Governance at Central Peninsula Hospital will go directly to the hospital’s operating board and the Kenai Peninsula Borough Assembly.

The service area will remain the same, but the borough assembly voted to dissolve the Central Peninsula Hospital Service Area Board at its Tuesday meeting, an elected board that has overseen hospital operations since 1998. The board was established to oversee the use of funds generated by the mill levy in the service area, which the hospital would use to pay its general obligation bonds.

However, after its last Lease and Operating Agreement was inked in 2008, the hospital was tasked with becoming self-sustaining. The hospital administration moved to pay its own general obligation bonds, and the mill levy was knocked down to 0.01, generating about $56,000 each year.

Since the curtailing of the mill rate, the service area board has had very few funds to oversee. The board’s role has diminished to the point where it was meeting once every three months and providing advice to the assembly, generally approving the hospital operating board’s decisions.

Kenai Peninsula Borough Mayor Mike Navarre said the board was originally patterned after the South Peninsula Hospital Service Area Board in 1998. However, the two boards function differently, and the central Peninsula’s board has not always worked well for the hospital, he said.

The board was not entirely superfluous, though — often, the members would ask questions of the operating board before a request went to the assembly, said Scott Walden, the chair of the board.

The board members were initially surprised by the introduction of the ordinance, but they recognized the logic behind it, Walden said. After some discussion and a few amendments, specifying that the responsibility for reporting will rest with the hospital administration, the board voted unanimously to support the dissolution, he said.

“It was kind of odd, to be the ones pulling the chain on the guillotine (on ourselves),” Walden said.

There was a time at which the board was an intermediary between the borough assembly and the hospital operating board, Walden said. However, with few funds to oversee, the board has become more of a questioning group, he said. The board does ask important questions of the hospital executives and maintains a good relationship, but the borough assembly can perform that function, he said.

Most of the assembly members agreed. Assembly member Kelly Cooper, who has served on the South Peninsula Hospital Service Area Board, said the board serves more purposes than it appears to from the outside, but the hospital is self-sustaining and may not need the board to supervise it anymore.

“(The hospital’s operations) are governed by an operating board with bylaws,” Cooper said. “They have an operating agreement with the borough, and it’s very strictly laid out. … My only concern is a precedent being set about service area boards going away, but we have control over that.”

The only objection, voiced by two members of the public and assembly member Wayne Ogle, was that the loss of the board would remove an elected body that gives citizens a voice. Ogle said he would prefer that the assembly restructure the board to give it more of a purpose rather than disband it.

“I don’t accept the idea that this body (the assembly) is keeping an eye on the hospital like I think has been stated,” Ogle said. “We get a report quarterly from the hospital and actions by this body occasionally here and there, as far as spending is concerned, but not really a good sense of what is going on there.”

The hospital executives update the borough assembly once per fiscal quarter and have to route purchasing decisions through the assembly for approval. The service area board did not have any authority to approve purchases — it was advisory only.

Navarre said it would be difficult for the assembly to restructure the board to be more than advisory, because the service areas are a subset of the borough. The assembly will always be the final authority in the borough, he said.

Hospital administrators did not know about the ordinance until it was introduced, said Bruce Richards, the government and external affairs manager for the hospital. While the service area board has always had a say in the hospital’s requests to the assembly, the assembly has always been the final arbiter, and the service area board does not have any funds to oversee any longer, he said.

“There was millions of dollars flowing through there (when the mill levy was higher),” Richards said. “That’s kind of gone away now. They don’t have any revenue sources. (The board process) is an additional layer and additional step that has kind of outlived its function.”

The board members will still stay involved with the health care issues in the borough, said Marion Nelson, a longtime member of the service area board.

“We can’t really help (being interested),” Nelson said.

The borough is in the midst of discussions about health care in its Healthcare Task Force meetings, with a number of issues identified to be addressed. Walden said he would stay involved as well. The board will have one final meeting on June 13.

“I think, one way or another, most of us will find a way to stay involved,” Walden said.

Reach Elizabeth Earl at elizabeth.earl@peninsulaclarion.com.