A planned-for merger between two regional healthcare providers has been put on hold for two months.
Alaska Island Community Services was to merge with larger organization SouthEast Alaska Regional Health Consortium (SEARHC) on February 1, but the consolidation will have to wait until April 1. The merger was formally announced last October, and heads of both organizations subsequently met with Wrangell officials in November and in January to explain the transition.
AICS executive Mark Walker has said the move was needed due to growth in the organization. Since its founding in Wrangell in 1989, the organization has branched out into clinical, pharmaceutical and behavioral health care in six communities. AICS’ most recent expansion came earlier last fall, when it announced it would take on administration of the Juneau Front Street Community Health Center.
With the expansion of services came an increase in revenues, on average increasing by 25 percent annually over the 15-year period to 2010. Since then, returns have leveled out, and in 2014 and 2015 AICS began to lose revenue.
Headquartered in Juneau, SEARHC is a non-profit, tribal health consortium representing 18 Native communities in Southeast Alaska. Among its facilities are the Ethel Lund Medical Center in Juneau and Mt. Edgecumbe Hospital in Sitka, and with 1,000 people on staff it is one of the largest employers in the region.
The proposed merger with AICS would extend the organization’s reach to 24 communities, and as SEARHC’s status as a tribal entity allows it greater reimbursement rates in both Medicare and Medicaid, the change would ostensibly boost the Wrangell-based service’s revenue situation. Because of its size, SEARHC would also be able to negotiate better with Primera Blue Cross, the only company participating in Alaska’s health insurance marketplace.
Many of the intended benefits to the merger will be financial. Walker explained the organizations will need a couple of additional months to prepare for the transition.
“I think it was a combination of the holidays, being able to coordinate the finances,” he said of the delay. Because of its varied set of services and the different state and federal agencies it deals with, Walker said the move proved to be more complicated than initially expected. “All of those create complexities between different agencies.”
The merger announcement caused the Borough Assembly some concerns, particularly how the change would affect local employment, current arrangements with Wrangell Medical Center, and tax arrangements with the city. AICS is currently Wrangell’s largest single private employer, and provides various staff and services for the local medical center. In past meetings, assurances were given by Walker and SEARHC administrators that staffing would not be reduced, and that cooperation with WMC would continue as before.
SEARHC CEO Charles Clement also committed the organization to continuing land and revenue arrangements with the city. The property for the AICS primary clinic on Wood Street had also been provided by the city for a symbolic price of $1 in 2010, with the intention of eventually building a new building for Wrangell Medical Center on the adjacent property. AICS presently provides between $60,000 and $70,000 each year in property taxes for it and other properties.
Assembly members were on board with the transfer of the statutory warranty deed to SEARHC in the event the merger was finalized, but only after a workshop was held in January to hammer out details. SEARHC agreed to allow one member of the Borough Assembly a permanent seat on its new advisory council, which will supplant AICS’ present corporate board. The council would also retain Walker, and is intended to amplify local input and forward concerns for continuing care to SEARHC administrators.
The two organizations also intend to oversee establishment of a community foundation using a portion of AICS’ financial reserves, which will help support programs and services dedicated to improving the health of Wrangell’s residents. An initial endowment could range between $1,000,000 and $2,500,000 initially, with 10 percent of the Wrangell clinic’s net profits cycled into the foundation.
For the story, SEARHC deferred to Walker for explanation of the merger’s delay.
Reader Comments(0)