Elected officials with Petersburg’s borough government and the community’s publically-owned hospital are trying to get a better handle on the relationship, legal and financial, between the two. The medical center’s board met again with the Petersburg borough assembly last week over the issue.
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Petersburg’s hospital building is owned by the municipality but it’s operated by the staff and overseen by board of the medical center; the borough government has no oversight or involvement in hospital operations.
However, the borough assembly is taking a closer look at that relationship. The borough’s attorney last year drafted a memo giving his opinion on various questions. One was whether medical center employees are actually borough employees. Attorney Jim Brennan wrote that this is a grey area legally. Hospital board president Tom Abbott, who also is general manager of KFSK, wondered about the direction of the discussion regarding hospital employees. “The W2s, the taxes, the IRS, everybody thinks that PMC employees are…..separate,” said Abbott. “And I hope that continues that way,” responded borough manager Steve Giesbrecht. “So I would hope that we could drop it,” Abbott said.

Assembly members did not argue that hospital staff should be considered borough employees. Kurt Wohlheuter liked the current arrangement. “I personally like the landlord tenant agreement we have. I’d just as soon be the people who own the building and you guys take care of the stuff. Because it seems like there might be a lot of liability there if we were to jump in, deeper pockets.”

Those deeper pockets were a concern for the municipal government. Mayor Mark Jensen explained his concern over the financial liability. “My main concern is that ultimately I think, and nobody wants this to happen, if the hospital, for lack of a better term went bankrupt, the rate payers, the residents of the whole borough would be liable for that right? Correct? I mean we won the building but we don’t own the business.”

“Actually I think we do own the business,” responded assembly member and attorney John Hoag. He raised some of the issues addressed in the borough attorney’s opinion. Before he joined the assembly, Hoag represented a former medical center employee who filed suit against the former city of Petersburg and a former medical center CEO. Hoag told the hospital board members that people could make a legal argument that the two were connected. “Persons who would say that would be persons looking at a deep pocket. If you want full disclosure, the lawsuit, which I assume you know, but maybe you don’t. The lawsuit referenced by the attorney as a footnote is one I filed before I was on the assembly. And I filed that frankly because I couldn’t figure how else to bring the lawsuit. Because my research was that the only entity, legal entity I could sue would be the city of Petersburg at the time.”

Borough attorney Brennan’s opinion on the matter was that the borough should leave reserve the option of making the argument in court that medical center employees are not employees of the borough in case of a medical malpractice suit. However he also noted that the borough is named on the hospital’s liability insurance.

Brennan noted that asserting that medical center employees work for the borough could result in an those employees being enrolled in the collective bargaining unit that includes borough employees. The hospital employees are already part of the public employees retirement system, or PERS, a decision made by a prior city council.

Cindi Lagoudakis did not get the sense from fellow assembly members that they wanted medical center staff to be called borough employees. “However, when we’re listed on the liability policy, it’s really difficult to figure out what the relationship between the hospital and the assembly are,” said Lagoudakis. “It could put the borough at risk. Can we live with that risk I think is really what the question is. Can we live with that ambiguity or do we need to make it clearer, so that the borough is protected and the hospital is autonomous.”

Petersburg’s borough charter approved by voters a year ago says, “The borough assembly, by ordinance, shall provide for the powers and duties of the hospital board, allowing for the greatest possible autonomy to operate and maintain borough medical facilities in the best interests of the public’s health” That language came up a number of times in Thursday’s meeting. Board president Abbott suggested drafting more language clarifying the roles of the two sides. “It says the greatest possible autonomy. And that, in the charter, is, to me, constitution. That directs us. That’s where we need to be going. So let’s tighten it up.”

The borough assembly is also planning to consider a new ordinance detailing the hospital board responsibilities and duties. Representatives of the two sides have drafted a proposed ordinance that will come up for three readings of the assembly.

The attorney Brennan’s memo notes greater borough control over public hospitals in Sitka and Wrangell. It also says that any code language approved by the assembly seeking greater control could run afoul of the charter language on hospital board autonomy.

Hoag thought any eventual review of the borough charter language will need to include discussion of the separate status of the medical center. “Do we wanna maintain this autonomy to the greatest extent possible? I think that is the discussion that needs to be had with you folks present and the citizens weighing in on it. Because we can’t say you’re on your own, have a good life,” Hoag said.

The powers granted to the hospital board in the borough charter include making hospital policy, hiring and firing of the administrator and preparation of a budget. In the past, the hospital has not sought borough funding for its budget, but that could be changing. The board may ask for help in funding capital projects in the future.