CPGH board, mayor wait: Task force pitch, 'bond issue' have both parties marking time

Posted: Sunday, October 17, 2010

While the mayor and two borough assembly members recently collaborated on the hospital issue, the hospital's governing board has not yet cooperated with a request the mayor made last month.

At Central Peninsula General Hospital Inc.'s Sept. 30 board meeting, Borough Mayor Dave Carey asked the board to agree to schedule a time to discuss opening up Central Peninsula Hospital's lease and operating agreement to possible changes.

At Tuesday night's Kenai Peninsula Borough Assembly meeting, Carey spoke of his Sept. 30 request and announced: "No response has been received."

"I hope that with what I did on Tuesday that we would get a response," Carey said this week.

Ryan Smith, the hospital's CEO, said the board is waiting to learn the resolution of a "bond issue" before going forward with any lease changes.

"It's not like they are trying to not respond," Smith said on behalf of the CPGH Inc. board. "They are just waiting to hear from the mayor regarding the issue of the bonds."

Carey said the issue is a confidential matter, but he will disclose details once it has been resolved. He said it is an issue that the borough administration brought to the hospital's attention.

The hospital board has not been given specifics, according to Tom Boedeker, CPGH Inc.'s president.

"(The mayor) indicated to us that the issue might require changes to the agreement, but we don't know what the issue is," Boedeker said this week. "We're waiting for that because that frames what we want to sit and talk about."

Meanwhile on Tuesday, the mayor announced that he and assembly members Charlie Pierce, Sterling, and Gary Knopp, Kalifornsky, are co-sponsoring a resolution that calls for creating a health care task force.

The task force, a Carey idea that Knopp and Pierce were initially cool toward, will bring eight relevant community members together to come up with a new ownership and governance structure recommendation. This comes after the assembly's Sept. 7 decision to immediately kill CPGH Inc.'s recommendation to partner with a for-profit firm.

At the Sept. 30 hospital board meeting, Carey called the assembly's kill "premature," which the hospital board found to be inconsistent with Carey's efforts to lobby against the partnership. The board said it would be hesitant to work with Carey on the health care task force, which he presented to the hospital board at the same Sept. 30 meeting. Currently, the borough owns the hospital and leases the facility to CPGH Inc., a nonprofit corporation that governs the hospital. Many local physicians have called for opening up the lease and operating agreement in a way that would allow for more flexible decision-making at the hospital. The hospital board has also prioritized more flexibility, citing the cumbersome process of having to receive borough assembly approval for major capital decisions.

During its recent process of vetting possible changes to the hospital's ownership and governance structure, the CPGH Inc. board considered requesting amendments to the lease agreement before instead recommending a 50/50 partnership with a for-profit partner. The board's more than $500,000 worth of research led it to determine that the partnership was in the hospital's best financial interest.

At Tuesday's assembly meeting, Carey presented a timeline that he said led to his request for opening up the lease agreement to possible changes.

According to the mayor's timeline, the process began in mid August when the law firm hired by CPGH Inc. asked the borough to consider what actions might be needed to make amendments to the lease agreement.

In early September, the borough's bond counsel said more research was needed. On Sept. 7, the assembly failed to introduce the ordinance that would have allowed CPGH Inc. to sign the letter of intent to partner with the for-profit firm, and the borough administration met with CPGH Inc. to talk about CPGH Inc.'s desire to change the lease and operating agreement, according to the mayor.

In late September, an independent bond counsel hired by the borough said there "may be some merit" to consider revising the lease agreement, according to the timeline. Finally, on Sept. 30, the mayor asked CPGH Inc. to schedule a meeting to discuss opening the lease agreement for changes.

The mayor said he is not deterred by CPGH Inc.'s failure to respond.

"If by next week I've heard nothing, we'll ask again," Carey said.

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

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