It's LHP : Hospital selects potential partner

Posted: Sunday, August 15, 2010

If Central Peninsula Hospital partners with any outside company, it will be with the Plano, TX.,-based for-profit LHP Hospital Group.

Central Peninsula General Hospital Inc.'s board of directors, the 11-member body that governs the hospital, on Thursday selected LHP out of a list of five remaining suitors. CPGH Inc. landed on LHP after scrutinizing five companies' proposals, visiting hospitals run by the companies and meeting with the companies' representatives at CPH, according to Ryan Smith, CPH's Chief Executive Officer.

"We judged them (the five suitors) on 23 criteria," Smith said. "Every board member scored them individually and we tallied the scores."

The criteria included access to capital, efficiency, local control, monetizing the asset and making the hospital a tax or lease-paying entity.

Thursday's decision does not mean CPH will definitely partner with LHP. CPGH Inc.'s only power in the hospital's change of governance discussion is to submit a recommendation to the Kenai Peninsula Borough Assembly. The assembly will then decide how to proceed.

CPGH Inc. is slated to make its recommendation to the assembly on Sept. 7.

Any partnership with LHP would be a whole hospital joint venture.

A whole hospital joint venture would take the borough, which currently owns the hospital, out of play. The borough would sell 51 percent to 80 percent of the hospital to LHP, and the remaining value would be handed to some sort of operating board, much like CPGH Inc.

While LHP would purchase majority ownership, it would share governance equally on a joint venture board with 100-percent local representation in one voting bloc.

LHP's focus is providing capital to nonprofit hospitals like CPH, according to its website. Its hospitals are Portneuf Medical Center, in Idaho and Texas Health Presbyterian Hospital-WNJ.

The company did not return a phone message left on Friday afternoon, shortly after CPH released news of its decision.

LHP beat out for-profits Capella Healthcare, LifePoint Hospitals and RegionalCare Hospital as well as the nonprofit Providence Health and Services.

CPGH Inc. also continues to pursue information on changing its current lease and operating agreement with the borough. CPGH Inc. could recommend such a change, which would not involve any outside partner.

Amending the current lease would mean rewriting the agreement to give CPGH Inc. control over hospital decisions. The borough would maintain ownership of the facility but would assume an even more hands-off role.

Kenai Peninsula Borough Mayor Dave Carey, the lease's administrator, said he doesn't want to rush changes at the hospital.

"I believe that any decision to partner with a for-profit group must be submitted to the taxpaying members of the Central Kenai Peninsula Hospital Service Area. October of 2011 would be the logical time if the assembly should decide to move forward with this option," Carey said in a prepared statement.

Carey also stressed the need for continued dialogue.

"Any discussion regarding amending the current lease and operating agreement would be seriously considered by this administration," Carey said. "In general, the hospital is doing very well, so a discussion of significant changes would need to be predicated upon a statement of what is not working and therefore what needs to be fixed."

Andrew Waite can be reached at

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