An outside consultant has concluded that Sitka Community Hospital’s days are numbered, while hospital leadership says they’re regaining financial viability. The Sitka Assembly heard from both parties Tuesday night (03-21-17). (Emily Kwong/KCAW photo)

The fate of Sitka’s city-owned hospital hangs in the balance. An outside consultant says it’s time to merge with SEARHC – the Southeast Alaska Regional Health Consortium – while hospital leadership wants to remain independent.

After a presentation from ECG Management Consultants on Tuesday (3-21-17), the Sitka Assembly decided to seek formal proposals from both hospitals. But not before getting an earful from citizens opposed to the buyout.

Downlodable audio.

Medicine is a life and death matter. And if Sitka Community Hospital was a patient, it would be 61 years old and recovering from a lethal case of under-billing. The good news is that this year the hospital may finally break even. But can it make a full recovery?

Consultant Kevin Kennedy says no. “The hospital has not been making money and continues to lose money. Even though its financial performance has definitely improved this year, it’s certainly not where anybody would like it to be,” he said.

After a year of talks, ECG is recommending a merger with SEARHC.

Kennedy’s report (AssemblyReport20170316_388067) detailed how SEARHC plans to offer jobs to all employees, give veto power to two Sitkans on its accreditation board, spend $100 million on a new facility and expand services. He then rattled off the nine areas that lack full-time providers in Sitka – “cardiology, dermatology, gastroenterology, oncology, neurology, psychiatry, OB/GYN, pediatrics” – and argued that a merger could change that.

Consultant Kevin Kennedy said he’s seen rural hospitals close for similar reasons. He circled the risk factors that trouble Sitka Community Hospital. CEO Rob Allen called ECG’s report “overly pessimistic.” Several citizens accused it of being one-sided. (Presentation from ECG Management Consultants)

Kennedy thinks Sitka Community Hospital can only stay afloat for another two years and urged the Assembly to act sooner, rather than later.  “I don’t know if you can negotiate this deal a year from now, or two years from now, that SEARHC is putting on the table,” he said.

SEARHC hasn’t made a formal offer, but COO Dan Neumeister assured the Assembly of their interest. He asked them, “What should the future of healthcare be and how great it could be, rather than holding onto the past?”

But Sitka Community Hospital has a different prognosis for its future, one where the hospital regains financial health and survives. The plan now is to pay for capital needs with tobacco tax revenue and for a new electronic health records system – a $3 million project – out of reserves. CEO Rob Allen said his team is also looking for ways to restructure the hospital and grow the strongest programs – like the clinic, home health care, and radiology.

“I cannot say that moving forward we will be the same organization in two years, but we would still be here and still thriving,” he said.

Over a dozen Sitkans, many of them hospital employees, patients, and allies testified with the same message before a crowd of 100 people. Many questioned the fairness of ECG’s report.

Rich Phillips called it a “railroad job” that offered scant information on SEARHC’s finances. “If we’re going to get thrown under the bus, let’s see what the bus looks like!,” Phillips remarked, eliciting chuckles. “Let the Assembly see the last five years at SEARHC.”

Dr. Richard Wein, who has worked at both hospitals, agreed. “The books need to be opened from SEARHC in order to understand what’s going on here. Their own financial stability needs to be questioned.” Since SEARHC gets the majority of its funding from compact funds and grants, Wein also questioned the logic of relying on federal dollars for Sitka’s healthcare.

Harriet Miyasato Beleal, a patient at SEARHC, was outraged that Alaska Native beneficiaries were not directly consulted on that matter. “Just being able to read it in the newspapers is not enough. Our constitutional rights have been violated and no due process has happened for us. Historically it’s an old story and one that is not in our best interest,” Beleal said.

SEARHC was established by the Indian Self-Determination Act in 1975 to provide medical care for Alaska Natives. But that’s started to change. SEARHC is expanding in some places to non-Native beneficiaries. In January, they merged with a health center in Wrangell.

Should the same thing happen in Sitka, SEARHC would open its doors to all. Trish White, who operates Harry Race and White’s Pharmacies, pointed out this could close doors for some businesses in town. She’s been the contract pharmacist for Sitka Community Hospital for 37 years.

“We have two independent community pharmacies. At least one of those will go away of this happens and probably both of them would go away because there would no reason to outsource your pharmacy.

When businesses leave, people leave. Karen Lucas forecasted a doomsday scenario for Sitka, where the cost of living is already on the rise. “To close the hospital is another nail in the coffin for the demise of this town,” Lucas said.

A nail in the coffin, or is it life support – a chance to alleviate some the financial pressure on the City of Sitka? That’s the key question here.

Mayor Matthew Hunter quoted Assembly member Steven Eisenbeisz, who wasn’t present, in saying, ‘We value the hospital in our hearts, but do we also value it in our pocketbook?’ He reminded the Assembly of SCH’s major bailout in 2014.

“I’m really concerned that if we get to a point like we were a couple years ago and the hospital CEO [then Jeff Comer] says, “We’re going to shut the doors in 30 days if you don’t give us $1 million,” the city is not going to be able to answer that one of these days. That would bankrupt us. Because every liability that the hospital has is a city liability. We don’t have enough money in our permanent fund to cover what could happen if suddenly we had to close the doors. So I’m not in favor of rapid change. I’m not in favor of jumping in and saying, ‘Okay, let’s change this.’ I want to make sure what we do is the most responsible way forward.

Finding themselves at this crossroads, the Assembly decided to pause and solicit more information. Through unanimous motion, they invited both hospitals to draw up proposals – SEARHC for the merger and Sitka Community Hospital for financial sustainability. Taking a cue from the crowd, Assembly member Aaron Swanson requested the group hold a town hall meeting to gather citizen input that will likely take place in a month.

In a previous version of this story, KCAW stated that SEARHC gets the majority of its funding from grants. In fact, according to an ECG report, the tribal health consortium gets the 50% of its funding from federal compact funds through the Indian Health Service, 36% from patient revenue, and 14% from grants. 

Workers pouring cement at the Blue Lake dam in June, 2014. Debt payments on this project are forcing another electric rate increase. (KCAW file photo)

Electric rates in Sitka likely will be going up this fall — after first going down by two cents.

The Sitka Assembly Tuesday night (3-14-17) passed on first reading a 15-percent increase in electric rates, and a seasonal rate structure intended to make electric bills more affordable in winter.

Downloadable audio.

City Hall says electric rates have to go up again in Sitka to pay debt on the Blue Lake hydro expansion project. It’s a predicament the city didn’t expect to be in when it issued bonds for the project, when diesel fuel was expensive and electric loads were nearing maximum of Sitka’s two existing hydro plants.

But the rate increase doesn’t have to be uniform. At the assembly’s meeting on February 14th, utility director Bryan Bertacchi suggested that the rates could be structured to help out Sitkans strapped by high bills in winter. The assembly liked the idea, and it emerged in a pair of new ordinances — the first increasing rates by 15-percent; the second implementing the seasonal adjustment, which would drop residential rates to $.12 per kilowatt-hour beginning October 1, and then raise them to $.19 in summer, when people generally use much less.

Resident Harriet Beleal didn’t support another rate increase. She urged the assembly to look elsewhere. She said she lived with her daughter and struggled to pay the electric bills.

“You won’t really understand that until you’re my age — 83 years old — and you have to live on a limited income, and the money doesn’t go very far.”

Member Tristan Guevin has advocated for subsidies to assist people in Beleal’s position. He estimated that 20-30 percent of Sitkans would find an additional increase in electric rates to be devastating.

The assembly has set aside over $900,000 next year to provide electric rate subsidies to low-income Sitkans — but hasn’t created a mechanism to distribute the money.

Guevin said he would be reluctant to vote for the increase on second-and-final reading, without some movement toward creating this safety net.

“And I think it’s something as a community, we need to hold each other up and recognize that these are tough times. And those of us who can afford it, to take on that responsibility.”

Member Aaron Bean has suggested allowing the Regulatory Commission of Alaska to audit Sitka’s utility rates — and perhaps regulate them.

“If one person’s here to testify there’s probably 10 behind her, and maybe even more. So I just ask the assembly to consider supporting me in at least asking for that to happen.”

But the support wasn’t there — at least not among the four other members present. Mayor Matt Hunter said that turning over the local utility to the Regulatory Commission would require a vote of the people, and provide no guarantees that rates would be lower.

“The board has approved recent 22-percent hikes in Anchorage; large rate hikes in Juneau — I think the rates would be higher if the board would be running it because we can toe the line right at the 125-percent that we’re required to meet the bond covenant debt service.”

Nevertheless, Hunter was not excited about raising rates. He called it the “worst part” of his responsibility as a public official.

“I’ve heard from many people in the community who are finding it increasingly difficult to live here — of all demographics and ages. And it pains me to hear them say, This next one is the straw that broke the camel’s back. This next one is the one that’s going to push me out of town. There are a lot of fronts that people are feeling the squeeze.”

The assembly voted 4-1, with Bean opposed, to pass both ordinances, but the rate increase — and the seasonal adjustment — won’t be final until passed on second reading.

The assembly last raised electric rates in October of 2016 — by 5-percent. The latest increase should be the last for some time — according to the Electric Department — except for adjustments based on the consumer price index.

Members Bob Potrzuski and Steven Eisenbeisz were absent.

Alaska Native Sisterhood member Pat Alexander was one of several speakers to urge the board to retain language and cultural programs in the district, even though there is “some rough sledding ahead” with the school budget. (KCAW photo/Robert Woolsey)

Members of the Alaska Native Brotherhood and Sisterhood urged the Sitka School Board to continue the district’s exceptional cultural programs, despite budget uncertainty next year.

The board held its regular March meeting — as it usually does — Monday evening (3-6-17) in the ANB Founders Hall.

Downloadable audio.

ANS member Pat Alexander was aware that the Sitka School Board was looking at a deepening deficit next year. She admitted that there was “some rough sledding ahead.”

But she reminded the board of the importance of cultural education.

“I would like to encourage you not to be tempted to cut language programs — Tlingit language programs — cultural programs, because of the strength it gives our students, in terms of their knowing who they are, and being confident in their abilities.”

This was theme of the evening’s public testimony: cultural identity. Marsha Strand is the widow of Martin Strand, and an adopted member of the Kiks.adi Tlingit.

“We want to advocate for the Tlingit language. That’s the number one thing that needs to be at the top of your list. As educators you will probably assert that we also have learned. Language tells about a culture, it teaches about being a human. And all of us is goal-seeking should have that as a very, very important item.”

ANB member Spike Arnold took a different tack. He urged the board to align the district’s spring break with the Gold Medal Basketball Tournament in Juneau. The event brings together teams from communities around Southeast Alaska — many of whom have been playing for generations.

Spring break doesn’t always fall at the same time as the tournament. Arnold thought it should be a priority.

“You have a number of students who miss a week of school because basketball is very important to this community, and they’re going to go to Gold Medal in Juneau. It’s not just the games, it’s a cultural event. Going to Juneau is a tradition.”

ANS secretary Harriet Beleal had prepared extensive remarks for the board, expressing support for the district’s efforts to create a cultural coordinator position, currently held by Nancy Douglas, and the partnerships and grants that made the cultural program possible.

But when she went off script, the 83-year old touched on the core idea of cultural education.

“I can remember my grandma. She didn’t say much, but she sure knew a lot. You learn by watching. You learn by learning. You learn by diversity. You learn by celebrating each other’s culture. Because everyone sitting here has a culture, has a story to tell, and has something that we can learn.”

Beleal reminded the board that the ANB Founders Hall was more than just a building, it was home. Her message about the significance of home resonated beyond the walls of the historic structure.

“This is where our identity comes in. So we need to respect our identities as people. Because the fight goes on. The fight all over — in South Dakota, everywhere. Stand up and let your voice be heard. That’s why you got a voice, you know.”

Beleal expressed her pride in Dionne Brady, a lifelong Sitkan, teacher at Mt. Edgecumbe High School, and now a member of the Sitka School Board. Brady’s grandmother, Isabella, helped found the Sitka Native Education Program; her granddaughter wondered about its future.

“I look at my generation and I know who was active when we were young in SNEP, and then how few of us are active today. And I wonder what’s going to be left of our culture 40 years from now, 60 years from now. My big concern is that all we’re going to have are shares in a corporation and CDIB cards.”

CDIB stands for Certificate of Degree of Indian Blood.

The Sitka School District has a long-standing partnership with ANB/ANS to offer cultural enrichment to students through grade 5. The district partners with the Tlingit & Haida Headstart program and the Sitka Tribe of Alaska to run the relatively new Wooch.ein Yei Preschool for 3-5 year-olds. There’s a Tlingit immersion class at Blatchley Middle School, and a Tlingit class at the high school — both taught by Roby Littlefield.

None of the programs have been targeted for cuts in the coming year, although the district is waiting on the outcome of several bills in the legislature which could significantly affect education spending.