SEARHC faces $4M loss from 2011, CEO says

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The new head of the Southeast Alaska Regional Health Consortium says the organization is losing money, and that difficult changes are on the way.

But in a letter to SEARHC employees, CEO Charles Clement also says organization’s long-term future is positive.

The letter says SEARHC lost more than $4 million in 2011.

Clement writes that the problems did not materialize overnight, but “are the consequences of inattention to the evolving nature of health care – the business of tribal health care specifically – and a failure to effectively manage such complex issues.”

SEARHC is a nonprofit tribal health consortium that operates in 18 communities throughout Southeast Alaska. With nearly 1,000 employees, it’s the region’s largest private employer. Headquarters are in Juneau, with a large hospital and medical campus in Sitka.

Clement started work as CEO on Feb. 6. His letter says SEARHC is facing major challenges such as the rising cost of providing health care, and limited federal compact funding. That federal money makes up nearly half the organization’s $115 million budget.

Clement calls for more innovation in delivering health care, and more responsibility in recovering expenses. His letter doesn’t provide details of how that will happen. But he writes that in the upcoming weeks and months, there will be changes, some of which will be “extremely difficult and perhaps even heartwrenching.”

SEARHC spokesman Michael Jenkins declined to comment on the letter Tuesday, but said Clement would be free for an interview next week. Jenkins says the letter is meant to provide information to staff in a transparent fashion.

The situation spelled out in the letter paints a different picture than SEARHC’s most recent annual report. In 2010, the organization saw net income of nearly $600,000, up from about $350,000 in 2009.

Then-CEO Roald Helgesen wrote in the 2010 report that SEARHC exceeded its financial goals that year, watching its programs grow as the finances stayed in balance. Patient visits were up across the board, and facilities were being renovated or expanded to the tune of millions of dollars, mostly from grants and government sources. Helgesen was not immediately available for comment.

Exactly what happened in 2011 to change SEARHC’s financial picture isn’t made clear by the letter. Clement says SEARHC needs to rebuild, but he also says he’s “incredibly optimistic” about the organization’s long term future.

In less urgent times, he says he would want to engage staff on the best ways to solve the consortium’s financial issues. But this situation is critical, he says, and the sooner changes occur, the less drastic they’ll be.