staff is very supportive, and as a whole, planning has been very thorough."

The project will cost $49.9 million and will expand the Soldotna facility by creating a new two-story bed tower on the north side of the medical campus. The result will add 42,000-square feet to create a facility of approximately 137,000-square feet.

Hospital officials and board members anticipate the need for general obligation bonds to pay for the building and plan to have the measure on the October ballot.

Because patient revenue estimates fall short of their target, officials project a mill increase of approximately 0.5 over a 20-year term to help fund the expansion plan. The measure will go before the Kenai Peninsula Borough Assembly at its June 17 meeting.

Work on the facility will be done in three phases, starting with a site preparation phase, which will cost $900,000.

The second stage, construction of the 50-bed two-story wing, will cost $37.4 million.

The final stage, renovating the existing structure, will cost $16.6 million.

Plans call for relocating surgery and recovery, medical and surgical, intensive care and laboratory departments.

The proposal also calls for remodeling the 30-year-old existing facility, replacing the hospital's roof and bringing the current building in line with all new borough codes.

The 0.5 mill rate hike is based on the assumption that the hospital won't contribute to funding, but hospital CEO Dave Gilbreath said that estimate is a "worst-case scenario," and could shrink.

"Over the next few weeks, we'll have a better projection of what the mill rate will be," he said.

Board President Diane Zirul echoed this confidence, saying she anticipated Gilbreath and Chief Financial Officer Ed Burke to work with numbers to produce a proposition that would be favorable to voters.

"Knowing Ed and Dave, I'm positive we'll do more to avoid that (rate)," Zirul said. "There probably isn't a better time with interest rates as low as they are."

In light of a dismal past, Gilbreath said CPGH Inc. is rebounding well from recent fiscal losses. He said he anticipated that hospital growth should be able to provide some of the revenue needed to finance the expansion, easing the proposed tax levy.

"We will be able to provide from patient revenue, by offering more services and controlling costs," he said. "We're going to grow ourselves out of the deficit.

"I told the assembly we would have no less than a six-figure loss for this year, but I'm looking at breaking even."

Gilbreath said early projections show the hospital making a $1 million profit in fiscal year 2004, and doubling that the following year.

"And those are conservative estimates," he said.

The programmatic phase of the project began in January and ended in March, with engineers polling hospital staff and administration on specific needs. Schematic designs began with six versions and were whittled down to one, based primarily on need, then price.

Estimated cost for building a completely new facility was $90 million. The first final cut was tagged at $55 million.

"We asked architects to go back and give us something a bit more affordable," Gilbreath said.

Hospital officials have been debating the possibility of updating the building for four years without success.

Board member Ken Meacham said he was pleased the project was finally able to come to fruition and said all the pieces were in place to make the project successful.

"The biggest reason I'm in favor of the expansion is that we have the leadership in our hospital capable of going forward," Meacham said. "The time is now."

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