Homer Alaska - Business

Story last updated at 1:50 PM on Wednesday, February 8, 2012

Soldotna hospital, private doctor wrestle with cancer center proposals

By Brian Smith
Morris News Service - Alaska

Two entities have proposed building a multi-million dollar cancer treatment center in the central Kenai Peninsula, but both contend the area can only support one — and neither one is currently backing away from their plans.

Central Peninsula Hospital, under the direction of Chief Executive Officer Rick Davis, and the newly formed Peninsula Cancer Center, under the direction of Anchorage-based Dr. John Halligan, want to bring radiation oncology services to the area.

Peninsula Cancer Center wants to build its own facility off, but near the Central Peninsula Hospital campus in Soldotna, own the land it sits on and charge both professional and technical fees associated with cancer treatment. It expects to treat about 350 patients per year who would otherwise go to Anchorage or Seattle for care. Land for the center has already been purchased.

CPH wants to build a facility to house radiation oncology services and eventually others as part of a larger cancer treatment operation on its campus and lease out the building to radiation oncologists, who would still collect the professional and technical fees.

"The radiation oncology is basically phase one of a bigger project," Davis said.

A key part of building any cancer center is purchasing a linear accelerator, which is used in radiation oncology. If a hospital wants to put in its own accelerator, it would need to acquire a Certificate of Need from the state. But, if a private physician wants to purchase and install the same piece of equipment, he or she doesn't need a CON because the state views it "like a doctor putting in a piece of equipment for his own patients," Davis said.

Any building would likely cost millions in addition to the multimillion-dollar linear accelerator.

The CPGH Inc. board unanimously approved Jan. 26 a resolution to move forward with planning of the center and to request a fund allocation from the borough, which would require further judgment from the assembly. Borough Mayor Mike Navarre said the item would be introduced at the assembly's Feb. 14 meeting, and a decision would likely be made in March after public comment.

Davis said CPH has been examining the possibility of bringing cancer services to the area for a long time and had been in discussions with Halligan since early 2011 under the supervision of former CEO Ryan Smith, along with Dan Moore, CEO of the Tennessee-based health care management company RBS Evolution, who is handling Halligan's proposal.

But the two sides disagree on what was said during the time from August, when serious talks started between the two, until late December when CPH sent out a request asking for Alaska radiation oncologists to bid on providing services in the area.

Halligan said he was surprised by CPH's announcement it would build its own center.

"There was a sudden difference — Rick used the words, 'Plans have changed' and he basically said, 'We are going to build the cancer center on the grounds of the hospital as part of this big project,'" Halligan said.

"We felt this was rather a dramatic change and not in the hospital's best interest because they are going to spend several million dollars to build this center when we are offering to bring it down there at no cost to the hospital and actually make money for the hospital."

Smith, now the CEO for Memorial Hospital of Converse County in Wyoming, and Davis both said there are currently only two radiation oncologists in the area — Halligan and Dr. Richard Chung of the Anchorage & Valley Radiation Therapy Centers.

Davis said last week he did not receive a letter of interest to partner on CPH's proposal from Halligan, but did receive a letter showing interest from Chung.

"We are committed to go ahead and build the cancer center," Halligan said.

"Right now I am expecting them to change their mind and try to partner with us because our deal makes a lot more sense theirs does," Davis said.

Both sides' argument comes back to whether the center should and can be located on CPH's campus. If Halligan's center is built, inpatients at CPH would need to be transported via ambulance to receive care.

"I don't think you could find anyone who doesn't agree that it is better to have radiation oncology on campus than it does off campus," Davis said. "It is closer to the services, the imaging and the lab and infusion and you have inpatients that require radiation oncology and if it is not on campus they have to be discharged from the hospital, put in an ambulance and driven across the street every day they are in the hospital to get their cancer treatments."

Halligan contends, however, the majority of cancer patients he would see are not inpatients.

"It would be by my estimate two or three patients a month might be inpatients being treated with radiation therapy for one or two days before they are discharged from the hospital," he said.

However, Halligan and Moore both said Smith "encouraged" them to build the cancer center off-campus in August and that CPH made it sound as if it wouldn't proceed with their plans.

"I didn't promise anybody anything," Smith said. "... We were interested in making sure residents on the peninsula had those two services available to them on the peninsula — both medical and radiation oncology — and we weren't exactly sure how we were going to get there, but it is very complicated how you get there.

"These guys in the meantime were sharks in the water smelling their opportunity to build a cancer treatment center and make millions of dollars ... by building a professional and technical component."

Smith said CPH was previously interested in working with the group, but disclosed it would need time to go through the processes required because of its status as a non-profit, government-owned hospital.

"Because we are owned and governed by the Kenai Peninsula Borough, our plans all get laid out in the public and everybody knows what we're doing and in the meantime these guys are going about securing land and building a cancer treatment center," Smith said.

Specifically, if the hospital were to build the center on campus, it would require an extension of the current lease and operating agreement — the document that regulates hospital management responsibilities and actions among the Central Peninsula General Hospital Inc. Board, the borough mayor and assembly, and the Service Area Board.

"Or we could possibly make the building lease assignable to the next operator and have the lessee, the borough, and the board agree to that," Davis said. However, the hospital was not willing to have those negotiations until after the borough mayor elections had finished in October and a new administration was seated, Davis said.

Halligan and Moore, Davis said, told them they didn't want to wait that long to build the center and asked about putting it where they are now proposing — on the other side of the street from Peninsula Internal Medicine.

"We didn't have an answer for that because we couldn't move any faster," Davis said, citing both changes in borough and hospital administration and the required assembly process.

"We continued on like we said we were going to do even last summer," he said.

Moore took issue with that, however.

"If I would have had a tape recorder I could give you a direct quote, 'On-campus or off-campus isn't as important as bringing cancer treatment to the area,'" he said. "So we were very surprised with that statement when we said, 'We're bringing cancer treatment to the area' and they said, 'We don't want you to do that.'"

Kenai Peninsula Borough Mayor Mike Navarre said the dual cancer center proposals should not be viewed as an unsolvable spat between the two sides, but merely "jockeying" for position in the matter.

Navarre said he hopes to ease tensions and open lines of communication again as the borough prepares to place an ordinance on the borough assembly agenda regarding the matter at its Feb. 14 meeting. The issue must be taken up as soon as possible, he said, so center construction deadlines can be met and a center built by the end of the year.

"There is ongoing discussions about the cancer center and I have had discussions with Dr. Halligan, and about what is best for the patients and for residents whether on the hospital campus or off site," Navarre said last week. "Every other (cancer) center in Alaska is on a hospital campus. It is really the preferred method for customer care."

The ordinance likely to be introduced next week will be up for public testimony at the assembly's Feb. 28 meeting.

"However, introduction is not passage," Navarre said. "So if it turns out that the discussions break down, or that Dr. Halligan says, 'No, I am not interested any longer, I want to build my own and I want to build it off-campus and I want to use my own funds,' then I think at that point both the hospital board and the borough say, 'OK, well we can't force you not to do that even though we think it is best to have it on campus and we are not going to compete with you in that regard,' because I think it would end up with too much public controversy and it would end up in another battle that isn't necessary."

Navarre said the borough needs to "dial back the controversy a little bit" and focus on a long term hospital plan and not "rhetoric."

The discussion should not be viewed as the borough "rushing forward and spending their money," either.

"It is really to keep the options open in case there is a consensus of opinion," he said. "Then the public process could still be met in terms of construction and the various approvals that it could go through. Private sector, they could do it much quicker — they don't have to get approval from the assembly, they don't have a public hearing process. If they decide to do it, they can do it.

"But from our standpoint it takes much longer so if we want to accomplish it, we have got to keep the options open."