Daily Sitka Sentinel

Assembly Gives Loan To Hospital

By SHANNON HAUGLAND

Sentinel Staff Writer

The City and Borough Assembly voted Tuesday night to add $1 million to the existing $500,000 line of credit for Sitka Community Hospital.

In effect, the $1 million is a loan that the hospital is expected to pay back once it solves its cash flow problem.

Sitka Community Hospital. (Sentinel Photo)

“This is a no-brainer to extend this,” Assembly member Matthew Hunter said, emphasizing that the hospital is a part of the city.

Other members described the situation in a similar manner, saying the Assembly didn’t have a lot of choice if the hospital is to remain open and functioning. But at the same time they expressed faith that SCH would find its way out of the financial crisis with smart – and perhaps tough – long-term and short-term solutions.  

Member Ben Miyasato said Sitka Tribe of Alaska has had similar challenges in recent years.

“I’d like to point out Sitka Community Hospital – you’ve been here for a long time and you will continue to be here for a ling time,” he said. “Sitka Community Hospital will weather the storm ... If STA can do it, Sitka Community Hospital can do it also.”

Assembly members and a few hospital employees stressed the need for transparency in the planning process for the hospital’s financial stability and future, and several expressed faith in the abilities of the hospital CEO Jeff Comer, and city officials to work out a plan.

The hospital is currently out of cash, and needs about $1 million to make payroll, cover health insurance for employees for December and January, state employee retirement benefits for two months and accounts payable for two months. From July 2013 to November 2014, the hospital has lost $2.2 million which has drawn down SCH’s savings account to under $1 million.

The Assembly was first asked to become involved at the Dec. 9 meeting during an executive session with hospital officials. When members emerged the mayor read a statement that repeated Comer’s term for the situation as a “perfect storm of financial events.”

Assembly member Tristan Guevin said Tuesday that in the last few weeks, the Assembly has gained an understanding that the problems “didn’t happen overnight” and as a result there won’t be a single simple solution. He stressed the need to keep an open mind about finding answers, which may include a possible collaboration with SEARHC.

“It comes back to prioritizing our values,” he said. “What do we value? ... These are important questions we’ll be facing as a community. It’s important to look at all options and have an open discussion.”

Comer, who was hired as hospital CEO in September, said he did not know the full extent of the financial problems at the time. He said the line of credit will give him the “breathing room” he needs to pay bills and start working out solutions. At the direction of the Assembly, City Finance Director Jay Sweeney and City Administrator Mark Gorman are working with Comer.

Among the problems that have contributed to the current crisis include funds owed to Medicare following a credentialing problem, a high amount of charity care and a much higher than normal delay in collecting accounts that have been billed out for hospital services.

The loan funds will come out of an emergency reserve within the city’s general fund.

Assembly members were told they will be kept apprised of plans in the works, and progress on controlling the crisis within the next four weeks.

The discussion started with a few comments from the public. Although several hospital board members and employees were present at the Assembly meeting, only a few spoke. A few expressed frustration that they felt left out of discussions that affected them personally, and said they didn’t have clear understanding of how the hospital ended up in such dire financial straits.

Thor Christianson, who was the liaison with the hospital board when he served on the Assembly, spoke from the audience and urged the Assembly to extend the line of credit.

“We have no choice in this,” he said. He said he expects the situation is “not as bad as it seems and not as good as it seems.” He said he supports giving the hospital some time to solve its problems with a loan extension.

Bridget Hitchcock, a physical therapist at the hospital, said it was scary to attend the staff meeting where the numbers were outlined, and disappointing to hear colleagues’ initial reaction to ideas for getting the hospital out of its problems. She said that has to change.

“We all have to be open to ideas,” she said. Hitchcock said she is “committed to this process, and committed to the leadership in this process,” and in the meantime she and others want to get back to patient care.

There was little debate on the motion to extend the line of credit by $1 million, from the current level of $500,000 to $1.5 million.

Hackett Resignation

In other business, the Assembly accepted the resignation of Assembly member Phyllis Hackett, who has cited unforeseen personal matters as the reason for her resignation.

The city will advertise for applicants to serve out her term, which expires next October. By city charter, a replacement must be appointed to the vacancy within 20 days.

Hackett has served just over six years on the Assembly, and the other members said they are sorry to see her go. 

“She worked hard, she set a good example,” Mayor Mim McConnell said. “I’ll miss her up at the table.”

Heat Pumps

The Assembly gave final approval to an ordinance to give a rebate of $750 for people who install a residential heat pump, which cost between $4,000 and $5,000. 

There was a similar program in 2012, when the city gave rebates for installation of high efficiency appliances, including heat pumps. The program resulted in 194 rebates, and the $100,000 rebate fund was spent within a year, electric utility Director Chris Brewton said.

This time, only heat pumps are eligible for the rebate, and $50,000 has been budgeted for the program, which will expire when the funds run out. 

Brewton said the purpose of the program is to effectively use the city’s newly plentiful hydroelectric resource and help citizens lower their utility bills. 

Brewton said late payment of electric bills is becoming an increasing problem, with 172 notifications of overdue bills issued in the last two weeks alone. In the same period the department disconnected 34 customers for non-payment, he said.

“We’re very concerned,” Brewton said today. He said he is currently working on program to collect contributions from the public to help people who are struggling to pay their electric bills. 

Other Business

On other agenda items, the Assembly:

– approved an ordinance that will establish an expedited permitting system at the planning commission level to allow residents to operate small home horticulture businesses.

– heard a report from state Rep. Jonathan Kreiss-Tomkins, who was the spokesman for the Solid Waste Advisory Committee, on a recommendation to seek bids in the upcoming garbage collection contract to add curbside pickup of co-mingled recyclables every other week.

– authorized the purchase of a power hose roller for the Sitka Fire Department for $9,488.

– awarded a design contract for Eagle Way and Old Harbor Mountain Road utility and road upgrades for up to $112,728.

– adjusted the fiscal year 2015 budget.

– held a one-hour work session prior to the Assembly meeting to hear a report on the efficiency study of the city government operations that has been conducted by a company called Municipal Solutions.