LUTHERAN QUILTERS – Members of the Quilts for Comfort Group stand between pews draped with some of the 205 quilts they made, in the Sitka Lutheran Church Tuesday. The group made the quilts for five local non-profits and one in Anchorage. The remaining quilts are sent to Lutheran World Relief which distributes them to places around the world in need, such as Ukraine, as part of Personal Care Kits. Pictured are, from left, Helen Cunningham, Kathleen Brandt,Vicki Swanson, Paulla Hardy, Kim Hunter, Linda Swanson and Sue Fleming. (Sentinel Photo by James Poulson)
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Daily Sitka Sentinel
Hospital Offers Focus On SEARHC Option
By SHANNON HAUGLAND
Sentinel Staff Writer
Do the people of Sitka want a regional company to take over the health care of the entire community? Or pay more than $500,000 a year for an outside manager of Sitka Community Hospital?
Or is a sustainable Sitka Community Hospital an option for the future?
At least one of the presenters didn’t think so.
“With 9,000 people it’s awfully hard to support two hospitals,” a representative from Quorum Health Resources, Bill Donatelli, told the Assembly Monday night.
The Assembly was hearing presentations from the health care management firm QHR and Southeast Alaska Regional Health Consortium to manage or replace Sitka Community Hospital. The presentations were followed by questions from the Assembly. A third company, Sitka Jet Center, has submitted a proposal, but didn’t present.
SEARHC said it would pay Sitka $9 million to $16 million in cash, retain all Sitka Community Hospital employees, provide the potential for enhanced services, and build a new 25-bed hospital and housing for employees on Japonski Island. Sitka would retain the current hospital facilities for alternative use.
The Quorum plan called for a five-year management agreement or a one-year transition plan at $480,000 per year, plus CEO and CFO salaries. The one-year transition plan referred to Sitka Community going with the SEARHC offer.
An audience of about 100, including employees of the two hospitals, packed the Assembly meeting room and an adjoining room that was opened up to make room for the audience at Harrigan Centennial Hall.
No opportunity was provided for comments from the public attending the work session. A town hall meeting on the issue is scheduled for Aug. 20.
Some Assembly members said today the presentations were an eye-opener.
“I’m two ways about it,” Bob Potrzuski said. “It was like the gut punch to me, when Quorum – they threw their hands in the air and said ‘we can’t help you here.’ Then I thought, that’s not going to work, but we do have a great opportunity with health care that could lead to a more sustainable community.”
He cited SEARHC’s promise of a new building, and its claim that their plan would allow a reduction in electric rates for the whole town.
Aaron Bean said today there will be some discussion at tonight’s regular Assembly meeting about the hospital, but in general he wants to leave the decision to the public.
That could include a ballot question to increase sales or property taxes to cover losses at the hospital, since it’s not paying for itself.
“Allow people to pay for it if they want,” he said.
Tonight’s regular meeting agenda includes a proposal from Sitka Economic Development Association for an economic impact study of Sitka Community Hospital.
One of the main concerns of the Assembly is the $35 million pension liability that the city would owe, if SCH were to close.
Quorum Health Resources
Donatelli, QHR division vice president, western operations, presented two options for the Assembly to consider.
The first was included in the formal written proposal, with Quorum taking over management of the hospital for five years, at $480,000 for the first year plus personnel costs of a CEO.
The second option was for a one-year agreement to help with a transition to SEARHC.
Donatelli said Quorum has worked with hospitals all over the U.S., including small community hospitals like Sitka Community, and has expertise and resources not currently available to SCH as a stand-alone facility. He said SCH is dealing with some big challenges, such as the 41 days of cash on hand, well short of the 100-day minimum for financial stability. (SEARHC by contrast says it has 218 days of cash on hand.)
The second option he cited was not included in Quorum’s written proposal, and was for a “short-term management agreement to facilitate a smooth transition.”
“We do think it will be awfully hard to compete in a community with two hospitals,” Donatelli said.
The two consultants from QHR said that SCH is in the same position as many similar small hospitals around the country.
“When you’re one bad outcome away from crippling instability, one bad patient outcome, one unexpended financial event could be the tipping point,” said Mark Armstrong, QHR senior vice president.
Assembly member Steven Eisenbeisz said he was concerned that QHR was identifying Option 2, or the “transition” plan, as the best option.
“What concerns me is you’ve seen an entity that’s not viable,” he said.
One statistic cited by the consultants was that only 50 percent of Medicare patients are seeking services locally, divided about equally between SCH and SEARHC.
“Twenty-five percent of the market is difficult,” Donatelli said. “One hospital would be able to bring in specialized services – three or four services.”
The consultants said that while Sitka Community has seen some improvements, some major pieces of equipment are due for replacement,
When the consultants were asked by Mayor Matt Hunter for an estimate of what it would cost over the next five years for the hospital to be sustainable, Donatelli said, “I can’t give you a short answer on that.” But he estimated $5 million over four years, plus some $1.5 million to $2 million in capital costs.
SEARHC
The SEARHC offer includes assuming “all financial risk and responsibility for health care in Sitka,” and funding for the city’s $35 million pension liability. That would include a cash payment from $9 million to $16 million, plus $3 million by liquidating Sitka Community’s assets. The proposal also calls for expanding and enhancing health care services, ensuring better electric rates for all ratepayers in Sitka, and “guaranteed employment for SCH employees – no layoffs,” according to a flyer distributed to Sitka mailbox holders.
SEARHC’s CEO Charles Clement said more discussion would be needed as to exactly what that means but he anticipates more employees would be needed to supplement the 495 already employed at the Mt. Edgecumbe Hospital to cover the increased patient load and expanded services anticipated at the new hospital.
Plans are in the works to replace the 70-year-old Mt. Edgecumbe Hospital with a new “sustainable health care campus for the entire community, including a 25-bed critical access hospital, new medical office building and a 20-bed long-term care facility. He also mentioned SEARHC’s plans for new housing next to the hospital for the hospital employees.
The flyer from SEARHC said the plan “provides the Assembly and Sitkans with a governance role by creating an Advisory Council for “input about services, quality and patient satisfaction.”
On a question of whether the planned advisory committee would have a say in hospital operations, Clement said he believes it has worked well in other communities where SEARHC is providing services for the general public.
“We feel it works pretty well,” he said.
Clement said he believes it’s a good deal for SCH and for the community. SEARHC would gain from the deal by being able to “enhance services in the community,” and have access to more services as a regional health care organization, he said.
“We’re able to punch above our weight class in a community of this size,” Clement said.
Clement said he feels this is a good offer for Sitka, but SEARHC would respect the will of Sitkans.
He said he has tried since the conversation began a few years ago to clear up misconceptions about SEARHC through public meetings, and informational brochures, but some don’t want to hear it.
“Without community buy-in this process will be a whole lot harder,” he said.
On a question of SEARHC’s practice of preferential hire for Native people, Clement said SEARHC will hire the best most qualified person for the job. The Native preference refers to when candidates for a job are equally qualified.
“The time it works out (that way) in practicality is rare,” Clement said.
As far as job opportunities at SEARHC go, there are usually vacancies in the “triple digits” every year.
Assembly member Richard Wein, who has worked as a surgeon at both SEARHC and SCH, questioned the effect that having only SEARHC in town would have on local vendors, taxi companies, lodging and the local pharmacy, since SEARHC provides those services for patients in-house. He also expressed concern about how Sitka’s tax base would be affected since the SEARHC facilities are federally owned.
He added today that, “SEARHC is also financially vulnerable in a similar way (to SCH). It’s dependent on federal appropriations, which could change at any moment.”
Clement told the Assembly that the main point is SEARHC wants a plan that works for the whole community.
“If it doesn’t work for you it doesn’t work for us,” he said.
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20 YEARS AGO
March 2004
Advertisement: Tea-Licious Tea House & Bakery 315 Lincoln Street Grand Opening! Freshly Baked Scones, Cakes & Pastries Innovative Salads, Soups & Sandwiches Harney & Sons Tea. Lunch * Afternoon Tea * Supper.
50 YEARS AGO
March 1974
Photo caption: National Republican Chairman George Bush takes a drink of water offered by Jan Craddick, Sitka delegate, during the Republican convention held here. Mrs. Craddick explained to Bush that the water was from Indian River, which means, according to local legend, that he will return.