Insurance issue settled, for now

Assembly agrees to foot the bill for surgeons' malpractice coverage

Posted: Thursday, December 09, 2004

Patients at South Peninsula Hospital can breathe a little easier.

The Kenai Peninsula Borough Assembly agreed Tuesday to OK a $54,000 appropriation from the hospital service area's fund balance to cover the cost of malpractice insurance for two longtime surgeons practicing at the medical facility.

Drs. Rene Alvarez and Paul Sayer had been exempt from having their own insurance covering medical procedures at the hospital. However, the insurance carrier covering the hospital recently informed administrators that the requirement for malpractice insurance must be applied to all physicians and surgeons with privileges, including those previously exempted.

In a memo to the assembly, borough Finance Director Scott Holt said Alvarez and Sayer had indicated they would be unable to continue operating at the hospital without some assistance in acquiring the malpractice coverage.

The service area board voted Oct. 7 to authorize up to $100,000 for the purchase of malpractice insurance for the two surgeons. The amount actually needed is $54,000, which is to be transferred to South Peninsula Hospital Inc., the nonprofit corporation that runs the hospital under contract with the service area.

David Green, a member of the service area board, told the assembly the appropriation would be for one year only. He also said hospital revenues are likely to be able to cover the cost without the appropriated funds. However, that won't be known for sure until nearer the end of the fiscal year in June. If that turns out to be the case, the service area board will ask the assembly to return the $54,000 to the service area fund.

Karen Berg-Forrester, chair of the service area board, said Monday that the money does not amount to a subsidy for the two surgeons, but it does bring them to a par with the way visiting surgeons are covered.

Visiting surgeons get compensation above their regular fees that is meant to cover any additional malpractice costs associated with services delivered while operating at the hospital. Alvarez and Sayer now will be similarly covered under the hospital's blanket policy. They will remain responsible for their own malpractice insurance for all other services they perform, Berg-Forrester said.

"The insurance carrier said they would not cover us unless they (the doctors) were also covered," she said.

Green told the assembly the hospital could not operate without malpractice insurance, nor could it operate without the surgeons.

The assembly voted unanimously to approve the appropriation. Diamond Ridge assembly member Milli Martin, however, said she did so because of the assurances that this expenditure would be for one year only.

The assembly also unanimously approved an appropriation of $80,000 to cover the cost of appraising the Tesoro Refinery in Nikiski in the 2005 tax year. The borough wants to avoid ending up in court as it has this year.

In the current tax year, the borough assessed the refinery based on an estimated value of $131 million. That evaluation was produced by an appraising firm then under contract to the borough, Dudley Pratt and Associates.

Tesoro appealed the ap-praisal to the borough's Board of Equalization, claiming the real value was just $50 million. The board set the value at $93,352,000, but in September, Tesoro filed papers in Anchorage Superior Court suing the board in an attempt to overturn that decision. The issue remains in litigation.

Dudley Platt and Associates' contract has expired. The company has said it would not want to be involved in assessing the Tesoro Refinery for the 2005 tax year if it should be rehired by the borough, given its recent experience before the equalization board.

The $80,000 approved by the assembly Tuesday will allow borough assessor Shane Horan to hire an appraisal firm specifically for handling the Tesoro plant, as well as other independent companies to then review and audit that appraisal, all in an effort to produce as accurate an appraisal as possible, he said.

The appraisal itself would cost an estimated $40,000. An independent review of that appraisal would cost another $10,000. A financial audit, to be done by still another company, would cost $20,000. Horan wants an additional $10,000 as a kind of contingency for further consulting if needed.

In other business, the borough:

n Approved Ordinance 2004-19-27, accepting and appropriating a $68,617 U.S. Department of Homeland Security grant to provide equipment for the Bear Creek Fire Service Area.

n Approved Ordinance 2004-37, authorizing a negotiated lease for two lots containing about 10 acres north of Ninilchik to Marathon Oil Company, which proposes to build a drill an exploratory well there.

n Passed Resolution 2004-119, requesting the Alaska Board of Fisheries to include the Kenai River Brood Interaction Escapement Model and Risk Analysis of the sockeye salmon harvest at the January 2005 Cook Inlet Finfish Board meeting.

n Introduced Ordinance 2004-19-28, accepting and appropriating a $75,000 state grant for construction of a road to the Cooper Landing Senior Housing site. A hearing is set for Jan. 4.

n Introduced Ordinance 2004-19-29, accepting and appropriating a $2.47 million U.S. Department of Justice grant, and appropriating $1 million from Central Emergency Services, as well as an additional $240,000 from the general fund for construction of an emergency response center on Wilson Lane in Soldotna. A hearing is set for Jan. 4.

n Introduced Ordinance 2004-19-30, that would appropriate a state Department of Health and Social Services grant of $927,151 for South Peninsula Hospital's expansion project. A hearing is set for Jan. 4.

n Introduced Ordinance 2004-19-131, that would authorize the purchase of a Dual Head Nuclear Gamma Camera for Central Peninsula General Hospital. A hearing is set for Jan. 4.

n Introduced Ordinance 2004-19-32, that would appropriate funds for a full-time public safety dispatcher position for the Soldotna Communications Center. A hearing is set for Jan. 4.

n Introduced Ordinance 2004-38, that would codify the adoption of the All-Hazard Mitigation Plan. A hearing is set for Jan. 4.

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