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12/5/2012
PeaceHealth: Capital $ needed for hospital to be hub

By NICK BOWMAN

Daily News Staff Writer

PeaceHealth’s senior officers said Ketchikan has a future as the regional hub for health care in Southeast Alaska — if the city’s $76-million capital project comes to fruition.

Alan Yordy, CEO of the nonprofit owner of nearly 10 hospitals in the Northwest, and Ken Tonjes, CFO of Ketchikan Medical Center who works from Bellingham, Wash., were in Ketchikan on Tuesday to speak at a joint Rotary-Greater Ketchikan Chamber of Commerce luncheon at Cape Fox Lodge. Gov. Sean Parnell also spoke at the luncheon. (See related story on this page.)

While experts and pundits simultaneously predict doom and salvation for the health care industry because of the Affordable Care Act, Yordy said no one truly can foresee the consequences of the legislation.

He said there will be “as many unintended consequences” as intended consequences, and he emphasized PeaceHealth’s commitment to Ketchikan.

“Despite whatever may happen in health care, our commitment to Southeast Alaska is strong — it is unwavering — and we believe there is a bright future here,” Yordy said.

Heavy industry expansion in Ketchikan, combined with waves of retiring baby boomers, will create health care jobs in Ketchikan and throughout the state during the next decade, according to Yordy.

To attract those jobs and secure Ketchikan’s role as a regional medical center, Tonjes and Yordy said the new hospital has to be built.

“You need a 21st century hospital for 21st century medicine,” Yordy said of the Ketchikan Medical Center, which opened in 1963. “I imagine we’re still dealing with 1960s (operating rooms). To keep great staff, great physicians, you really need a great facility.”

Keith Smith, executive director of the Chamber, asked how much it would cost to renovate the operating room suites instead of building a new hospital.

Tonjes said PeaceHealth’s discussion with the city started with renovations to the current structure, but the facility’s low ceilings “will not accommodate a renovation.”

Talk with the city went through 12 different construction models, ranging from $125 million to the agreed-upon $76 million, according to Tonjes. He said a new facility was the “bare minimum” required to achieve PeaceHealth’s service goals for the next 25 years.

Construction is in four phases, Tonjes said. “The first phase is the new ORs and the medical office building, which is $62 million of the $76 million. The next $14 million is all the other infrastructure that’s going to carry us over the next 30 years.”

Changes to Medicare might put in jeopardy the increased number of seniors expected to increase PeaceHealth’s business.

Ed Zastrow, director of Ketchikan’s AARP, said seniors “have no idea what’s going to happen with our Medicare programs.” He said most seniors have to buy supplemental insurance for their Medicare coverage, funding for which was cut by the health care law.

“My concern is that if we have more cuts in Medicare, over a period of time we’ll have less money coming into PeaceHealth,” Zastrow said.

PeaceHealth is paid approximately $51 for every $100 it charges the federal government for Medicare patients, according to Tonjes, and the impending cuts might increase the burden of cost on hospitals.

Yordy said that, while the Medicare well of funding is expected to soon run dry, he’s confident a solution will be found.

“My view happens to be that Medicare is here for the long haul,” he said. “While they see problems — certainly the biggest one is the Medicare trust fund runs out of money in about 2020 right now — we’re going to find a solution.”

He added that he expects a solution to be found in Washington in the next five years.

“The wisdom will come that we have to do what’s right for the American public, not what’s politically expedient,” Yordy said.

Approximately 10 to 12 percent of the Ketchikan Medical Center’s business comes from off of Revillagigedo Island, according to Tonjes, which is why PeaceHealth is eager to develop a new facility.

“When you look at the entire breadth of services we offer, we’re budgeted to have a bottom line of under $2 million,” Tonjes said.

PeaceHealth realizes about $3.5 million from Prince of Wales Island residents, more than $1 million from Wrangell residents and just less than $1 million from Petersburg, according to Tonjes.

“If it all went away, we would be in a negative position,” he said. “That means we have to reduce some of the services that we’re providing. We have to be sustainable. We’re not for-profit, but that doesn’t mean we don’t have to generate a profit because technology is changing, services are changing, and we have to have money to reinvest in the community.”

Dr. William Sims, a new surgeon at the center, said the expertise of the hospital’s staff has to make up for the dated facilities.

“We have state-of-the-art equipment,” Sims said. “What we don’t have is a state-of-the-art facility. You can’t get all of that (equipment) in these small rooms. It really impacts our ability to do procedures.”

He added that the six post- and pre-operation beds for patients aren’t sufficient for the volume of services the center provides.

“There’s only so many beds to get people ready and to recover them afterwards,” he said. “A lot of times we can’t proceed with cases because we’re in gridlock.”

Yordy said a new facility would make use of nurse practitioners to see patients for non-emergencies after Zastrow said it didn’t make sense that he had to visit the emergency room for regular procedures.

“Of all the visits that go to primary care physicians, only 50 to 60 percent of them actually need to see a doctor,” Yordy said. “The other 40 percent of them could be seen by anywhere from a nurse practitioner, a physician assistant and sometimes just a therapist.

“That’s exactly where we heading in terms of the time when we can see more mid-level providers here.”