Assembly Discusses Selling Hospital Building

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Jennifer Canfield/KMXT

At Thursday’s work session, the Kodiak Island Borough Assembly discussed the possibility of selling the hospital building it currently leases to Providence. Borough administration says revenue from the lease is $720,000 per year, but that’s not enough to cover operating costs and depreciation. In fiscal year 2010 the borough lost over $230,000 and in FY 09 nearly $300,000.

The current 20-year lease expires in 2017 and is without a clause that would allow the borough to raise the rent and make up some of the loss.

Assemblywoman Louise Stutes doesn’t see the lease as fair to the people of Kodiak who she says are paying higher-than-average medical costs. Stutes said that she can’t use her insurance at the hospital for anything other than emergency room visits because the rates are so high.

(Hospital Sale 1 :21 sec "It’s a beautiful hospital. We all are happy to have a hospital but it shouldn’t be costing us the kind of money it is. When they have a 20-year lease I would expect Providence at the very least to say, ‘Look, you’ve given us a deal on this lease, we’re going to try and keep our costs down.")

Assemblywoman Carol Austerman says that she has learned a lot about Providence in her last year on their board. She says that the hospital gives back over $2 million a year in charitable care to Kodiak residents.

(Hospital Sale 2 :23 sec "The profit that they do seethey are a non-profit– it goes back in to our own hospital in the form of capital expenditures and so they’re buying new equipment for Kodiak. It’s been very clear for me, seeing those financials, that they are working for our community.")

The assembly is considering all aspects of the issue. There is money from the Alaska legislature and a grant that might have to be paid back if there is a sale. And then there is the question about the bonds that were issued to pay for the hospital. Are they callable (cullable) or are they not? If they are then they could be bought back anytime and a sale could happen, with one-year notice and first dibs to Providence. If they aren’t callable, the sale would have to wait until February 2014 when the bonds mature.

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