Sitka could see a dramatic shift in healthcare the coming year. Last night (08-28-18), the Sitka Assembly approved entering negotiations with the Southeast Alaska Regional Health Consortium to buy Sitka Community Hospital. The future of the community-run hospital was the sole item on the agenda. Over 150 citizens attending and 47 testified, chairs spilling into the lobby.
The vote was 6 to 1, one year after the Sitka Assembly vowed to seek management partners for Sitka Community Hospital. The story of how the Assembly reached this point is long and winding, but has recent history. In 2014, a severe cash flow at the hospital resulted in a $1 million loan from the city. And while current management introduced changes to bring the hospital back into the black, the current Assembly determined it was not financially sustainable into the future. Since 2017, they’ve coordinated two town halls, sought the analysis of multiple consultants – two of whom where on the phone last night – and conducted a months-long RFP process to scout management offers from outside entities.
Of the five offers, SEARHC put forward what many considered the strongest proposal — a buyout of the Sitka Community Hospital for between $8- and $9-million, in lump sum or over time; a buyout of the city’s pension obligation to hospital employees for about $700,000; annual lease payments to Sitka of $140,000 for use of the hospital property for five years, until a new hospital is constructed on Japonski Island; retention by the City of tobacco tax revenue; guaranteed employment for all current Sitka Community Hospital staff. In May 2017, they made an offer for $6.5 million, but the Assembly turned them down to put out a call for other management models. The issued an RFP in January of 2018 and Tuesday night, chose the SEARHC proposal.
See final version of SEARHC proposal here
See community input from last week’s town hall here
In the end, those Assembly members who voted in favor concluded that merger was in the financial interest of the City and Borough of Sitka. Assembly member Bob Potrzuski made the motion to move forward with SEARHC, with a second from Aaron Bean.
Potrzuski: First of all, I want to thank the folks who, a year ago, demanded that we have an RFP for this process. Though we were assured there would be bids from Providence Hospital or multiple other choices from across the country, none of those materialized. In fact some of the groups that looked to respond or did respond, said the economics of the situation as it is are dire and pointed us in the direction of SEARHC. I was told by one person tonight, ‘Tell us what it’s about.’ And it is, was, and will be about economics.
Bean: It is about the economics. I’m in this community with everyone and I do see us as a single community. I don’t see the divide that seems to be in the room here tonight, which is tough for me because I’ve grown up here with a lot of you and I have the best intentions of the community here.
Also voting in favor was Mayor Matthew Hunter and Deputy Mayor Steven Eisenbeisz. While backing the economic argument, they also hoped the merger would bring expanded healthcare offerings to town.
Matthew Hunter: I too, along with Mr. Bean, thought we would find more opportunities through that RFP, but I’m thankful that we have one that is very responsive to the five main things that we came up with as an Assembly. There’s things that we can have here than can save Sitkans lives or at least save them medevacks and transports south that we can offer here if we join forces together and do that. That is something SEARHC is committed to doing and that is something I’m excited about for the future of Sitka.
Steven Eisenbeisz: If my decision negatively affects any person, whether SCH employees, SEARHC employees, or the community at large, I am truly sorry. I am looking out for what I believe to be the best long term solution for the community of Sitka. And I intend to grow old and die in Sitka, so I will be here to deal with the consequences of my decision tonight.
Assembly members Ben Miyasato and Kevin Knox noted that this decision does not mean merger is imminent. The city will first draw up a non-binding letter of intent and enter a months-long process of negotiation and due diligence. Consultants Sarah Cave and Steve Huebner have estimated it may be six months to a year before a definitive agreement with SEARHC is reached.
Kevin Knox: There isn’t a selection of any one of the three options that SEARHC has proposed here. We will go forward and negotiate from the city’s best standpoint. SEARHC will come to the table from their best standpoint. We should come out with what should be best for all of us.
Ben Miyasato: Having heard the testimony of all the people and all the people who have e-mailed. As has been mentioned by several Assembly members, I am willing to listen to you after this vote tonight on your concerns. With that being said, I do hope SEARHC is listening to all those concerns we do have — if you are going to be the hospital that is for Sitka, that you listen to all of those concerns and address them.
At a town hall meeting last week, citizens voiced concern that merging Sitka’s two hospitals would silence the community’s voice in healthcare. Many at the town hall called for equal access to care, jobs, and local representation in management should the two hospitals combine.
The sole dissenting vote Tuesday night was surgeon Richard Wein. He previously worked at both hospitals and criticized the process leading up to this decision.
I prefer to be Cassandra, who was punished by Zeus to speak the truth but not be believed. I think this sounds wonderful and I will do everything to make it happen and make it work, but I do believe, as was said by Mr. Hazel, the devil is in the details. I think that this will be quite a ride that we will have.
The Sitka Assembly’s vote is final, though a future Assembly could take other action – such as pursuing an economic impact analysis – as the negotiations unfold. The Assembly will meeting again on Thursday night to address the other business items on their agenda.
Here is a full video of Tuesday night’s meeting. The Assembly’s debate and comments begins at 2:59:15.