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Hospital lease on Council agenda

Daily News Staff Writer

During a special meeting on Thursday, the Ketchikan City Council will meet with a consulting firm regarding the city’s upcoming negotiations for PeaceHealth’s lease of the city-owned Ketchikan Medical Center.

The city and ECG Management Consultants will discuss the city’s options and strategies during an executive session. The council then will decide whether to hire the firm for ongoing assistance. The city paid $10,000 for Thursday’s initial meeting.

PeaceHealth’s current, 10-year lease of the hospital is set scheduled to expire on Oct. 8, 2023.

The city is interested in exploring the issue well in advance of that date in order to allow it to potentially negotiate changes to the new lease, Assistant City Manager Lacey Simpson said on Wednesday.

“I think a lot of this is a self-education moment for the council to understand what aspects should be taken into consideration for a modern lease agreement for the hospital,” Simpson said, noting that the core of the lease agreement has remained “frozen in time” since 1961.

The Sisters of St. Joseph of Peace (which would later found PeaceHealth) began leasing the hospital in 1961. Since 1963, the Sisters/PeaceHealth have renewed the lease every 10 years — most recently in 2013. The city currently charges PeaceHealth $1 per year to lease the facility.

Simpson said on Wednesday that she isn’t aware of specific proposed changes to the lease agreement, though she noted that the city’s proposed changes might be inspired by its recent work on the facility.

“Obviously the city has invested a considerable amount of capital to bring the facility up to a certain level of first-class and modern standards for a medical facility,” Simpson said. “So there’s things that, I would imagine, that need to be reflected in the lease, based on what the facility is actually able to accommodate now.”

PeaceHealth has expressed its own ideas about the upcoming lease. In March, PeaceHealth Executive Vice President Ron Saxton proposed an “at least 20-year” renewal of the lease, in an email to city staff.

“Operating the Ketchikan Medical Center requires a very substantial investment in people, facility maintenance, and the maintenance or purchase of our medical equipment,” Saxton wrote. “Making such commitments and investments require the certainty of a long-term relationship.”

Simpson said on Wednesday that both parties favor a mutually beneficial agreement that will last for a substantial amount of time.

The hospital item is the only item on Thursday’s agenda.

The meeting is scheduled to begin at 7 p.m. in the City Council chambers at 344 Front St. There will be time for public comment at the start of the meeting.