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Narrowing the choices down : Hospital board makes more decisions toward possible governance changes

Posted: Tuesday, July 13, 2010

The options for Central Peninsula Hospital's potential governance structure changes narrowed last week.

Not only did Central Peninsula General Hospital Inc.'s board of directors whittle down a list of 24 potential partners to just five organizations, but the board also took two forms of potential governance structures off the table.

These decisions are the latest steps toward CPGH Inc., coming to the Kenai Peninsula Borough Assembly with a governance recommendation. The assembly will have the final say on any hospital governance change decisions, but this process could spell the end of borough involvement with the hospital. CPGH, Inc., the board that governs the hospital, is scheduled to make its recommendation on Sept. 7.

CPH's CEO Ryan Smith released the information about these latest moves in a July 11 e-mail to hospital employees, borough leaders, hospital leaders and others. The decisions came in an executive session held July 8.

Of the five potential partners, four are for-profit organizations and one is a nonprofit organization.

The trimmed-down list does not mean CPH will definitely partner with one of the organizations or even that the CPGH Inc. board will recommend a partnership with one of the companies. The list simply represents the partners that CPH would likely sign with should the borough decide to sell the hospital or enter it into a whole hospital joint venture agreement.

Smith said the final five organizations have two main characteristics in common:

"One would be of course value - the value of the proposals for the hospital," Smith said. "And the second is the willingness to do a whole hospital joint venture in addition to an outright sale."

An outright sale would put CPH in the buyer's hands. A whole hospital joint venture would sell 51 percent to 80 percent of the hospital but would still include a local body in the hospital's decision-making processes.

The five potential suitors will visit the hospital later this month and present the details of their proposals and interview CPH management.

Capella Healthcare (http://www.capellahealth.com/) will be here July 19, LHP Hospital Group, Inc., (http://www.lhphospitalgroup.com/) follows on July 20, while LifePoint Hospitals (http://www.lifepointhospitals.com/) is scheduled to present on July 21. Providence Health and Services, the only nonprofit of the bunch, (http://www2.providence.org/phs/Pages/default.aspx) will visit on July 22 and RegionalCare Hospital Partners (http://www.regionalcare.net/) is scheduled to come July 23. The visits and presentations are not public.

Of course, the CPGH Inc. board could still recommend a non-market option, which could be as simple as amending the hospital's current lease agreement with the borough. Non-market could also mean privatization, which would leave the hospital as an independent facility but put the CPGH Inc. board and not the borough assembly in charge.

Currently, the borough owns CPH. The borough leases the facility to the nonprofit corporation CPGH Inc. The 11-member CPGH Inc. board governs the hospital, but the borough assembly must first approve major capital decisions.

The CPGH Inc. board also made clear on Thursday that it will not recommend a merger or a joint operating agreement - both of which would combine CPH with another facility.

"In addition to the decision to invite these five proposers to come to our service area, the CPGH Inc. BOD (board of directors) passed a motion to eliminate the Joint Operating Agreement 'market' option and the Merger 'non-market' option as less desirable options," Smith said in his e-mail.

Joint operating agreements are outdated and "there was really only one candidate to do a merger with and that was South Peninsula Hospital, and there seemed to be a lot of complicating factors," Smith explained this week.

Now, five potential suitors remain.

Providence, the only nonprofit, currently includes 27 hospitals, more than 35 non-acute facilities, physician clinics, a health plan, a liberal arts university, a high school, approximately 49,000 employees and numerous other health, housing and educational services. It's based in Renton, Wash., and has roots tracing back to 1856.

"We're honored to be invited to move to the next phase in the process," Providence's Alaska-region spokeswoman Becky Hultberg said. "We want to partner with the community to enhance, expand and improve local health care."

Capella Healthcare, based in Franklin, Tenn., was founded in 2005. It has partnerships in 13 communities in seven states, including McMinnville, Ore., and Olympia, Wash.

"If we're fortunate to be selected as a partner for CPH, we promise to honor the hospital's strong mission and rich 40-year history," Anne Hancock, the company's spokeswoman, said. "We are interested in being a part of communities where we can be an additive health care partner - either through access to our strong financial resources for growth and expansion, through the assistance of our management and clinical experts or through best practices among our sister hospitals."

LHP was established in 2008 and is based in Plano, TX., Its website points to Portneuf Medical Center, in Pocatello, ID., as a successful partnership.

Life Point, established in 1999 and based in Brentwood, Tenn., has partners with 48 facilities in 17 states.

RegionalCare is also based in Brentwood, Tenn. Jess Atwood, RegionalCare's spokesman, spoke about what community members could expect if RegionalCare partnered with CPH.

"It would be working with medical staff and leaders to say what are the services we need to recruit, where are the opportunities to make this a better hospital," Atwood said. "You're not going to lose your hospital, you are going to gain a partner."

Andrew Waite can be reached at andrew.waite@peninsulaclarion.com



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