Work halted at Homer hospital

Posted: Thursday, October 04, 2007

Homer News

Construction of work currently under way at South Peninsula Hospital has been stopped and an Oct. 17 bid opening for construction of the hospital's second phase of expansion has been delayed until Dec. 12, Kenai Peninsula Borough Mayor John Williams announced Tuesday.

The reason for the stoppage and delay is the time needed by the state to review and decide on the hospital's application for a state-required Certificate of Need.

The certificate is required by the state when projects, such as the expansion of the borough-owned Homer hospital, exceed $1.15 million, the bed capacity is altered or a category of health care is added. The hospital obtained a certificate for expansion in 1998. That certificate expired in 2003, and an application for a new one was received by the state July 5.

On Aug. 1, Karleen Jackson, commissioner of the Alaska Department of Health and Social Services, declared that the application submitted by SPH was complete.

On Sept. 26, she issued the hospital a "cease and desist" order.

"It has come to our attention that a significant amount of construction has occurred at the South Peninsula Hospital that is above the threshold that triggers the requirement for approval of a Certificate of Need application," Jackson wrote to Charlie Franz, the hospital's CEO.

"As such, South Peninsula Hospital shall cease and desist from any further construction until the review of the current Certificate of Need application is completed and my decision is made."

That same day, Jackson granted the state a two-week extension to review the Certificate of Need application and submit a staff analysis to her office. It was originally due Monday.

"I understand that additional time is needed because of the difficulty of reviewing this particular SPH application and due to the extraordinary demands being placed on both you and the Department of Law to address the range of certificate need matters," Jackson wrote to David Pierce, Certificate of Need coordinator for the Department of Health and Social Services.

Jackson has until Nov. 30 to make a decision regarding the certificate, according to Williams.

"It is unfortunate the hospital is in this situation, but the Kenai Peninsula Borough stands committed to comply with the commissioner's order," Williams said in a press release. "I am hopeful the commissioner will be able to render a final decision before the allotted 45-day limit so we can get back to work and open the recently finished expansion and begin the next phase of construction that the voters have approved."

Delaying the bid opening, Williams said, "prevents having a bid opening for a project that does not have a green light from the state."

It also allows general and sub-contractors to continue "honing their numbers instead of scrapping the whole process," he said.

Franz, who accepted responsibility for the delay in applying for the certificate of need, has announced his plans to retire as the hospital's CEO in April 2008. A committee, consisting of representatives from SPHI's operating board, hospital medical and management staff and the hospital's chief of staff, has been formed to find a replacement.

Walt Partridge, president of South Peninsula Hospital Inc.'s board of directors said, verification of the cease and desist order was provided to Jackson within an hour of its receipt.

"I talked to (Franz) Monday when he received the letter," Partridge said. "The mayor also called me prior to his press release being released and discussed with me the decisions he had to make. Frankly, it sounded to me like he was doing everything within the law, while complying with the law to move this project forward. I was comfortable with that.

"We will continue to respond very quickly to any questions that are asked of us in support of moving that CON forward and we anxiously await that decision."

McKibben Jackinsky can be reached at

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