Homer hospital, borough at odds

South Peninsula Hospital questions delays in its equipment purchases

Posted: Monday, September 24, 2007

A leading physician at South Peninsula Hospital said the borough purchasing division is responsible for significant delays in acquiring furnishings needed before newly expanded areas of the medical facility can be utilized.

Testifying Tuesday before the Kenai Peninsula Borough Assembly, which met in Homer, Dr. Hal Smith, director of the hospital's emergency department, said furnishings requested in July through the hospital's procurement procedure, which goes to the Kenai Peninsula Borough for approval, should have arrived already in time for a planned Sept. 15 occupation of the new spaces. Some of that material was not ordered until earlier this month.

"Besides the time delay," he said, "there is also a monetary delay, or monetary penalty, as there are significant discounts available for ordering earlier in the summer."

Smith said he believed the delay stemmed from a problem between the borough's public works and planning departments and wanted the borough to "own up to the problem," adding that he feared this was an example of how the hospital would run under the borough and mayor's control.

Borough Mayor John Williams disputed Smith's contention, presenting documents he said showed that important information was missing from hospital purchasing request forms. He compared that to a list prepared by the borough that included detail required under the borough's strict procurement protocol, especially when bond money was involved.

"There is a great deal of interest by the IRS about how we handle this money," he said.

He also said that the borough had successfully ordered all vital equipment needed to allow the new emergency room and radiology department to operate and that that equipment already was on site or on the way. Further, he said the equipment that had not yet arrived was mostly furniture couches, chairs, tables, lamps and the like that would be used in such places as waiting areas.

That furniture will cost in excess of $50,000, he said, thus kicking into effect borough ordinances requiring much more detailed and specific purchasing procedures that simply take more time, in part because of the need to advertise and secure bids.

Following the meeting, Administration Chief of Staff Tim Navarre said the complaints leveled at the borough "opened old wounds," resurrecting the administration's decision earlier this summer, backed by the assembly, to take over negotiations for a new operating agreement with South Peninsula Hospital Inc., leaving the South Peninsula Hospital Service Area Board out of those talks.

Indeed, Smith had prefaced his remarks about the delay in acquiring furnishings by saying the assembly had done a disservice by not postponing its decision to strip the SAB of its "traditional powers" until the assembly met in Homer where it would have heard more testimony.

"Waiting until the assembly had correct information to make an informed decision would have been wise," he said.

Maria Soto, hospital purchasing technician, said South Peninsula Hospital had supplied what it believed was all the necessary information and documentation for making equipment purchases.

"We have done our due diligence," she said, adding that there needed to be better communication between the hospital and the borough.

Whether or not certain equipment is late in arriving, the Sept. 15 occupation date has long since been abandoned, superceded by a major complication that came to light earlier this summer the fact that the now completed $16 million first phase of the expansion project was built without the required umbrella of a state certificate of need. The administration has laid blame for that on the shoulders of hospital officials, including administrator Charlie Franz.

Franz has accepted responsibility for not securing the certificate of need, often called a CON.

Meanwhile, a request for a new CON that would cover both the first phase and the second phase, now awaiting contractor bids, is under review by the state commissioner of Health and Social Services. Williams said a CON was unlikely to be in the borough's hands before mid-November, providing enough time to acquire the missing furnishings.

In an interview Wednesday, Navarre said occupying the new facilities before a CON was in hand could, among other things, put the hospital at great risk of violating rules and regulations associated with state Medicaid payments that reimburse hospitals for costs.

"Legally and professionally, you just can't," Navarre explained. "Right now, we are at the mercy of the state" with regard to the timing of the CON.

Williams said construction on the second phase of the expansion would start on time and come in at or under budget.

Hal Spence can be reached at hspence@ptialaska.net.

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