If numbers work, hospital on its way to SEARHC management

If it proves financially feasible, Wrangell Medical Center may soon pass from municipal ownership to new management.

At a public meeting held inside the Nolan Center on Monday evening, representatives of the City and Borough of Wrangell and the hospital explained WMC is in pretty dire straits at the moment. WMC chief executive Robert Rang said the facility has been having increasing difficulty meeting costs to operate.

"The hospital's been losing money for several years," he reported.

Wrangell's hospital has never generally been flush with cash, but over the past decade and a half it has had enough cash on hand to cover an average of 23 days' expenses. In recent months that number has fallen to 10 days, and an infusion of public funds on loan has boosted that to 19.

The cause is a combination of factors, including slower inpatient and emergency room traffic, empty beds in long-term care, and cuts to the hospital's Medicaid compensation. Routed through the states, the federal medical coverage program accounts for about half of WMC's total revenues, with senior-focused Medicare making up another 30 percent. The rest comes from a combination of commercial insurance or private sources.

Already set at cost before, Rang estimated payments for services from Medicaid was winnowing down further. For every dollar in services the hospital provides those under its coverage, WMC only recoups 93 or 95 cents back. To make ends meet the hospital would therefore have to squeeze the 20 percent from its commercial-private revenue sources, which would be untenable.

Uncertainty surrounding the state's ability to stably fund the program in light of its ongoing budget deficit worsens WMC's financial vulnerability. Coupled with this, aging infrastructure within the 50-year-old hospital building itself could put the whole operation over the fiscal edge.

Maintenance head Jim Holder walked Monday's attendees through a grim series of pictures, indicated significant rust, clogs and leaks in the hospital's sprinkler, water and sewage infrastructure. Further problems with the heating system and accessibility issues through many of its facilities only add to concerns.

Building a new hospital would cost upward of $90 million over the next 30 years, according to cost estimates for a facility put forward by BDO last November. The liability of repaying this sum would be beyond the hospital's ability to repay, Rang said, or even the city's itself.

For perspective's sake, city manager Lisa Von Bargen told the crowd the new water plant approved by the Borough Assembly last month would, beyond grant funds, cost Wrangell $3.6 million. Over 40 years those annual payments would with interest come to $175,000. A new hospital would be 25 times higher in cost, to be repaid over a shorter time frame.

"It's just not something we should do," Von Bargen said.

An offer of partnership from Southeast Alaska Rural Health Consortium has appeared to be a way out from these realities. Acquiring Wrangell-based clinical provider Alaska Island Community Services early last year, the regional organization has greatly expanded its presence in the local health care sector. AICS and WMC had previously enjoyed a close association sharing medical staff and services, with plans to eventually site a new hospital adjacent to the AICS clinical campus on Wood Street. Even after its acquisition, that relationship with AICS has continued to the present under SEARHC, and a joint campus still desired.

Following a weekend of meetings with two steering committees made up of city and hospital staff, tribal representatives

and community members, SEARHC chief operating officer Dan Neumeister

confirmed the organization would be willing to take over management of WMC, as well as its financial liabilities. This would be pending a feasibility review of the

hospital and Wrangell's health needs. Workshops involving consultants

from Wold Architects and Engineers already took place over the weekend as a first stage of that review, with further study to follow.

The feasibility review was an agreed-upon step reached by non-binding agreement last month between the city and SEARHC. Von Bargen reported SEARHC and Wold will present their feasibility study findings to the hospital steering committee and assembly sometime in May or in June, with an offer and possible agreement to follow if the findings are positive. A deadline of June 30 has been set for the discussions, but Von Bargen suggested an offer may be expected as early as mid-May.

Architect Josh Ripplinger of Wold said the weekend's work sessions with steering committee and community members had helped hammer out prospective needs for a new medical facility. Chief among local concerns would be maintaining Wrangell hospital's critical access status, which requires maintaining emergency and observation facilities, diagnostics, acute care and swing beds, and the resources to feed and support the patients and staffing involved.

A number of other features and programs were also considered as important, to be worked into future architectural designs. If an acquisition deal for the Wrangell hospital were to move forward, Neumeister confirmed a new facility for it would be constructed as an extension or added wing to the current AICS clinic on a shared campus. Once given the go-ahead, Ripplinger estimated a facility could be completed in from 30 to 36 months.

Neumeister laid out some benefits to transitioning the hospital to SEARHC management. Its tribal organizational status grants it more favorable rates of recompense from the federal government, which AICS chief executive Mark Walker attributed to a 20-percent increase in the clinic's revenues since its acquisition last year. Federal funding for SEARHC is also not affected by Alaska's budgetary woes, and would be a dependable source of revenue moving forward. If it took on WMC's assets SEARHC would also be taking on its liabilities, as well as the financial responsibility for constructing a replacement facility.

Though talks between the borough and SEARHC about a management transition are quickly gathering speed, Von Bargen and Ripplinger noted the public input process was just beginning.

"This is certainly not the last meeting, not by any stretch of the imagination," said Von Bargen.

She encouraged residents to reach out to their elected officials with questions or concerns, either at City Hall or on the WMC Board.

People in attendance at Monday's meeting – practically a full room at the Nolan Center, with many drawn by a door prize of air miles – were given the opportunity to ask questions and provide comment to the prospect. Support had been about unanimous among those speaking during the ensuing hour, with the general consensus being that an acquisition by SEARHC would be a needed next step for the hospital's future.

A longtime nurse at the hospital before her retirement a couple of years ago, Janet Buness noted the importance Wrangell Medical Center has had for the community since it opened its doors in 1968. Multiple generations of residents or their relatives have been born or treated there, or ended their days there. The hospital is part of the community's economic bedrock as well as quality of life, and holds a central place in the town's social character.

Remembering the hospital's predecessor at Bishop Rowe, Buness recalled the precariousness of that facility's elevator, or having to navigate stretchers up its four flights of stairs. When the new medical center was finally operational, "It had felt like we were entering the 21st century," she said.

"Over the 50-year span of the hospital, it's been greatly improved and greatly enlarged," Buness continued. "It has reached the end of its lifespan. ... We really need a new facility that's modern."