Homer Alaska - News

The body chose not to introduce an ordinance that would have allowed Central Peninsula General Hospital Inc., the nonprofit that governs the Soldotna hospital, to sign a letter of intent to partner with an outside for-profit firm.

Assembly members Mako Haggerty, who represents the southern peninsula, and Bill Smith, who represents Homer joined Gary Superman of Nikiski, Paul Fischer of Kasilof and Gary Knopp of Kalifornsky in voting against the introduction of the ordinance.

Assembly President Pete Sprague of Soldotna, Hal Smalley of Kenai, Sue McClure of the eastern peninsula and Charlie Pierce of Sterling voted for introduction.

Tuesday night's Kenai Peninsula Borough Assembly meeting drew one of the largest crowds in recent memory, with people lining the walls of the chamber to take part in the landmark decision facing the assembly.

Many people testified to the issue, representing both sides, but the

majority of the testimony spoke against a partnership with the Texas-based

LHP Hospital Group.

CPGH, Inc. recommended such a partnership last month, saying it believes the

50/50 ownership and control arrangement is in the hospital's best financial

interest. The decision moved into the assembly's hand on Tuesday.

Tuesday's meeting was the public's first opportunity to speak out in an

official forum on the possible changes.

A draft of the letter of intent, written by LHP and subject to assembly

amendments, detailed the potential partnership in which LHP would purchase

CPH, Serenity House, Heritage Place and other local practices for about $105

million.

Half of that money would have gone to a nonprofit joint venture entity that

would have run the hospital, much like CPGH, Inc. The joint venture entity

would have been made up of two, five-member voting blocs.

One bloc would have included 100 percent local membership and the second

bloc would have included three LHP representatives and two physicians. Each

bloc would have received one vote in all decisions.

The letter of intent would not have finalized any partnership; it would have

allowed CPGH, Inc. to continue negotiations toward a deal with LHP.

The decision before the assembly on Tuesday was the latest step in a process

dating back to March, when CPGH, Inc. brought in a private consultant who

recommended changing the hospital's governance structure.

Since then, the hospital's board has vetted several governance options with

the help of a $25,000-per month investment banking firm. After months of

deliberation, the board recommended a whole hospital joint venture with

Texas-based LHP.

Enacting the letter of intent ordinance would have forced the assembly to

either accept a partnership with LHP or forfeit $300,000 of the hospital's

money.

In a May contract extension signed between CPGH, Inc. and the

investment-banking firm Juniper Advisory, LLC, the hospital agreed to pay

the firm a $300,000 "withdrawal fee" if the hospital signed a letter of

intent but then backed out of the deal.

The hospital has spent about $300,000 in the decision-making process,

according to CPH CEO Ryan Smith.

Andrew Waite can be reached at andrew.waite@peninsulaclarion.com