The Borough Assembly in a special meeting last week adopted a letter outlining its intent to potentially partner up with Southeast Alaska Rural Health Consortium on Wrangell’s hospital.
Held on March 22, the early evening meeting covered some of the pros and cons of third party partnership for managing Wrangell Medical Center. The hospital is public asset owned and managed by the borough, one of only a handful in the state still run independently of a larger healthcare service.
WMC has been “hemorrhaging money,” assembly members have been informed by city and hospital staff alike over the past several months. On the revenue side of things, current reimbursement rates for the largely federally-recompensed center fail to match cost of care, while the number of procedures this fiscal year have been falling short of budget. WMC has already drawn on half of its $500,000 emergency account set up by the city in 2016 in order to meet continued operational costs.
Nearly half a century old, the hospital’s physical facilities are also in need of replacement. The city has explored concepts for a new building and equipment to meet future medical needs, but estimates produced in November expected costs for a new building to range between $90 million and $115 million over a 30-year span, depending on interest rates and design. Meanwhile, Wrangell lacks the finances needed to cover either the debt involved or even current operational expenses.
“It is potentially one system failure away from closure,” warned Lisa Von Bargen, Wrangell’s city manager.
Since acquiring Wrangell-based clinic Alaska Island Community Services earlier last year, SEARHC has emerged as the likeliest candidate for partnership on the hospital’s future. AICS and WMC already enjoyed close ties in staffing and services before the acquisition, commitments SEARHC has since reconfirmed.
In its special meeting last week, the assembly considered seven reasons favoring some level of partnership with SEARHC. It is already established in Wrangell, a presence it has expressed an interest in expanding. The provider has demonstrated a willingness to provide financial resources needed to build a new hospital, including paying for an architect to study the project’s feasibility.
The organizational status of SEARHC is another positive, providing it with a higher rate for reimbursement through Medicare and Medicaid. The hospital already saves money by contracting its physicians through AICS, and SEARHC facilities purchase about a third of WMC’s services in terms of annual revenue. Meanwhile, designing a shared campus for a new hospital in tandem with the AICS clinic would reduce the footprint and cost of a new facility.
With the support of WMC’s governing board, the city assembly earlier this year approved a professional services agreement with legal consultants Dorsey & Whitney LLP to help guide the partner seeking process. On March 13 it also approved creation of a steering committee with the hospital board’s inclusion to facilitate that.
On its end, SEARHC requested that the borough enter into a largely non-binding letter of intent, setting the parameters under which their joint solution will be explored. Either party would be free to disengage for the process for whatever reason. The only two binding conditions are that both parties only negotiate with each other during the duration of this process, and a confidentiality agreement.
The draft letter before the assembly last week was a version agreed to by SEARHC, after input was given by both parties. Before coming to a decision, members met in a 75-minute executive session where they discussed potential issues with their legal counsel.
Of primary concern to them during their deliberations was the potential impact on the community’s jobs, should closer ties with SEARHC produce labor redundancies. In the version of the letter they would adopt, members agreed to add a provision stressing the preservation or enhancement of healthcare employment in Wrangell as the partnership process is explored further.
Sitting in on the public portion of the meeting were residents and a number of employees at the hospital. A letter in favor of the agreement signed by 45 staffers was submitted by Jessica Rooney, while five other members of the audience entered comment on the proposal.
Hospital custodian Jim Holder warned the facility is at risk for sewage and fire system problems, while wheelchairs do not fit into hospital restrooms. Ann Cramer also added comment, suggesting a partnership with larger provider SEARHC could open up opportunities for education and additional medical services.
Assembly members moved in favor of adopting the amended letter. City manager Lisa Von Bargen was as of Tuesday drafting their suggested language into a final copy, to be submitted to SEARHC. If approved there, it would return to Wrangell for Von Bargen’s signature, borough clerk Kim Lane explained.
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