Next step: Hospital board recommends partnership with Texas firm

Posted: Monday, August 23, 2010

More than five months after a health care consultant called Central Peninsula Hospital's governance structure "antiquated" and "nonsensical," the hospital's governing board has recommended a major change.

Central Peninsula General Hospital, Inc.'s board of directors is calling for a whole hospital joint venture with a Plano, TX.- based hospital group that was established in January of 2008.

Soon, the Kenai Peninsula Borough Assembly will face the decision of whether or not to relinquish ownership of the hospital. CPGH, Inc. plans to make its formal recommendation to the assembly on Sept. 7.

Any deal with LHP Hospital Group will sell 51 percent to 80 percent of the hospital to LHP. The remainder will be sold to a separate governing board much like CPGH, Inc. That board would include 100 percent local representation in one voting bloc.

The public will learn the details of LHP's proposal if and when the assembly authorizes CPGH, Inc. to sign a letter of intent to partner with LHP, according to Ryan Smith, the hospital's CEO. Smith said the hospital board is in the midst of drafting the letter.

Currently, the borough owns the hospital and leases the facility to CPGH, Inc. CPGH, Inc.'s board of directors governs the hospital, but the borough assembly must first approve major capital decisions.

In March, James Orlikoff, president of the Chicago-based firm Orlikoff & Associates, Inc., said the hospital's current governance structure prevents efficient decision-making.

The hospital board is recommending a partnership with LHP because it believes the new structure would best serve the area's residents, according Smith.

"I am confident this is the best solution to meet the health care needs of service area residents in the future and am excited to provide information to the residents of the service area and other stakeholders as they learn more about the potential the (whole hospital joint venture) holds for CPH," Smith said.

The hospital board had been deciding between a whole hospital joint venture and amending the current lease and operating agreement. Amending the lease would have given CPGH, Inc. increased decision-making power without selling the majority of the hospital.

Many local physicians have expressed their support for amending the lease agreement.

Smith said a whole hospital joint venture is the best combination because it will allow the hospital to maintain "meaningful local control" - despite selling a majority of the hospital - while also seeing an influx of capital, allowing the hospital to grow local services.

Possible new services include a cancer treatment center that will provide radiation therapy, enhanced cardiology services, and a medical office building to house physician practices, according to Smith.

Andrew Waite can be reached at

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