Bagley proposes SPH service area change

An ordinance proposed by Kenai Borough Assembly Member and Vice-President Dale Bagley would dramatically change the South Peninsula Hospital Service Area by moving the current boundary south of Ninilchik. The new east-west boundary would run roughly along Oil Well Road. The ordinance comes up for introduction at the April 3 meeting in Soldotna and a public hearing at the May 1 meeting.

Voters created the SPH and Central Kenai Peninsula Hospital Service Areas in 1969 after the Homer hospital was started in 1955 and before Central Peninsula Hospital was opened in 1971. The common boundary was the Clam Gulch Tower. The SPH service area mill rate is 2.3 mills and the CPH service area mill rate is .01 mills. In a memorandum in support of the ordinance, 2018-16, Bagley does not provide a fiscal note on the impact to the service areas.

“I view this as a fairness issue,” Bagley wrote in an email. “South Peninsula Service area was formed first and that is why the boundary is so far north. If you lived halfway between Soldotna and Homer, sure some people might go south to the smaller hospital but most are going north to the Central Peninsula General Hospital and yet they are paying 2.35 mills to support the South Peninsula Hospital.”

In a June 2016 resolution opposing a 2016 proposed boundary change not as far south, the South Peninsula Hospital Board of Directors said that the SPH service area would lose at least $179,000, not including oil and gas tax revenue. It also would remove the Ninilchik Clinic from the SPH service area and a requirement that SPH provide health services or support to the clinic. That resolution also cited statistics showing 30 percent of the Ninilchik population were treated at SPH in the first three quarters 2016. In 2015, 240 Ninilchik residents visited SPH.

In his memorandum, Bagley said, “It can be safely assumed that the vast majority of the people living in the Ninilchik area and north to the current boundary routinely use CPH instead of SPH,” but he does not cite any statistics to support that claim. A whereas clause in the proposed ordinance says that 78 percent of Ninilchik Emergency Services ambulance runs are to CPH.

“What if things were reversed?” Bagley wrote in an email.

He said if the central peninsula had a high mill rate and the lower peninsula a lower mill rate and locals went to SPH, “I am sure if things were reversed there would be much complaining about that.”

Bagley wrote that he understood the boundary change would hurt the finances of SPH.

“But that is the only argument, because you can’t argue about which direction people are going for their medical service,” Bagley said in his email.

He noted that if the service area were changed, people in the former SPH service area would still pay the portion of the mill rate dedicated to debt.

“So people will still be paying long into the future for a hospital that the majority don’t use,” he wrote.

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