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

Sitkans State Doubts On Hospital Merger

By Sentinel Staff

Comparing the size and financial stability of the two hospitals in Sitka, and the drawbacks of a joint venture, consultant Kevin Kennedy reported Tuesday night that the logical way to end the wasteful duplication of health services in the community is a merger in which Sitka Community Hospital would be absorbed into the much larger Southeast Alaska Regional Health Consortium and its Mt. Edgecumbe Hospital.

Kennedy came to the special meeting of the Sitka Assembly armed with a slide show depicting the findings of a year-long study in which his company, ECG Management Consultants, concluded Sitka Community can’t survive more than a few more years in light of its operating losses and capital needs. He portrayed the merger scenario as an opportunity to improve health services for Sitkans while saving the city millions of dollars in hospital subsidies.

It’s been over a month since word of ECG’s findings began to circulate in the community, and the more than 100 Sitkans who filled the Assembly chambers Tuesday night came prepared to dispute the consultant’s conclusions in detail, and to argue forcefully in favor of keeping SCH as an independent hospital.

Rob Allen, the chief executive officer of the Sitka hospital, was the first of more than a dozen people who came forward to testify against the merger scenario, claiming that the hospital was well on the way toward operating in the black, and claiming a much longer life expectancy for the hospital building than the 10 to 15 years in the ECG report.

He said the ECG report “is too pessimistic,” and the loss of local control “is too high a price to pay” for a merger. ECG said that under the merger option, Sitka would have two of the seven members of the SEARHC Accreditation Governing Body (AGB).

As for the ECG estimate of two years before the hospital is overwhelmed by its financial challenges, Allen said that if the city agrees to a merger, it should not be because SCH is not viable. The hospital has paid off $1 million in back debts and will end the year with a break-even financial report instead of a deficit as in past years, he said. At the end of two years the hospital will not only be here, but will be thriving, he said.

He was backed up by several Sitka Community Hospital staff members, including Steve Hartford, director of operations. He said the hospital is paying for major facility improvements on an ongoing basis and has a capital improvement plan. Patrina Kilkeary, another staff member, said better billing and collection practices are increasing income, and even greater gains are ahead with a planned electronic health records system.

SEARHC was represented at the meeting by chief operating officer Dan Neumeister, who said a merger would increase the availability of medical specialists to all patients, end duplication of services, and provide jobs for displaced SCH workers. He said he looks forward to presenting a detailed merger  proposal to the Assembly.

By the end of the three-hour special meeting, with two hours given over to public testimony, the Assembly had adopted a motion to invite both Sitka Community and SEARHC to come forward with detailed proposals on their respective plans for the future, and also to have a town hall meeting on the hospital issue.  Administrator Mark Gorman said he would facilitate the arrangements, and that it would take at least a month to arrange for the presentations or a town hall.

Apart from the consultant’s skepticism about the long-term sustainability of Sitka’s community hospital, the only doubts expressed at Tuesday night’s meeting were raised at the Assembly table, where Mayor Matt Hunter, Bob Portrzuski and Aaron Bean said they needed more assurances from SCH that it can survive at a cost the city can afford.

One of the attractions of the merger option cited by ECG is the opportunity for the city, which is battling severe problems balancing its own budget, to save the $800,000 in tobacco taxes that it now dedicates to the hospital, as well as the city’s annual $150,000 contribution for hospital capital costs.

The parade of witnesses coming forward spelled out their own predictions of hardship for the city if the merger should go forward.

Trish White said her two retail pharmacies, which have provided pharmacy service to Sitka Community Hospital for many years, would close if SCH should merge with SEARHC, which operates its own pharmacy. 

Others from the public questioned ECG’s assumption that SEARHC had stable funding, pointing to the uncertainty in Washington about federal funding for health care. Some speakers noted SEARHC’s own past financial crises, and demanded that the health care consortium produce its last five years of financial statements before the city acts on any merger proposal.

Dr. Richard Wein, who until recently was on the medical staff of SCH, said 80 percent of SEARHC’s funding is from grants, and asked what would happen if that federal funding were cut. SCH is much more efficient, with a much higher percentage of its costs coming from patient services, he said.

Wein, whose contract with Sitka Community was not renewed for undisclosed reasons, drew a laugh when he introduced himself as an “unemployed surgeon, will operate for food.” He had high praise for the community hospital and laid out a complex financial scenario under which it would not only be self-sustaining but expand its services.

Carolyn Evans suggested that the Assembly look at a hospital option that has not yet been considered, a lease agreement with any of a number of major out-of-state health service providers.

Karen Lucas said SCH can be a major revenue source for the city, “so why not look at it that way?”

Others predicted a dark future for Sitka if it should lose its hospital, claiming that they, as well as possibly others, would simply move away.

In its report ECG said “the time is right” for Sitka to make a deal with SEARHC because of the competitive pressure that SEARHC could choose to increase at any time, and SCH’s worsening financial condition eroding its bargaining power. The consultants appraised the valuation of Sitka Community Hospital at $7.6 million, largely on the value of its real estate, and SEARHC at $37.2 million.

Kennedy said the process of combining the two hospitals, if it should continue, is only 25 percent complete, with many decisions ahead as to the details of implementation.  

 

 

 

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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.

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