Legislature(2001 - 2002)

04/02/2002 03:02 PM HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 407-CERTIFICATE OF NEED PROGRAM                                                                                            
[Contains testimony relating to SB 256, the companion bill]                                                                     
CHAIR DYSON announced the next  order of business, HOUSE BILL NO.                                                               
407,  "An  Act relating  to  the  certificate of  need  program."                                                               
[Before  the committee  was Version  F, 22-LS1389\F,  Lauterbach,                                                               
3/21/02, adopted as a work draft on 3/26/02.]                                                                                   
Number 1142                                                                                                                     
CHAIR DYSON  called an at-ease  at 3:22  p.m.  He  reconvened the                                                               
meeting at 3:24 p.m.                                                                                                            
Number 1246                                                                                                                     
CHAIR  DYSON moved  to adopt  Amendment 1,  which read  [original                                                               
punctuation and line numbering provided]:                                                                                       
     1  Page 2, following line 19:                                                                                              
     2  Insert new bill section to read:                                                                                        
      3  "*Sec. 3  AS 18.07.031 is amended by adding a new                                                                  
         subsection to read:                                                                                                  
     4         (d) Notwithstanding the expenditure                                                                              
         thresholds, population thresholds, and                                                                                 
     5  other provisions of this section, a person may                                                                          
         not convert the use of a bed in a health                                                                               
     6  care facility to another bed, including                                                                                 
         converting adult psychiatric beds to psychiatric                                                                       
     7  beds designated for adolescents and children,                                                                           
         unless authorized under the terms of a                                                                                 
     8  certificate of need issued by the department."                                                                          
     10  Renumber Sections as appropriate.                                                                                      
     11  Page 6, line 3:                                                                                                        
     12        Delete "secs. 1 - 12"                                                                                            
     13        Insert "secs. 1 - 13"                                                                                            
REPRESENTATIVE WILSON objected for purposes of discussion.                                                                      
Number 1281                                                                                                                     
KATHY  CRONIN, Chief  Executive  Officer,  North Star  Behavioral                                                               
Health  System   ("North  Star"),  explained  that   Amendment  1                                                               
requires  a  facility  to  stay  within  the  provisions  of  its                                                               
original certificate  of need  (CON).  If  the facility  wants to                                                               
convert those  beds to another type  of bed, it would  need to go                                                               
through the  CON process.  She  said North Star believes  this to                                                               
be  important because  of  the large  Medicaid  impact on  mental                                                               
health beds.                                                                                                                    
MS. CRONIN explained that in  1996 the legislature recognized the                                                               
need to  control expansion  of nursing home  beds because  of the                                                               
large Medicaid impact.  She  said psychiatric beds are similar in                                                               
that 85 percent of all psychiatric  beds are paid for through the                                                               
Medicaid  system.   As  funds  become  increasingly tighter,  she                                                               
said, North  Star feels it is  important to look at  the best use                                                               
of  state dollars  for  treatment and  to  provide those  dollars                                                               
where treatment is most necessary.   Her experience at North Star                                                               
has  shown  her  that  the  greatest need  for  services  is  for                                                               
residential treatment,  which is different  from hospitalization.                                                               
Currently,  Alaska  has  400 children  in  residential  treatment                                                               
centers outside the state.                                                                                                      
MS. CRONIN told members, "I  think it's really incumbent upon all                                                               
of  us  as  citizens  that  these  kids  come  home  and  receive                                                               
treatment in their home community."   She suggested that the only                                                               
way these  children will be able  to return is for  the number of                                                               
these beds  to be  expanded in the  state, which  requires funds.                                                               
If  [Alaska] continues  to provide  funding for  acute, intensive                                                               
beds,  however,  she  doesn't  believe money  will  be  left  for                                                               
residential beds.  Therefore, Amendment  1 protects the number of                                                               
acute-care  psychiatric  beds currently  in  the  system, and  it                                                               
requires that new beds must go through the CON process.                                                                         
Number 1409                                                                                                                     
CHAIR DYSON  expressed his understanding  that Amendment  1 calls                                                               
for [providers] seeking  to change the designation of  beds to go                                                               
before the  [Department of  Health and  Social Services]  with an                                                               
amendment, in essence, to the original CON.                                                                                     
MS. CRONIN  replied, "Essentially,  I believe it  would be  a new                                                               
application  that  would explain  or  would  prove the  need  for                                                               
additional psychiatric beds."                                                                                                   
CHAIR  DYSON inquired  about a  hypothetical facility  [should HB
407  pass with  Amendment 1]  that  hadn't gone  through the  CON                                                               
process originally and that changed the use of a bed.                                                                           
MS. CRONIN  answered, "I believe  under this amendment,  in order                                                               
to change that  level of service, it would  require a certificate                                                               
of need."                                                                                                                       
Number 1480                                                                                                                     
CHAIR  DYSON asked,  "If Representative  Coghill's bill  [HB 407]                                                               
passes and  becomes law, and  a facility  can be built  without a                                                               
certificate of  need, why would you  want them to have  to have a                                                               
certificate of need to change ... what they were doing?"                                                                        
MS.  CRONIN  replied that  she  was  limiting  the scope  of  her                                                               
testimony to  psychiatric care; it  is [North  Star's] contention                                                               
that because of the great impact  on the state budget and because                                                               
of  the  need  to  expand  services,  those  services  should  be                                                               
required  to  go through  the  CON.    In further  response,  she                                                               
expressed  her  understanding  that   under  HB  407,  areas  not                                                               
requiring a CON would not need  one [to change the designation of                                                               
Number 1540                                                                                                                     
REPRESENTATIVE  WILSON   inquired  about   lines  6  and   7  [of                                                               
Amendment 1],  which read  in part,  "including converting  adult                                                               
psychiatric beds  to psychiatric beds designated  for adolescents                                                               
and children".                                                                                                                  
MS.  CRONIN  replied that  the  majority  of Medicaid  funds  for                                                               
mental  health  treatment  are  for  services  for  children  and                                                               
adolescents, rather  than adults.   Thus there  would be  a large                                                               
fiscal impact  if adult  beds were changed  to beds  for children                                                               
and  adolescents,  for  two  reasons:    first,  there  are  more                                                               
admissions for children and adolescents,  and, second, the length                                                               
of stay  for children and  adolescents is much greater  when they                                                               
are hospitalized.                                                                                                               
Number 1586                                                                                                                     
MS. CRONIN,  in further response  to Representative  Wilson, said                                                               
her basic  concern is  simple:  the  cost of  acute-care services                                                               
for mental  health can range from  $1,500 to $562 a  day, whereas                                                               
the cost for residential treatment is $325 a day.  She said:                                                                    
     If we  truly believe, as  a state, that  it's important                                                                    
     to bring the 400 children  who are Outside in treatment                                                                    
     centers  home for  treatment, we  need  to stretch  our                                                                    
     Medicaid dollars as  far as we can.  If  we continue to                                                                    
     build and  support or convert  acute-care beds  at that                                                                    
     1,500-  or  500-dollar-a-day   rate,  I  don't  believe                                                                    
     there'll be enough  money left for the  service that is                                                                    
     really  needed, which  is residential  treatment, which                                                                    
     is reimbursed at  $325 a day.  So, in  a nutshell, what                                                                    
     we are trying  to educate the legislature  about is the                                                                    
     huge  difference  in  payment  for  acute  care  versus                                                                    
     residential  treatment,  and  being  able  to  preserve                                                                    
     dollars  so that  we can  expand residential  treatment                                                                    
     services, so we can bring these kids home.                                                                                 
Number 1651                                                                                                                     
REPRESENTATIVE  WILSON  asked, "Instead  of  taking  care of  one                                                               
patient, you want to take care of three patients?"                                                                              
MS. CRONIN  said that was correct.   She added that  [North Star]                                                               
believes it is  a more appropriate placement  for these children.                                                               
She explained that on any given  day at North Star Hospital, 9 to                                                               
15  children are  hospitalized at  that  higher acute-care  rate,                                                               
waiting for a  residential treatment bed outside of  Alaska.  She                                                               
said, "They shouldn't be there.   They should be in a residential                                                               
program,  which is  a different  method of  treatment than  acute                                                               
care."  Adding  that she has observed that [acute  care] is not a                                                               
healthy  placement,  she  remarked,  "We hope  that  people  will                                                               
understand this  and will  fund those kids'  going to  this lower                                                               
level  of  care."    She  likened it  to  keeping  a  patient  in                                                               
intensive  care instead  of  a  more appropriate  assisted-living                                                               
facility.  "We  think it's better for the kids,  and we know it's                                                               
more  cost-effective  for  the state,  and  that's  what's  we're                                                               
trying to do," she concluded.                                                                                                   
Number 1708                                                                                                                     
CHAIR  DYSON  noted that  in  an  earlier conversation  with  Ms.                                                               
Cronin, he'd  struggled with  understanding why,  if the  need is                                                               
for  residential beds,  facilities  aren't being  built; why  the                                                               
marketplace demand isn't  making it work; and  why the government                                                               
needs  to be  involved.    He asked,  "By  forcing  people to  go                                                               
through some kind  of an approval process, what good  is it going                                                               
to do?"                                                                                                                         
MS.  CRONIN responded  from a  business perspective,  noting that                                                               
the state  is the primary  payer, since  85 percent of  all bills                                                               
are  paid by  the state.   The  Medicaid system  in Alaska  has a                                                               
priority ranking  for how bills are  paid.  Acute care  gets paid                                                               
first, which is  appropriate because these patients  are the most                                                               
ill.  The  levels of payment decrease; once the  monies are gone,                                                               
the other  items on  the list are  not funded at  all.   For many                                                               
years, items  on the list  such as psychological and  social work                                                               
services never  get funded  because there  isn't enough  money to                                                               
reach that [lower] priority ranking.   She added, "My concern is,                                                               
if we continue  to build and support that highest  level of care,                                                               
that most expensive  level of service, as you go  down that list,                                                               
there's  less   and  less  money   available."     Therefore,  an                                                               
institution  would have  to  seek  a loan  and  build a  facility                                                               
without knowing  whether there will  be [Medicaid] funds  left to                                                               
pay for the lower level of care.                                                                                                
CHAIR DYSON asked whether all the acute-care beds are filled.                                                                   
MS. CRONIN  replied yes.   She mentioned, however, that  if there                                                               
were more  residential beds,  she doesn't  believe all  of [North                                                               
Star's] acute-care beds would be filled.   "No kids stand in line                                                               
waiting to  go Outside  for acute-care  treatment, but  there are                                                               
kids every  day in our  state waiting in  line to go  Outside for                                                               
residential," she added.                                                                                                        
Number 1825                                                                                                                     
CHAIR DYSON  offered his understanding  that if [North  Star] had                                                               
the residential  beds, Ms. Cronin,  as a professional,  would put                                                               
children in these  placements that are two to  five times cheaper                                                               
because it's more appropriate, even  though the reimbursement for                                                               
acute-care beds is far higher.                                                                                                  
MS.  CRONIN concurred  and  added, "In  fact,  that's what  we've                                                               
done."    She explained  that  [North  Star] had  two  facilities                                                               
licensed  as acute-care  facilities.   Recognizing that  [Alaska]                                                               
was sending  a high number  of children Outside,  however, [North                                                               
Star] decided to  convert one to a  residential treatment center,                                                               
which has had 100-percent occupancy since the conversion.                                                                       
CHAIR DYSON asked if a CON was required to do that conversion.                                                                  
MS. CRONIN  replied, "No.  But  we had to give  up our acute-care                                                               
license to do [it]."                                                                                                            
CHAIR  DYSON inquired,  "If [Amendment  1] to  this bill  passes,                                                               
would you have had to do a CON to convert those?"                                                                               
MS. CRONIN replied yes.                                                                                                         
Number 1878                                                                                                                     
ELMER LINDSTROM,  Deputy Commissioner,  Department of  Health and                                                               
Social  Services (DHSS),  concurred with  Ms. Cronin's  statement                                                               
about the need for additional  residential capacity in the state.                                                               
He referred  to SCR  21, previously heard  by the  committee, and                                                               
said  this resolution  makes the  statement  that [Alaska]  needs                                                               
additional  non-acute beds;  the  department  supported that  and                                                               
believes it needs to be done, he said.                                                                                          
MR. LINDSTROM stated that [DHSS]  could accept [Amendment 1], but                                                               
that  it's  only  half  of   the  equation.    He  expressed  his                                                               
understanding  that the  sponsor  [Representative Coghill]  might                                                               
offer an amendment related to AS 18.07.031(b) that reads:                                                                       
     (b)  Notwithstanding the  expenditure threshold  in (a)                                                                    
     of this  section, a person  may not convert  a building                                                                    
     or part of  a building to a nursing  home that requires                                                                    
     licensure  under AS  18.20.020 unless  authorized under                                                                    
     the  terms  of a  certificate  of  need issued  by  the                                                                    
MR.  LINDSTROM  explained that  this  provision  in existing  law                                                               
precludes the  creation of  any additional  nursing home  beds in                                                               
Alaska by  converting from another type  of bed.  Those  are beds                                                               
that  [the state]  pays for  at  85 percent  of the  market.   He                                                               
offered  that  the  department  also  agrees  with  Ms.  Cronin's                                                               
statement that psychiatric beds are  similar.  Medicaid "pays the                                                               
freight" on  those beds; therefore,  it might make good  sense to                                                               
control costs by  precluding the conversion of any  beds to acute                                                               
psychiatric beds, because the [state]  will pay the bulk of those                                                               
MR. LINDSTROM  noted that [Amendment  1] does  this in part.   He                                                               
suggested  that the  committee  consider  amending the  foregoing                                                               
statute  to   simply  include  acute   psychiatric  beds.     The                                                               
deficiency in [Amendment  1] is that, for  example, some existing                                                               
residential beds  of any type  could be converted  to psychiatric                                                               
beds without  a CON.   [Amendment 1] precludes conversion  of bed                                                               
licensed as an acute bed or  other health care facility for which                                                               
statute  has  a  definition;  however,   it  would  not  preclude                                                               
conversion  of  other types  of  beds.    He stated  that  [DHSS]                                                               
believes that  if this  step is  taken, it  ought to  include all                                                               
Number 2010                                                                                                                     
CHAIR DYSON asked why additional  acute psychiatric beds would be                                                               
created if there aren't enough patients to fill them.                                                                           
MR. LINDSTROM replied that he  believes those acute-care beds are                                                               
full, as are all the  existing [residential treatment psychiatric                                                               
care] beds.   He  said he  also believes,  based on  numbers from                                                               
[the  Division  of  Family  and Youth  Services  (DFYS)]  he  has                                                               
reviewed,  that  the  occupancy  rate  has  been  approaching  90                                                               
percent of  other types of residential  beds.  He said,  "I think                                                               
the  real  answer, Mr.  Chairman,  is  perhaps we  need  capacity                                                               
across the  entire spectrum of care  here."  He added  that since                                                               
acute-care beds  are the  most expensive, it  is wise  to proceed                                                               
with care.   "All  the beds  are full, is  the short  answer," he                                                               
CHAIR DYSON remarked that he  still didn't see why [Alaska] would                                                               
want  to put  any restriction  on  building all  the beds  people                                                               
want; then the people who need those beds would fill them.                                                                      
Number 2085                                                                                                                     
MR. LINDSTROM answered  that [the state], as the  payer, needs to                                                               
be careful  about those  most expensive type  of beds;  those are                                                               
the beds controllable by the certificate-of-need process.                                                                       
CHAIR DYSON asked whether Mr.  Lindstrom is concerned that if the                                                               
acute  beds are  filled, people  will end  up in  these beds  who                                                               
shouldn't be there.                                                                                                             
MR. LINDSTROM responded, "I think that's a concern."                                                                            
CHAIR  DYSON offered  that  instead of  working  on the  medical-                                                               
ethics  portion wherein  only people  needing the  most expensive                                                               
beds would  fill them, this is  seeking to control the  number of                                                               
beds available.  He asked if this  was correct.  He said it seems                                                               
the best way to ensure that  only those needing acute beds are in                                                               
them is to have  careful, ethical medical professionals assigning                                                               
patients to those  beds.  Therefore, the payer is  not paying for                                                               
patients who don't  need them to be in expensive  beds.  He said,                                                               
"You  must  not have  confidence  that  that process  is  working                                                               
perfectly, so you're wanting to control the number of beds."                                                                    
Number 2152                                                                                                                     
MR. LINDSTROM agreed this  is a good point.  In  fact, he said, a                                                               
couple  of  different  ethical  dilemmas  come  into  play.    In                                                               
addition  to  the  aforementioned  situation, if  a  DFYS  social                                                               
worker needs to place a child  somewhere and an acute-care bed is                                                               
the  only one  available,  what  is the  ethical  action for  the                                                               
social worker to take?                                                                                                          
CHAIR DYSON suggested that  from a medical-placement perspective,                                                               
if doctors  are doing their  job ethically and are  not motivated                                                               
by greed,  then [the department]  should not have to  worry about                                                               
the number  of acute-care beds.   He queried, "Is what  we're all                                                               
after is  to have  enough beds  available ...  every day  for the                                                               
patients to go into, only the appropriate bed?"                                                                                 
MR. LINDSTROM replied, "Absolutely."                                                                                            
CHAIR  DYSON asked  Mr. Lindstrom  if he  believes the  CON helps                                                               
accomplish this.                                                                                                                
MR. LINDSTROM answered  that [DHSS] believes the CON  is one tool                                                               
to help  control the  number of  those most  expensive acute-care                                                               
beds, and that [Amendment 1] is only half of the piece.                                                                         
Number 2230                                                                                                                     
MS. CRONIN  offered an example.   If a family faces  the decision                                                               
of admitting  a child to  a residential treatment center  in Salt                                                               
Lake  City or  keeping  the  child at  home,  many families  will                                                               
choose to  keep the child  at home.   Often what happens  is that                                                               
the family  keeps the child  at home and the  child decompensates                                                               
and winds up going to acute care.                                                                                               
CHAIR DYSON asked for a definition of "decompensates."                                                                          
MS. CRONIN  said, "Clinically, gets  worse."  She  explained that                                                               
one  challenge in  [mental]  health care  is that  it  is not  as                                                               
clear-cut as  a broken arm,  easily diagnosed  with an x-ray.   A                                                               
child  will need  a level  of care  - in  many cases,  it is  not                                                               
hospitalization - but the services  are unavailable in Alaska, so                                                               
the child  doesn't go  Outside for  treatment because  the family                                                               
wants  to keep  the child  home.   However, these  families don't                                                               
have the  ability to cope  with the  problem, and the  child gets                                                               
worse  and ends  up hospitalized.   She  mentioned the  number of                                                               
reviews, internal  and external, that  a patient goes  through to                                                               
be  hospitalized, and  said it  is hard  to imagine  that someone                                                               
would be admitted to a  hospital inappropriately.  The problem is                                                               
that  there  aren't services  available  to  get the  appropriate                                                               
treatment at the appropriate time, she concluded.                                                                               
Number 2303                                                                                                                     
MR.  LINDSTROM  expressed  his  belief  that  [Amendment  1]  was                                                               
drafted by neither [Legislative  Legal and Research Services] nor                                                               
the  Department  of Law.    He  said  he  doesn't know  what  the                                                               
reference  to converting  adult psychiatric  beds to  psychiatric                                                               
beds for  adolescents and children  means.  While  he understands                                                               
the intent,  he noted that  there is  not a separate  category of                                                               
licensure  for   adolescent  beds  as  opposed   to  adult  beds.                                                               
Technically, he  is not confident  that this language is  what is                                                               
legally necessary  to accomplish  [Amendment 1's] goal,  he said.                                                               
He added that in  order to align with Version F,  lines 12 and 13                                                               
[of the amendment] should read:                                                                                                 
     Delete "secs. 1-11"                                                                                                        
     Insert "secs. 1-12"                                                                                                        
Number 2346                                                                                                                     
REPRESENTATIVE COGHILL, sponsor of HB  407, said this is an issue                                                               
he  didn't  want  to "wade  in  on."    He  agreed it  should  be                                                               
discussed,  and  concurred  with  Mr. Lindstrom  that  it  should                                                               
[encompass  all  types  of  beds].   He  indicated  hesitance  to                                                               
address this issue because he  didn't fully understand all of it,                                                               
although  he  was learning  as  quickly  as  he could,  he  said.                                                               
[Amendment 1 was withdrawn a short time later.]                                                                                 
TAPE 02-27, SIDE B                                                                                                              
Number 2360                                                                                                                     
CHAIR  DYSON brought  attention  to  Amendment 2,  22-LS1389\F.3,                                                               
Lauterbach, 3/27/02, which read:                                                                                                
     Page 1, line 1, following "program;":                                                                                    
          Insert "relating to children's mental health                                                                        
     Page 5, following line 30:                                                                                                 
          Insert a new bill section to read:                                                                                    
        "* Sec.   11.   AS 47.30.660 is amended by  adding a                                                                
     new subsection to read:                                                                                                    
          (c)  The plan prepared, revised, and amended                                                                          
     under (a) of  this section must include,  as a distinct                                                                    
     component, a  master plan for children's  mental health                                                                    
     services.     The  master  plan  required   under  this                                                                    
     subsection must  be developed  in conjunction  with the                                                                    
     Alaska  Mental Health  Trust  Authority, Alaska  Mental                                                                    
     Health  Board, and  Advisory  Board  on Alcoholism  and                                                                    
     Drug  Abuse,  and  must   provide  for  involvement  of                                                                    
     families   of   emotionally  disturbed   children   and                                                                    
     adolescents,  community  mental health  providers,  and                                                                    
     providers  of   residential  and  inpatient   care  for                                                                    
     children and adolescents.   After gathering information                                                                    
     through methods determined  appropriate, the department                                                                    
     shall prepare  the master plan, which  must include the                                                                    
               (1)   recommended  principles that  should be                                                                    
     used to guide development  of a comprehensive system of                                                                    
     care to  meet the mental  health needs of  children and                                                                    
               (2)     an  estimate   of  the   current  and                                                                    
     projected  number of  children and  adolescents in  the                                                                    
     state who  are suffering severe emotional,  mental, and                                                                    
     substance disorders;                                                                                                       
               (3)   a description of the  current system of                                                                    
     care   for  children   with   emotional,  mental,   and                                                                    
     substance disorders, including  the type, capacity, and                                                                    
     geographic availability of care;                                                                                           
               (4)   an  assessment  of the  ability of  the                                                                    
     existing  service system  to  meet  the identified  and                                                                    
     projected   needs,    including   an    assessment   of                                                                    
     utilization and factors affecting utilization;                                                                             
               (5)   an assessment  of gaps  in the  type or                                                                    
     capacity of services needed;                                                                                               
               (6)    the  array and  capacity  of  in-home,                                                                    
     community-based,   residential,   and  inpatient   care                                                                    
     needed  to  meet the  current  and  projected need  for                                                                    
     screening,  diagnosis, and  treatment  of children  and                                                                    
     adolescents in  the state who are  suffering emotional,                                                                    
     mental, and substance disorders;                                                                                           
               (7)   an analysis of impediments  limiting or                                                                    
     preventing  development or  operation  of the  services                                                                    
     and capacities needed;                                                                                                     
               (8)   recommended  priorities  for action  to                                                                    
     reconfigure,  expand, or  enhance existing  services or                                                                    
     to develop new service alternatives;                                                                                       
               (9)    an  estimate of  resources  needed  to                                                                    
     develop and support the system of services required."                                                                      
     Renumber the following bill sections accordingly.                                                                          
     Page 6, line 3:                                                                                                            
          Delete "secs. 1 - 11"                                                                                                 
          Insert "secs. 1 - 10 and 12"                                                                                          
     Page 6, following line 5:                                                                                                  
          Insert a new bill section to read:                                                                                    
        "*  Sec. 14.   The  uncodified law  of the  State of                                                                  
     Alaska is amended by adding a new section to read:                                                                         
          MASTER   PLAN   FOR   CHILDREN'S   MENTAL   HEALTH                                                                    
     SERVICES.    The initial  master  plan  required to  be                                                                    
     prepared  under AS 47.30.660(c),  added by  sec. 11  of                                                                    
     this  Act,  shall be  completed  and  delivered to  the                                                                    
     governor by the first day  of the First Regular Session                                                                    
     of the  Twenty-Third Alaska State Legislature,  and the                                                                    
     Department of  Health and Social Services  shall notify                                                                    
     the legislature  that the master plan  is available for                                                                    
     Renumber the following bill section accordingly.                                                                           
[End of Amendment 2]                                                                                                            
CHAIR  DYSON withdrew  [Amendment 1].    He asked  Ms. Cronin  to                                                               
explain [Amendment 2].                                                                                                          
Number 2320                                                                                                                     
MS.  CRONIN explained  that Amendment  2 establishes  a workgroup                                                               
charged with creating a master  plan for children's mental health                                                               
services.   She  reiterated  that 400  children  are Outside  for                                                               
treatment, and  that there  are funding issues  to address.   She                                                               
expressed her belief that [Alaska] needs  a master plan on how to                                                               
best treat  children with  mental health  needs within  the state                                                               
and how to do it in the most economical manner.                                                                                 
CHAIR DYSON told  Ms. Cronin that she would have  to convince him                                                               
before  April  4 why  [Amendment  2]  fits in  a  CON  bill.   He                                                               
returned  to  the  subject  of   the  400  children  Outside  for                                                               
treatment, offering  his understanding  that the average  cost is                                                               
over $800 a day.  This  is a grave concern, both economically and                                                               
as  an  issue   of  separation  from  families,   he  said.  "I'm                                                               
sympathetic on  the issue;  I need some  convincing that  this is                                                               
the vehicle to  accomplish what apparently we both  agree on," he                                                               
concluded.  [There was no motion to adopt Amendment 2.]                                                                         
Number 2230                                                                                                                     
JIM  HOLM,   Member,  Board  of  Directors,   Fairbanks  Memorial                                                               
Hospital Association, noting that  he is a Fairbanks businessman,                                                               
testified  to  provide  [the  board's]  assessment  of  what  the                                                               
proposed  CON change  might do  to  [Fairbanks Memorial  Hospital                                                               
(FMH)].    He  reported  that  in  1967  there  was  a  flood  in                                                               
Fairbanks, where  Saint Joseph  Hospital, run  by the  Sisters of                                                               
Providence, was the only hospital.  He elaborated:                                                                              
     The hospital  was damaged sufficiently enough  that the                                                                    
     Sisters  of  Providence  decided  that  they  could  no                                                                    
     longer  support the  medical and  health care  needs of                                                                    
     the  people of  Fairbanks.   The  community itself  got                                                                    
     together, and with the visionaries  such as Dr. William                                                                    
     R. Wood  and Harry  "Red" Porter  (ph) and  people that                                                                    
     had  been there  for many,  many years,  they set  up a                                                                    
     foundation to  see what we  could do about  a community                                                                    
     creating its  own hospital,  providing the  health care                                                                    
     ...  for the  people  of Fairbanks.  ...  I'm one,  but                                                                    
     there's many  others that  gave a  few dollars  when we                                                                    
     didn't have  money, to help  get this thing ...  on its                                                                    
     feet.  And then, over  the past 30 years, this hospital                                                                    
     has become a really fine institution.                                                                                      
Number 2164                                                                                                                     
MR.  HOLM   stated  that  FMH  currently   "provides  the  lowest                                                               
ambulatory surgery care" in the  state.  In addition, it provides                                                               
home  care,  which costs  in  excess  of  $250,000 more  than  is                                                               
recovered.    Other  services  such   as  inebriate  programs,  a                                                               
neonatal  facility, adult  psychiatric care,  and emergency  room                                                               
care  aren't profitable.   He  said 25  members of  the Fairbanks                                                               
community  serve on  the board  for no  compensation.   [Members]                                                               
believe that  this matter needs  to be looked at  more carefully,                                                               
he  noted,; it  can adversely  affect the  hospital's ability  to                                                               
function  because the  hospital is  required to  provide services                                                               
without compensation.   Therefore,  if the hospital  is put  in a                                                               
position in which  services can be "cherry-picked"  away, it will                                                               
be unable to afford the services it must provide for free.                                                                      
Number 2113                                                                                                                     
DENNIS  MURRAY, Administrator,  Heritage Place  Nursing Facility,                                                               
testified via  teleconference in opposition to  HB 407, conveying                                                               
particular  concern about  the fiscal  note, which  suggests that                                                               
eliminating  the  CON  in  the  state's  three  major  population                                                               
centers  would significantly  increase the  state's general  fund                                                               
obligation.  He  offered that in his experience,  the CON statute                                                               
isn't  perfect,  but that  the  state  won't  be well  served  by                                                               
removing that process from two-thirds of the state's population.                                                                
MR. MURRAY said as a member  of the Long-Term Care Task Force, he                                                               
knows the task force wrestled  with the balance between community                                                               
nursing-home beds and  other community options.   The language in                                                               
the current [statute], coupled with  legislation passed two years                                                               
ago, would be negated  by [HB 407], he said.   Alaska is, in many                                                               
ways, one  large community:   facility construction  in Anchorage                                                               
affects  Kenai,  for example.    This  is  why the  existing  CON                                                               
process  allows   for  public  oversight  and   scrutiny  of  the                                                               
construction  of publicly  supported  services.   With regard  to                                                               
Amendment 1,  he offered his  understanding that it  includes any                                                               
bed.    He posed  an  example  and  suggested  it could  have  an                                                               
unintended consequence.                                                                                                         
Number 2022                                                                                                                     
CHAIR DYSON asked Mr. Murray  to explain how the Anchorage market                                                               
affects the Kenai market.                                                                                                       
MR.  MURRAY  replied,  "In  terms  of expansion  of  beds  or  no                                                               
certificate of  need, I  think that ...  the history  of Heritage                                                               
Place Nursing Facility  has been somewhat reliant  on serving the                                                               
needs  of persons  from other  parts of  the state,  particularly                                                               
Anchorage.    Currently,  that's   not  our  circumstance."    By                                                               
example, he indicated  there are families in Kenai  with a family                                                               
member in acute  care in Anchorage.  He offered  his opinion that                                                               
the  nursing facility  is  impacted, adding  that  acute care  is                                                               
certainly  impacted.   "I  was  thinking  generically there,  Mr.                                                               
Chairman," he added.                                                                                                            
Number 1991                                                                                                                     
CATHY DIMON  testified via teleconference,  noting that she  is a                                                               
Tanana Valley Clinic  employee but testifying on  her own behalf.                                                               
She stated that  she is in favor of HB  407 and indicated support                                                               
for a new surgery center to be  built in the Fairbanks area.  She                                                               
reported that  her husband recently underwent  cardiac surgery in                                                               
Anchorage;  upon returning  to  Fairbanks,  he needed  outpatient                                                               
care  for   intravenous  antibiotic   therapy,  which   was  only                                                               
available at  the outpatient center  at FMH.   She said,  "Let me                                                               
tell you, this  was an experience in patience.   Not only did the                                                               
outpatient  center  staff  have  little   clue  as  to  what  was                                                               
happening or what was supposed to  happen for his care, they were                                                               
repeatedly running late,  [and] the majority of  the staff seemed                                                               
not to care  that he waited sometimes over  an hour-and-a-half to                                                               
be seen."  She said he was  told not to make appointments, but to                                                               
just "show up and they would work him in."                                                                                      
MS. DIMON asked:   If the only outpatient center  in Fairbanks is                                                               
that busy, why is FMH  worried about another facility coming into                                                               
Fairbanks?   She said  that although  the testimony  against this                                                               
bill  seems to  have  only  come from  FMH  staff,  it seems  the                                                               
hospital is  trying to  get a  corner on the  market.   She asked                                                               
what has  happened to consumer  choice, and suggested  supply and                                                               
demand should apply  to medical care as well.   She suggested the                                                               
benefits of a  new facility would include extra  jobs, more taxes                                                               
paid,  and  choices  for  patients.   She  requested  passage  of                                                               
HB 407.                                                                                                                         
Number 1896                                                                                                                     
MIKE   POWERS,   Administrator,  Fairbanks   Memorial   Hospital,                                                               
apologized to Ms.  Dimon for anything that might  have gone wrong                                                               
and offered  to discuss the  situation with  her.  He  noted that                                                               
the  hospital loses  $100,000 on  cardiac rehabilitation,  and at                                                               
the moment  [FMH] is  the only facility  willing to  provide that                                                               
service to the  community.  He said the CON  issue is nationwide,                                                               
and  that  headlines  in Ohio,  Pennsylvania,  and  other  states                                                               
indicate these  states are experiencing  similar problems.   Many                                                               
of these  relate to struggles  between hospitals  and physicians,                                                               
and  problems  when  both  ethical  and  financial  concerns  are                                                               
MR.  POWERS  stated  that  USA   Today  reported  that  hospitals                                                             
nationwide are engaging  in a "medical arms"  race, scrambling to                                                               
build specialized  cancer and cardiac  programs and  other "niche                                                               
service lines."   This is especially  true in a few  states where                                                               
the  CON has  been eliminated,  he  said; one  expert notes  that                                                               
supply  often dictates  in the  health care  industry; therefore,                                                               
oversupply  of  facilities  equates  to  more  procedures'  being                                                               
performed, whether necessary  or not.  He said that  in New York,                                                               
Rome Memorial  Ambulatory Surgery Center filed  suit against Rome                                                               
Memorial Hospital  in January, alleging  that a  120-bed facility                                                               
drove the  outpatient clinic  out of  business by  negotiating an                                                               
exclusive  agreement  with Blue  Cross  Blue  Shield, the  area's                                                               
largest insurer.   He noted  that court papers indicate  that the                                                               
hospital counters  that the for-profit center  was cherry picking                                                               
the  most lucrative  cases  and refusing  to  take high-risk  and                                                               
uninsured  patients, with  only  secondary regard  to the  public                                                               
health and patients' needs in the larger community.                                                                             
MR.  POWERS  continued,  indicating  that a  Syracuse,  New  York                                                               
newspaper headline  read, "Hospitals Lose Patients  as For-Profit                                                               
Surgery  Centers  Siphon  Off Profits;  One  Hospital  Files  for                                                               
Bankruptcy."   Last summer,  he noted,  a center  specializing in                                                               
orthopedic  surgery  opened  ten miles  from  Syracuse  Community                                                               
Hospital; the hospital expected  to lose 3,400 same-day surgeries                                                               
a  year, more  than  half its  annual volume.    He referenced  a                                                               
hospital that filed for Chapter  11 bankruptcy protection earlier                                                               
this  year; he  noted that  the article  indicated the  community                                                               
must  face  the fact  that  the  hospital's ability  to  maintain                                                               
[service] is being eroded.                                                                                                      
CHAIR  DYSON  suggested  that  Mr. Powers  make  copies  of  that                                                               
information for committee members.                                                                                              
MR.  POWERS said  his point  is  that nationwide,  this issue  is                                                               
playing  out, and  that Alaska  has a  unique and  fragile health                                                               
environment with a  sparse population.  He cautioned  that a bill                                                               
that  essentially  lifts  any  need   for  scrutiny  or  business                                                               
planning could have dire effects  on communities.  In response to                                                               
Chair Dyson,  Mr. Powers said  he thinks the areas  of particular                                                               
concern  are  Fairbanks, Juneau,  the  Kenai  Peninsula, and  the                                                               
Matanuska-Susitna  area,  and that  even  Anchorage  is at  risk.                                                               
Managed care  companies are  not found  in Alaska,  he said.   He                                                               
clarified that only  communities with a population  of 20,000 and                                                               
above would be adversely affected.                                                                                              
Number 1715                                                                                                                     
JANICE WILKINSON  testified via teleconference,  offering support                                                               
for  HB 407  and SB  256.   She noted  that she  is a  laboratory                                                               
manager for  Tanana Valley  Clinic, but was  speaking on  her own                                                               
behalf.  A resident of Fairbanks  for six years, she said she has                                                               
been in health care 30 years,  including her high school years as                                                               
a  candy-striper;  her  career  has taken  her  from  very  small                                                               
communities to  large, urban areas.   She said she  has witnessed                                                               
what happens  in communities  with a  healthy competition  in the                                                               
medical field,  and has witnessed  what happens when  one medical                                                               
facility has  too much control or  power:  it gains  control over                                                               
the community,  fees increase,  no incentive  is present  to meet                                                               
the personal  needs of individual  [patients], and  patients find                                                               
the need  to go elsewhere.   In  this situation, she  noted, both                                                               
the facility and the community are hurt.                                                                                        
MS. WILKINSON  said Fairbanks needs more  competition with regard                                                               
to  its medical  entities.    Indicating FMH  has  had a  massive                                                               
amount of unrestricted growth in the  last few years, she said it                                                               
has developed into  a monopoly, more or less.   She also spoke in                                                               
favor of  having alternatives such  as an  alternative outpatient                                                               
center  in order  to  keep  costs down  and  ensure that  surgery                                                               
revenues remain in Alaska.                                                                                                      
Number 1590                                                                                                                     
BARBARA FLEMING, Member, Board of Directors, Providence Health                                                                  
System, read from a written statement as follows:                                                                               
     My name  is Barbara  Fleming; I serve  on the  Board of                                                                    
     Directors of  Providence Hospital here in  the state of                                                                    
     Alaska.   I  also  sit  as a  trustee  delegate to  the                                                                    
     Alaska State Hospital and  Nursing Home Association, as                                                                    
     well as  the region nine American  Hospital Association                                                                    
     board  member.   So,  I've  many  hats on  this  issue.                                                                    
     During the  past 100 years,  the Sisters  of Providence                                                                    
     have been in  Alaska, and they have  served hundreds of                                                                    
     thousands  of   Alaskans  by  providing   health  care,                                                                    
     education and  food for the underserved,  regardless of                                                                    
     their ability to pay.                                                                                                      
     Additionally,  Providence  has  provided  medical  care                                                                    
     where none existed before and  served those that no one                                                                    
     else  would serve.    Providence  serves the  expanding                                                                    
     population of seniors, children,  and families, and has                                                                    
     been  proactive in  lowering  emergency  room costs  by                                                                    
     operating a family practice clinic  that allows care by                                                                    
     accepting patients  on Medicaid and  Medicare, sliding-                                                                    
     fee  scales, insurance,  and those  in need  of charity                                                                    
     Providence opposes HB  407 because it will  put many of                                                                    
     the existing  programs in jeopardy.   [House  Bill] 407                                                                    
     will also  allow for new  competing surgery  centers to                                                                    
     be  built  without  any review  [or]  consideration  of                                                                    
     whether or  not the  community can  financially support                                                                    
     them.    Statistics  nationwide  indicate  there  is  a                                                                    
     duplication of medical  services, which has contributed                                                                    
     to the increasing costs of health care.                                                                                    
MS. FLEMING continued:                                                                                                          
     Providence provides  services that we know  will not be                                                                    
     reimbursed.     Five   years  ago   the  charity   care                                                                    
     Providence provided  was, roughly, $11 million.   Today                                                                    
     it  has risen  to nearly  $36  million.   Of that,  ...                                                                    
     approximately $10 million ...  is in community benefits                                                                    
     for  places  like  the Brother  Francis  [Shelter]  and                                                                    
     Covenant House -  daily hot meals, roughly  200 of such                                                                    
     to  the   Brother  Francis   Shelter  and   many  other                                                                    
     charitable organizations,  roughly ...  50 just  ... in                                                                    
     the  Anchorage  area.    Our  greatest  concern  is  in                                                                    
     maintaining the programs that we  already have in place                                                                    
     and increasing  those that we  know are going  to grow,                                                                    
     such  as our  Cancer Therapy  Center.   Who will  offer                                                                    
     these medical services if Providence does not?                                                                             
     Eliminating the CON process in  these urban areas would                                                                    
     allow for new  surgery centers that only  serve a small                                                                    
     number of  patients who  can afford ...  to pay.   This                                                                    
     could  quickly erode  the  financial  stability of  our                                                                    
     medical  center and  its ability  to  provide the  many                                                                    
     [un]reimbursed  [services] ...  for a  complete medical                                                                    
     center for all Alaskans.                                                                                                   
MS.  FLEMING  turned  to   concern  about  the  55,000-population                                                               
threshold, saying  she took exception  to this a bit  because she                                                               
believes it  does affect many  of the state's  small communities.                                                               
She explained:                                                                                                                  
     I  spent ten  years in  Seward.   I  recently moved  to                                                                    
     Anchorage,  and the  medical center  [in  Seward] is  a                                                                    
     Providence  facility; they've  supported that  facility                                                                    
     in the  past five years,  to roughly $7 million  in the                                                                    
     red.   It would not be  able to do that  if they didn't                                                                    
     have  a  stable  base,  in Anchorage,  to  the  medical                                                                    
     center.  Outreach as far  as Seward, they deserve that.                                                                    
     People  of Anchorage  deserve  quality  care for  their                                                                    
     parents  in  Providence's  long-term  care  facilities.                                                                    
     People across the region rely  on home health care, and                                                                    
     also  the ...  3,100 ...  [full-time employees]  at the                                                                    
     medical center deserve quality  daycare for their kids.                                                                    
     ... These  services are in  jeopardy, because  they all                                                                    
     have red  ink on  their books,  and those  things would                                                                    
     not be able  to happen, had the medical  center not had                                                                    
     the stability.                                                                                                             
Number 1441                                                                                                                     
MS. FLEMING continued:                                                                                                          
     By changing  the CON  and allowing  independent centers                                                                    
     to  open  in the  larger  cities,  it will  affect  our                                                                    
     ability  to  provide   the  much-needed  services  that                                                                    
     people across the  state are accustomed to.   Again, we                                                                    
     serve everyone,  ... regardless of ability  to pay. ...                                                                    
     These independents  ... don't have a  responsibility to                                                                    
     the community,  as Providence  does. ...  If Providence                                                                    
     doesn't  do this,  who else  will?   The state  will be                                                                    
     left holding the bag for  even greater increases to the                                                                    
     Medicaid budget.                                                                                                           
     One  last  point:    I  know  you've  heard  a  lot  of                                                                    
     conflicting  information regarding  the cost  increases                                                                    
     versus  savings.    For  FY  2003,  the  state's  total                                                                    
     Medicaid  budget  was  $830  million.    Of  this,  $32                                                                    
     million was  a general  fund increase.   Therefore, the                                                                    
     state's Medicaid budget [will]  increase by 23 percent.                                                                    
     This is  a dramatic  jump, and  with my  association at                                                                    
     the state and national  levels, the forecast is gloomy.                                                                    
     You can't afford to speculate on these costs.                                                                              
MS.  FLEMING reiterated  her opposition  to HB  407, noting  that                                                               
Providence also opposes the bill.                                                                                               
Number 1388                                                                                                                     
CHAIR   DYSON  related   his   understanding   from  an   earlier                                                               
conversation with Ms.  Fleming that the excess  revenues are used                                                               
to subsidize many  charitable [services] such as  the [center] in                                                               
Seward,  the   Brother  Francis  Shelter,   [covering]  nonpaying                                                               
emergency  room  patients, and  other  services.   Therefore,  he                                                               
noted that  he understood part  of the argument  to be that  if a                                                               
competing business  comes along and takes  those [excess-revenue-                                                               
generating services],  Providence would not be  able to subsidize                                                               
the many other  services.  Those costs would  eventually be borne                                                               
by the  state and would drive  up the state's Medicaid  costs, to                                                               
the detriment  of all  Alaskans.   He asked  whether this  was an                                                               
accurate summation.                                                                                                             
MS. FLEMING agreed the foregoing was accurate.                                                                                  
Number 1256                                                                                                                     
CAROLYN WATTS,  Ph.D., testified  via teleconference,  noting she                                                               
is a professor  of health economics and policy  at the University                                                               
of Washington  in Seattle.   Dr. Watts said she  was representing                                                               
FMH and her own research on the CON.                                                                                            
CHAIR DYSON noted an extensive resume from Dr. Watts.                                                                           
DR.  WATTS  told  members  her testimony  was  in  opposition  to                                                               
HB 407.   She has  worked in  the health care  area for  27 years                                                               
doing  teaching  and  research in  health  economics  and  health                                                               
policy; much  of this experience  focused on the  organization of                                                               
the  health care  industry  and  its financing  and  the CON,  in                                                               
particular.  She agreed with  the summary offered by Chair Dyson,                                                               
saying  the  financing of  health  care,  both  now and  for  the                                                               
foreseeable future,  is a fragile,  interdependent web  of cross-                                                               
subsidies and  indirect financing.   If everyone were  willing to                                                               
pay  taxes to  support  public programs  to  provide services  to                                                               
people who are  unable to pay for them,  cross-subsidies would be                                                               
unnecessary; competition  would be  fine.   However, this  is not                                                               
how  the health-care  world works,  and it  isn't likely  to work                                                               
that way  in the near  future.   Therefore, she said,  one cannot                                                               
look at this market the way  one might look at the competition in                                                               
the market  for pizza,  for example, because  health care  is too                                                               
important and is part of  the essential community infrastructure,                                                               
particularly in a state like Alaska.                                                                                            
Number 1166                                                                                                                     
DR.  WATTS offered  her  opinion  that the  CON  is an  important                                                               
"piece of the  puzzle" for the whole state, not  just the smaller                                                               
communities.    She  referenced other  speakers'  comments  about                                                               
freedom and  choice, control  and power,  and supply  and demand.                                                               
Again,  she  noted,  "This  isn't  pizza."    She  observed  that                                                               
patients in Alaska,  even those in Anchorage, know  they will not                                                               
have  many  choices  because  the  population  density  does  not                                                               
support such  choice.   Other industries,  including some  in the                                                               
Lower 48, do not offer  choice because stability is so important,                                                               
she said.                                                                                                                       
DR.  WATTS,  citing  the   recent  Enron  [Corporation]  debacle,                                                               
pointed  out  that  [society] understands  that  some  pieces  of                                                               
infrastructure are  so important that  it is necessary  to ensure                                                               
access  to services  at all  times.   She drew  attention to  the                                                               
issue  of ambulatory  surgery in  Fairbanks and  said three  CONs                                                               
were competing for the state's  attention in 1999; all three were                                                               
reviewed  by the  state, which  concluded there  was no  need for                                                               
them  until  2017.    Therefore,   she  suggested  the  issue  of                                                               
inadequate capacity in Fairbanks has been addressed.                                                                            
Number 1098                                                                                                                     
DR. WATTS  said the real  issue is  whether [the state]  wants to                                                               
have hospital  services in  Alaskan communities at  all.   If the                                                               
"intrusion of  the entrepreneurs"  is allowed, "there  are plenty                                                               
of them out  there" who will come in -  not as community members,                                                               
but  as entrepreneurs  - and  take the  profitable services  from                                                               
hospitals  like  Providence  and  FMH.     That  will  leave  the                                                               
hospitals with  the legal  and moral  obligation to  treat anyone                                                               
who comes  to them.   Those hospitals will have  several choices,                                                               
she predicted.   For example,  they could shut down  the services                                                               
that  don't  pay for  themselves,  thereby  precluding access  to                                                               
everyone; hence people would need to go Outside for services.                                                                   
DR.  WATTS said  the  CON  is not  about  excluding a  particular                                                               
facility  or service;  rather,  it is  about  creating a  process                                                               
whereby  communities -  which  have in  many  cases funded  their                                                               
hospitals -  can decide where  and what kind of  competition they                                                               
want.   So the CON  doesn't prohibit competition, but  provides a                                                               
mechanism  to  monitor  it  and  ensure  it  is  consistent  with                                                               
community  goals;   it  allows  good  stewardship   of  community                                                               
DR.  WATTS offered  her opinion  that the  impact on  Medicaid of                                                               
HB 407  could  be  very  large.    She  referenced  Ms.  Cronin's                                                               
comments about psychiatric beds, 85  percent of which are covered                                                               
by  Medicaid.    If  one   part  of  the  market  is  restricted,                                                               
particularly  in a  community like  Fairbanks where  there is  no                                                               
psychiatric hospital, where do those  who cannot get into nursing                                                               
homes  and psychiatric  beds go?   Dr.  Watts offered  that these                                                               
patients  go  to  the  community  hospital.    If  the  community                                                               
hospital is  failing financially because the  profitable services                                                               
are  being provided  elsewhere, there  won't be  the capacity  to                                                               
handle these  patients; consequently,  everyone in  the community                                                               
will suffer,  and the Medicaid  budget will suffer.   She offered                                                               
that the  impact on  Medicaid expenditures  is much  more complex                                                               
than has been presented by Information Insights.                                                                                
DR. WATTS  concluded by  saying the  CON isn't  about prohibiting                                                               
the building  of a specific facility  or prohibiting competition;                                                               
it  is  about  maintaining  a   process.    She  reiterated  that                                                               
competition in health care is  very different from competition in                                                               
other industries.   It is  not about government  control; rather,                                                               
it is about community stewardship.                                                                                              
Number 0945                                                                                                                     
REPRESENTATIVE  KOHRING  observed  that  Dr.  Watts  has  a  very                                                               
extensive background  and has written some  papers about national                                                               
health insurance.   He asked her  to give a brief  summary of her                                                               
thoughts and position on that topic.                                                                                            
DR.  WATTS  stated  that  she   is  primarily  a  researcher  and                                                               
educator, adding,  "I guess I  don't have a  professional opinion                                                               
of  whether   we  should  or   shouldn't  have   national  health                                                               
insurance.  My job is to talk  about what would happen if we did,                                                               
[and] what happens now that we don't."                                                                                          
REPRESENTATIVE KOHRING  expressed concern  that without  [HB 407]                                                               
Alaska  would be  moving towards  socialized medicine,  which, to                                                               
his belief, has proven to be not in a country's best interest.                                                                  
DR. WATTS  respectfully disagreed.   In response to  Chair Dyson,                                                               
she specified that  she was asked to testify by  FMH and was paid                                                               
for doing so.                                                                                                                   
Number 0843                                                                                                                     
RICK  SOLIE,   Trustee,  Greater  Fairbanks   Community  Hospital                                                               
Foundation Board, testified in opposition  to HB 407, noting that                                                               
he  serves  on the  Fairbanks  North  Star Borough  Assembly  but                                                               
wasn't  representing  the assembly's  views.    He said  the  CON                                                               
process, while not perfect, won't  be improved by modifying it in                                                               
this  fashion.   Rather,  he predicted  it  would create  further                                                               
problems,  allowing  cherry  picking  of  selected  services  and                                                               
hurting FMH's ability to pay  for some services that a for-profit                                                               
venture  wouldn't provide  in the  same  manner.   He recalled  a                                                               
hearing several years ago on this  same issue wherein the CON and                                                               
competition were discussed at length.                                                                                           
MR. SOLIE  noted that he has  a degree in economics  and that his                                                               
father had a Ph.D. in the  field.  He said health care, including                                                               
that  in  Alaska,  isn't  simple economics.    He  suggested  the                                                               
discussion  should  focus  on  moving   in  that  direction,  but                                                               
expressed concern about  the short amount of time  in the session                                                               
and at this hearing.  He  recalled that an interim task force was                                                               
discussed two  years ago to  look at  the problems with  the CON.                                                               
He acknowledged  that the hospital  foundation has  some problems                                                               
with [the  current CON process];  it is an uneven  playing field.                                                               
Physicians are able  to get services from their  clinic for which                                                               
[the hospital] must obtain a CON from the state, he noted.                                                                      
Number 0720                                                                                                                     
MR.  SOLIE  referenced an  earlier  amendment,  saying he  hadn't                                                               
understood it,  and believed  the committee  chose wisely  to not                                                               
adopt  it.    He  conveyed  concern that  there  is  a  piecemeal                                                               
approach to  fix the CON due  to the laudable view  that [Alaska]                                                               
should  move  toward a  competitive  process.   He  suggested  if                                                               
members truly  wish to fix  a process  they view as  flawed, they                                                               
should be  willing to spend the  time during an interim  to study                                                               
it.   Mr. Solie said  people in  Fairbanks have spent  the better                                                               
part of 30  years creating a health care system  that can provide                                                               
an array of quality services in  an economical way with access to                                                               
all.   He mentioned the home  care program of [FMH],  and pointed                                                               
out that a  few years ago other providers offered  home care, but                                                               
no longer do so.                                                                                                                
MR. SOLIE  emphasized that an emergency  room is open to  all who                                                               
cannot  pay, and  "will be  there tomorrow  for those  that can't                                                               
pay,  regardless of  race or  color or  their problems."   Mental                                                               
health  care, neonatal  care, cardiac  rehabilitation, and  other                                                               
services are offered.  In the  absence of a competitive arena, he                                                               
suggested that members look at cost, quality, and access.                                                                       
MR.  SOLIE noted  that  [FMH]  has audited  data  from the  state                                                               
showing that  its inpatient prices are  competitive statewide and                                                               
its outpatient  prices are competitive with  freestanding centers                                                               
in Anchorage.   He suggested [Alaskans] are  also getting quality                                                               
and access.  If  this needs to be fixed, a  task force should [be                                                               
created],  he suggested.   He  added  that the  55,000-population                                                               
threshold  doesn't have  basis  in  fact.   He  said he  believes                                                               
[FMH's]  administrator would  have  concerns about  a  lack of  a                                                               
service category  when it comes  to issues such as  cardiac care.                                                               
He emphasized  that this issue  is serious, adding,  "We wouldn't                                                               
have come here as volunteers to talk to you if it weren't."                                                                     
Number 0566                                                                                                                     
CHAIR DYSON  thanked Mr. Solie  and said he could  appreciate the                                                               
frustration  of those  involved.   He noted  the pile  of letters                                                               
received on  this matter  and indicated he  would read  them all.                                                               
He  offered  his  belief  that   members  are  seeking  to  do  a                                                               
responsible  job   trying  to  understand  this   complex  issue,                                                               
acknowledging  it   is  unlike  any  other   economic  situation.                                                               
[HB 407 was held over.]                                                                                                         

Document Name Date/Time Subjects