TRUCK FIRE – Firefighters knock down a fire in a Ford Explorer truck in Arrowhead Trailer Park in the 1200 block of Sawmill Creek Road Saturday evening. One person received fire-related injuries and was taken to the hospital, Sitka Fire Department Chief Craig Warren said, and the truck was considered a total loss. The cause of the fire is under investigation, Warren said. The fire hall received the call about the fire at 5:33 p.m., and one fire engine with eight firefighters and an ambulance were dispatched, he said. (Sentinel Photo by James Poulson)

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Daily Sitka Sentinel

Hospital Agreement Outlined for Public

By SHANNON HAUGLAND
Sentinel Staff Writer
    The city released the terms of the Asset Purchase Agreement and Lease Agreement to the public on Friday, outlining the terms under which the SouthEast Alaska Regional Health Consortium will assume health care services for the entire Sitka community.
    At least initially SEARHC will lease the Sitka Community Hospital building, and purchase the hospital‘s health care business under terms to be selected by the Assembly later.
    Among many other things, the 131-page APA and 27-page lease agreement outlines the purchase options and the composition and function of the community health council that will be set up to advise SEARHC on the services provided to the Sitka community.
    Also covered are the health care services for all Sitkans during the transition; the conditions under which current Sitka Community employees will be offered employment for at least a year; the escrow rules on the financial transactions; and the use of the existing community hospital building for health care.
    SEARHC has said it plans to build a new acute-care hospital, clinic and nursing care facility on Japonski Island.
    There is no reference to a promise made by SEARHC in its public presentations about ensuring the “economic security to Sitkans” through the lower residential electric rates that the city could offer with a new hospital as a high volume power user.
    A public question and answer session on the proposed SEARHC contract is scheduled for 6 p.m. Wednesday at Harrigan Centennial Hall.
    Assembly members have said they would like the public to have at least 30 days to review the document before the Assembly makes a decision. A special meeting on the affiliation agreement is on the Assembly calendar for 6 p.m. Monday, April 15.
    The affiliation proposal grew out of concerns by city leaders about the long-term viability of Sitka Community. While there have been discussions between the two entities, this is the first time the public discussion has been on the actual agreement.
    The executive summary on the proposed agreement says the city at the outset engaged in an extensive review of Sitka Community Hospital’s prospects for survival, health care needs in Sitka, and the hospital industry using nationally recognized consultants.
    “The conclusions were uniform: the outlook for independent unaffiliated critical access hospitals in the current and projected health care environment is dire, and SCH’s financial status is typical of those hospitals – that is, fragile and precarious,” said the city’s consultants “on behalf of the CBS (City and Borough of Sitka) negotiating team.”
    “While the amount of time predicted prior to SCH’s closure differed slightly the reviewers’ prediction of the ultimate outcome was unanimous: SCH will continue to decline and the community will lose that health care resource without a significant ongoing subsidy from the city.”
    At the Assembly’s direction in January 2018, the city sent out a Request for Proposals, and signed a letter of intent with SEARHC last August. Since then, teams from SEARHC and the city have been negotiating, with regular updates provided to the Assembly. The Assembly will make the final decision on behalf of the city.
    Outside consultants Sarah Cave and Steve Huebner, and attorney Sandy Johnson, guided the city in the negotiations process.
    Of major concern to the city were the general fund outlays needed to support the hospital and the unfunded pension liability of over $30 million that the city would have to take on if the hospital closed its doors.   
    The just-released APA and Lease Agreement gives these details:
Purchase Price
    SEARHC has offered three different options for paying $9 million to $16 million for the health care business.
    The city’s consultants have recommended the second payment option, of $1,346,000 payable on the date of closing, plus $700,000 per year for 21 years, for total cash payments of $16 million.
    The agreement said that option represents SCH’s accrued liability of $646,000 under the State of Alaska Public Employees’ Retirement System Defined Benefit and Defined Contribution Retirement Plan and an initial installment payment of $700,000. Every year for the next 21 years, SEARHC would pay $700,000 a year. It would pay $1 a year to lease the old Sitka hospital building, which would be retained by the city.
    Option No. 1 is a one-time cash payment of $8.3 million, and $11,666.66 per month to lease the Sitka hospital building. The third option was for a one-time $9 million payment, plus $1 per year for the hospital lease.
    “Option 2 is the preferred option since the economics appear to be better than Options 1 or 3 when effective interest rates are considered,” consultants Steve Huebner and Sarah Cave wrote.

Governance
    The APA sets up an 11-member Community Health Council that will meet quarterly. Meetings will not be open to the public, except once per year when “a portion of a meeting” will be open to the general public.
    (Under its compact with the federal government SEARHC is run by its own board of directors, with representatives from all of the tribal governments in communities it serves.)
    The purpose of the Community Health Council is “to provide input on health care services, access to care, quality of services, practices, meeting social, health and welfare needs, and policies.”
    “The Council’s role is advisory in nature,” the APA says. “Thus, the Council has no authority to bind or represent SEARHC. However, the Council shall have the resources and authority appropriate to discharge its duties and responsibilities.”
    The Assembly would appoint five members to the initial council, with three from the Sitka hospital board and two from the general public.
    SEARHC will appoint a member who will be designated “the SEARHC Representative,” and the Sitka city administrator also will be a member.
    For the four at-large positions on the initial council, SEARHC will appoint two and the Sitka Tribe of Alaska will appoint two.
    After the initial terms expire all at-large positions will be filled by the council, voting on nominees put forward by the unanimous vote of a three-member nominating committee consisting of the SEARHC representative, the Sitka city administrator and one at-large member of the council.
    The agreement calls for one member of the council at all times to be a physician at Mt. Edgecumbe Hospital.
    There is also a provision for evaluating the effectiveness of the council, and determining whether it should continue to exist or sunset.

Employment
    “All employees in good standing as of the effective time (of the agreement) will be offered employment in Sitka,” the document says.
    The executive summary said the positions offered will be similar to an applicant’s current position at SCH, and with compensation and benefits commensurate to current SEARHC employees in Sitka.
    Employment under this offer will continue for at least a year and “thereafter as long as the need for the employee’s skills continues to exist in Sitka.”
    Benefits start from Day 1, compensation will not be reduced for one year, SCH employees must satisfy standard SEARHC hiring requirements, and up to 80 hours’ of paid time off may be transferred by Sitka Community Hospital employees to their new jobs at SEARHC.
    An effort is under way to compare the positions at the two health care facilities, the executive summary says.
    Employment provisions also apply to all employed medical staff meeting the requirements for SEARHC medical staff.

Escrow Accounts
    The city will be required to put money into an escrow account to cover liability adjustments, bills for services, and “other types of liabilities.” “It is the function of escrow accounts to pay those liabilities,” the summary says. One will hold the purchase payments and rent payments from SEARHC; the other will hold amounts set aside by CBS to address liabilities such as the bills that come in for operations prior to closing and liabilities for amounts due to Medicare from cost reports or compliance issues.

Interim Health Care
    Among a number of schedules and exhibits at the end of the agreement is “Schedule 6.15(b) labeled “Continuing Interim Services,” listing the services currently provided by SCH that the city “would like to ensure to continue during the interim period, at a level of community access at least equal to that currently provided.”
    That includes acute care, inpatient medical, respiratory therapy, radiology, laboratory (including blood bank), physical therapy, occupational therapy, speech therapy, surgery, obstetrical, emergency department, swing bed, skilled nursing, outpatient (including infusion services, home health and FASD assessment. The surgical and obstetrical services listed are ones previously provided at SCH and “committed to continue per the APA.”
    The list includes:
    – visiting specialists in cardiology, allergy-immunology, ENT, podiatry and sleep disorders.
    – an attending physician assigned for Sitka Pioneers Home patients who qualify for an Intermediate Care Facility.
    – food services, including meal service to the jail, and laundry services previously provided at Sitka Community and committed by SEARHC to continue per the APA.
    The document is available on the city web page.

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20 YEARS AGO

March 2004

Businesses using the Centennial Hall parking lot testified Tuesday against a proposal to charge them rent in addition to the $200 annual permit fee. City Administrator Hugh Bevan made the proposal in response to the Assembly’s direction to Centennial Hall manager Don Kluting to try to close the $340,000 gap between building revenues and operational costs.


50 YEARS AGO

March 1974

Alaska Native Brotherhood Grand President William S. Paul Sr. will be special guest and speaker at the local ANB, Alaska Native Sisterhood Founders Day program Monday at the ANB Hall.

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