Denial of transfer agreement a sound business decision for Central Peninsula Hospital

  • Saturday, September 6, 2014 8:22pm
  • Opinion

A NEWLY OPENED KENAI-BASED SURGICALcenter has been at the center of a growing controversy due to its inability to treat Medicare and Medicaid patients without a transfer agreement with Central Peninsula Hospital.

At issue are a group of patients whom both the hospital CEO Rick Davis and Surgery Center of Kenai vice president Harold Gear said are typically the lowest-paying patients — though at more than 100 million people covered by Medicare and Medicaid nationwide, we’re betting that both institutions could use the boost to their bottom lines.

The hospital denied the transfer agreement in July and since that time, the Clarion has received numerous letters to the editor; residents have spoken out against the decision on local radio shows and in other newspapers. Each makes the argument that Central Peninsula Hospital is somehow bullying the surgery center and should be more concerned about providing Kenai Peninsula Borough residents with the cheapest options for healthcare — not its own bottom line.

Opponents of the hospital’s decision have characterized the denial as a deliberate limiting of care options for patients on the Kenai Peninsula, one that gave it a monopoly on health care services, but we think the hospital made the right decision.

In 2010, when the hospital board recommended that the borough enter a public-private partnership with a for-profit firm, the borough assembly and the borough residents overwhelmingly rejected the deal.

“They are investment bankers and basically looking to make money off this hospital,” wrote former borough mayor Dave Carey in a letter to the hospital board. “Any local funds should stay local.”

The hospital is still fully owned by the Kenai Peninsula Borough and, by extension, borough taxpayers. It is the responsibility of the hospital board to ensure the continued viability of the business and signing an agreement with a privately-owned business, one that could cut into its revenue, would not be good for business.

As distasteful as it may seem for patients seeking care from either facility, medical care is not an altruistic pursuit for institutions that provide it — it is a business.

Borough residents cannot have both a fully publically-owned hospital that stays financially stable – and one that undermines its own business every time a private company comes into town and offers medical services at a lower cost.

Medicare patients make up about 26 percent of the hospital’s business and another 16 percent is Medicaid patients, Davis told the Clarion.

Gear told the Clarion that without the ability to treat Medicare and Medicaid patients — the surgery center would have enough business to remain profitable.

This is not an issue of one business causing another to fail by limiting access to patients, and therefore revenue, this is one of two institutions fighting over profit.

And, while the loss of Medicare and Medicaid patient revenue might not cripple either provider — borough taxpayers ought not expect Central Peninsula Hospital to establish business practices that would undermine its ability to stay profitable in the long run.

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