Members of Petersburg’s Borough Assembly are telling the board of the Petersburg Medical Center to be transparent about the facility’s financial status before seeking public financial support for equipment and renovations. The two elected groups continued their discussion about medical center finances last week.

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Petersburg Medical Center is a non-for-profit organization owned by the borough and run by an elected board of seven local residents. That board has approached borough officials about public support to pay for capital costs, that is, new construction, renovations and major equipment.

Borough assembly member John Hoag told the board Thursday that local voters will need more information on day to day operations of the facility. “I would suggest that before you say to the voters alright even though we’ve got some reserves we’ve built up over time, we need your help for big capital projects, they’re still gonna say show me that what you’re doing for expenditures is in line,” he said. Hoag suggested the board be able to show that hospital salaries and benefits are on par with other hospitals in Southeast Alaska.

For years the medical center has operated at arms length from the local municipality without requesting funding. That could be changing this year. The new borough government is reviewing and revising its ordinances. A proposed version of the new hospital ordinance requires annual medical center budgets and audits be presented to the borough. It also requires the medical center to start following state open records law, public bidding procedures and notify the assembly of a contract with the facility’s administrator. All that’s not yet set in stone, it will have to be approved by the borough assembly.
Last month the borough told the medical center to repay a line of credit it took out to pay for capital costs and an operating shortfall.

For the meantime, the two sides are focusing on how to fund those major capital costs in the future. Board member Kris Kissinger thought people would accept spending for new capital project items. “And I think I have confidence in the city or whatever if they go and add something or need something new that I’ll look at that and OK, they need that. I have confidence in the council and the board,” Kissinger said.

Hoag responded, “The feedback that I think (borough manager) Steve (Giesbrecht) has received and a lot of us has received, the public has a healthy skepticism on the now-borough’s spending habits.”

Board and staff from the medical center outlined the facility’s financial status for assembly members. PMC CEO Liz Woodyard noted the facility has a higher amount of bad debt and charity care than ever before. That’s potential revenue that has to be written off as a loss. “It’s about 8-10 percent is bad debt and charity care,” Woodyard said. “And that also supports our community. And then we have people you know that have large bills, 50-thousand dollar bills, that don’t pay.” Woodyard said another big question mark is future state and federal reimbursement levels for Medicare and Medicaid services.

Assembly member Sue Flint thought the medical center should focus on accounts receivable, known as AR, or the money owed to the hospital. “To me the answer is in your AR. I’m hoping the people that are working are training your employees so that you can get that down. Because like you say in a year it increased a million and a half. What could you do with a million and a half today? That would solve so many problems.”

Board president Tom Abbott agreed. “If we are collecting the billing, we don’t have a problem,” Abbott said. Outstanding money owed to the medical center has reached as high as three point 75 million dollars and the medical center is trying to collect money and reduce that amount.

CEO Woodyard brought the focus back to major expenses for the building. “I do believe it with my whole heart we can make it on operations. And I believe too our salaries are right in line. I have no problems with that. But it’s an old building and things fall apart and you get a new roof and you find out you have to have insect screens.”

PMC is currently replacing part of its roof. State grant funding has paid for $275,000 dollars of that cost. However, the medical center board last week approved spending just over $76,000 dollars for the project.

The biggest cost on the horizon is a new medical information system already being installed this year. It could cost PMC 700-thousand dollars but the medical center is hoping for state funding to offset that amount. Other big price tag items in the future could be new beds, medical imaging equipment and a remodeling of the long term care wing among other projects.

The two elected groups plan to have another work session in early December to continue their discussion.