Homer Alaska - News

Story last updated at 4:36 PM on Wednesday, May 2, 2012

Hospital to purchase clinic

By McKibben Jackinsky
Staff Writer

After almost a year of planning, the Kenai Peninsula Borough-owned South Peninsula Hospital is taking steps to purchase Homer Medical Clinic.

Marcus A. Mueller, the borough's land management officer, said in a memo to the borough assembly the purchase of the clinic is consistent with the hospital's strategic plan to provide services that increase use of the hospital "as a first choice medical facility and service point in the service area." The hospital is managed by South Peninsula Hospital Inc., a nonprofit local organization.

"It will be a very positive move for the community and for the Homer Medical Clinic and for the hospital," said Robert Letson, the hospital's CEO.

"I think it will be a good move toward keeping health care available for the folks of Homer and keeping the hospital viable and keeping us the healthiest community in Alaska," said Dr. William Bell, owner of Homer Medical Clinic.

The purchase of the clinic was sparked by conversations between Bell and Letson. Bell was facing increasing clinic management demands in addition to his clinical practice. At the same time, the hospital was struggling to recruit new physicians.

Letson said aligned hospitals and physicians do "a much better job of recruiting physicians to the community than either one individually." That became evident in the past year when the hospital lost the services of two physicians and was challenged to recruit replacements.

"Doctors coming out of residency want to be employed by a hospital system or a very large clinic system. They are not wanting to be entrepreneurs like doctors from 20 years ago or more," said Letson. "It is a much more effective way to maintain physicians in a community to keep continuity and try to attract new physicians when we do that through hospitals and doctors together. An employment situation is the best way to do that."

That relationship allows hospitals to take over administrative details while doctors focus on clinical management of patients, according to Letson.

Two resolutions unanimously passed by the borough assembly at its April 3 meeting have authorized the borough to:

• Enter into a 5-year lease of the 4,904-square-foot building in which the clinic is located at 4136 Bartlett Street, with two 1-year renewal options, for a monthly rental fee of $9,808;

• Enter into a five-year lease of 1,500-square-feet of clinical space at 4117 Bartlett Street for the monthly rental of $3,000;

• Enter into a two-year lease of 700-square-feet of business office space at 309 W. Fairview Ave., for the monthly rental of $1,500; and

• Purchase $146,545 of office equipment at those three locations.

The transition is expected to be gradual, with no immediate changes to current practices, staff and systems at the clinic. It is anticipated the three leases will be finalized by July 1, the beginning of the hospital's fiscal year, with the clinic operating under the name of South Peninsula Hospital Homer Medical Center.

Proposals in the new Affordable Care Act, such as requirements related to electronic health records and bundled payments to hospitals and physicians based on diagnosis, also played a role in the hospital's purchase of the clinic, as did a desire to keep health care local.

"In trying to work with Homer Medical Clinic and our other doctors, I want us to work very closely together so there's not any reason for someone outside of Homer to come in and start meeting those needs," Letson said.

Finally, he noted a trend toward increased outpatient care, resulting in hospitals working with medical staff in outpatient services and care.

"It was all of those reasons, with recruitment and retention of good doctors probably the largest factor," said Letson.

According to a study done by a consultant, the hospital believes it will break even on clinic operations. Services the clinic will provide the hospital are anticipated to be financially positive. Purchase of the equipment is being paid in several payments out of hospital operating funds. A physician who has been practicing through a family practice residency in Anchorage will join the staff in September, making it possible to recapture revenue lost by the departure last year of the two physicians.

"When we are able to bring in a new physician who does well and offers a new service it helps the financial economic status of the hospital," said Letson.

Several other physicians also are expected to arrive within the next year. Information on those physicians will be made available by the hospital once the agreements are signed, said Letson.

Dr. Paul Eneboe opened Homer Medical Clinic in 1967. Bell began working for Eneboe as a student in 1975, and became full-time with the clinic in 1981. The clinic's full- and part-time staff of 30 includes three physicians, four nurse-midwives and two physician's assistants.

Under this new arrangement, Bell will remain the clinic's medical director; clinic staff will become hospital employees.

"This seemed like a very reasonable move to make given the political climate of where health care is going in the nation," said Bell of the purchase.

"It was brought home to us when we were trying to recruit doctors. No one wanted to work for a clinic. We read the handwriting on the wall," he said.

While Bell anticipates the public will see little change as a result of the purchase, there is one change especially positive for clinic staff.

"They're happy because we'll be able to offer them health insurance and other benefits through the hospital that we weren't able to do as a clinic," said Bell. "They're very excited. I definitely think this is a win-win situation."

Bell said negotiations are underway to expand the clinic's scope of services, but declined to give details at this time.

Attempts by another hospital to purchase the clinic would not have been looked upon as favorably as the arrangement with South Peninsula Hospital, according to Bell.

"Our focus has always been to support the hospital for the 30 years we've been in business," he said. "If the hospital is viable, we're viable. If we're viable, the hospital is viable."

Asked what would have happened if the clinic and hospital had not reached an agreement, Bell said, "There probably would have been some point when I was ready to retire and no one would want to take over the practice. That's kind of the way it was looking."

That scenario was noted by Bill Smith, who represents the city of Homer on the Kenai Peninsula Borough Assembly and has served on the hospital's service area board.

"(The purchase) makes it a lot easier to recruit physicians because they have the bigger organization of the hospital to work within ... whereas otherwise if a chief physician like Bell decided to retire and couldn't find a replacement, the clinic would just close," said Smith.

Discussions similar to those between the hospital and Homer Medical Clinic also were held with Kachemak Bay Medical Clinic, said Letson.

"I think at the moment they are happy with the way their operations are going," he said. "That's good. We are very busy trying to pull everything into place right now. We have enough to do."

McKibben Jackinsky can be reached at mckibben.jackinsky@homernews.com.