CPH issue draws a crowd: Assembly hears from public on proposed joint venture

Posted: Wednesday, September 08, 2010

Tuesday night's Kenai Peninsula Borough Assembly meeting drew one of the largest crowds in recent memory, with people lining the walls of the chamber to take part in the landmark decision facing the assembly.

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Photo By M. Scott Moon
Photo By M. Scott Moon
Trena Richardson reacts Tuesday night to public testimony concerning the borough purchasing land and a building for Central Peninsula Hospital during a standing room only meeting of the Kenai Peninsula Borough Assembly.

The assembly had to choose whether or not to introduce an ordinance allowing Central Peninsula Hospital's governing board to sign a letter of intent to partner with an outside for-profit firm.

CPGH Inc., the nonprofit board that governs the hospital, recommended such a partnership last month, saying it believes the partnership is in the hospital's best financial interest. The decision moved into the assembly's hand on Tuesday.

The body did not make a decision on the ordinance before press time. Many people testified on the issue, representing both sides, but the majority of testimony was against selling a portion of the hospital.

Tuesday's meeting was the public's first opportunity to speak out in an official forum on the possible changes.

"If this goes through, you've done the community a disservice," one man testified.

A draft of the letter, written by LHP and subject to assembly amendments, details a potential partnership in which LHP Hospital Group would purchase Central Peninsula Hospital, Serenity House, Heritage Place and other local practices for about $105 million.

Half of that money would go to a nonprofit joint venture entity that would run the hospital, much like CPGH Inc. The joint venture entity would be made up of two, five-member voting blocs.

One bloc would include 100 percent local membership and the second bloc would include three LHP representatives and two physicians. Each bloc would receive one vote in future decisions.

The letter of intent does not finalize any partnership; it allows CPGH Inc. to continue negotiations toward a deal with LHP.

The decision before the assembly on Tuesday was the latest step in a process dating back to March, when CPGH Inc. brought in a private consultant who recommended changing the hospital's governance structure.

Since then, the hospital's board has vetted several governance options with the help of a $25,000-per month investment banking firm. After months of deliberation, the board recommended a whole hospital joint venture with Texas-based LHP.

Enacting the letter of intent ordinance would force the assembly to either approve a partnership with LHP or forfeit $300,000 of the hospital's money.

In a May contract extension signed between CPGH Inc. and the investment-banking firm Juniper Advisory, LLC, the hospital agreed to pay the firm a $300,000 "withdrawal fee" if the hospital signs a letter of intent but then backs out of the deal.

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

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