Legislature(2001 - 2002)

04/09/2002 03:00 PM HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 407-CERTIFICATE OF NEED PROGRAM                                                                                            
                                                                                                                                
CHAIR DYSON announced  that the first order of  business would be                                                               
HOUSE BILL NO.  407, "An Act relating to the  certificate of need                                                               
program."   Chair Dyson  announced his intention  to move  HB 407                                                               
from committee today.                                                                                                           
                                                                                                                                
Number 0335                                                                                                                     
                                                                                                                                
REPRESENTATIVE  COGHILL  moved   to  adopt  version  22-LS1389\O,                                                               
Lauterbach, 4/4/02, as the working document.                                                                                    
                                                                                                                                
REPRESENTATIVE  COGHILL explained  that on  page 2,  lines 30-31,                                                               
through  page 3,  line 3,  the inserted  language clarifies  that                                                               
when a  facility changes  and transfers  its certificate  of need                                                               
(CON), that it stay within the same use and bed type.                                                                           
                                                                                                                                
RYNNIEVA  MOSS,  Staff  to Representative  John  Coghill,  Alaska                                                               
State Legislature, continued with the  changes in Version O.  She                                                               
explained that Version O clarifies  that when a person replaces a                                                               
facility or relocates  a facility that was obtained  under a CON,                                                               
a new CON  is not required, although the requirements  of the CON                                                               
must be followed.  This change is on page 3, lines 6-7.                                                                         
                                                                                                                                
CHAIR  DYSON related  his understanding  that all  that is  being                                                               
required with the change on page  3, lines 6-7, is that the [CON]                                                               
contract be followed.                                                                                                           
                                                                                                                                
Number 0495                                                                                                                     
                                                                                                                                
ELMER   LINDSTROM,    Deputy   Commissioner,   Office    of   the                                                               
Commissioner,  Department of  Health  &  Social Services  (DHSS),                                                               
thanked  the  sponsor's staff  for  the  work  on  HB 407.    Mr.                                                               
Lindstrom recommended that the committee adopt Version O.                                                                       
                                                                                                                                
REPRESENTATIVE COGHILL  restated his motion to  adopt version 22-                                                               
LS1389\O,  Lauterbach, 4/4/02,  as the  working document.   There                                                               
being no objection, Version O was before the committee.                                                                         
                                                                                                                                
Number 0590                                                                                                                     
                                                                                                                                
REPRESENTATIVE   CISSNA   moved    that   the   committee   adopt                                                               
Amendment 1, which read [original punctuation provided]:                                                                        
                                                                                                                                
     Add new section under temporary law:                                                                                       
                                                                                                                                
     The  State of  Alaska Department  of Health  and Social                                                                    
     Services shall develop a  comprehensive health plan for                                                                    
     the  state,  making  use of,  to  the  maximum  extent,                                                                    
     existing health  care plans  and processes  employed by                                                                    
     the  Department of  Health and  Social Services,  other                                                                    
     state agencies  and local community  efforts.   A focus                                                                    
     of  the plan  shall  be to  develop community  specific                                                                    
     health information  to assist  the Certificate  of Need                                                                    
     program in evaluating  applications for certificates of                                                                    
      need.  A report will be submitted to the legislature                                                                      
     by January 1, 2004.                                                                                                        
                                                                                                                                
CHAIR DYSON objected.                                                                                                           
                                                                                                                                
REPRESENTATIVE CISSNA  specified that Amendment 1  is basically a                                                               
conceptual  amendment  requiring  the  department  to  develop  a                                                               
comprehensive  health  plan  for  the state  that  utilizes  what                                                               
already  exists  in   every  community.    She   noted  that  the                                                               
January 1,  2004, date  specified in  the amendment  could be  an                                                               
earlier  date.   She  informed  the  committee that  the  state's                                                               
current health care plan was developed  in 1983.  She said health                                                               
care  is one  of the  fastest  growing industries  in the  state.                                                               
Therefore, Amendment  1 provides the  state the chance  to review                                                               
what is currently on the books  and [decide] whether the state is                                                               
going in the right direction.                                                                                                   
                                                                                                                                
CHAIR DYSON related his  understanding that Representative Cissna                                                               
didn't  want the  bill to  pick up  a fiscal  note, which  is why                                                               
existing staff are being utilized under existing duties.                                                                        
                                                                                                                                
REPRESENTATIVE  CISSNA confirmed  that she  didn't want  a fiscal                                                               
note.                                                                                                                           
                                                                                                                                
REPRESENTATIVE COGHILL acknowledged  that the title of  HB 407 is                                                               
fairly broad,  as is  [Amendment 1].   However, he  indicated the                                                               
need to ask  whether there would be any  legal ramifications with                                                               
the  adoption of  Amendment  1.   He  said  that  the request  to                                                               
develop a plan is outside the scope of HB 407.                                                                                  
                                                                                                                                
Number 0850                                                                                                                     
                                                                                                                                
MR. LINDSTROM remarked that [Amendment  1] in regard to the title                                                               
is probably a  "close call."  [Amendment 1] might  well fit under                                                               
HB  407 since  one  of  the focuses  of  the  amendment would  be                                                               
related to  assisting the  CON program.   Mr.  Lindstrom recalled                                                               
his  testimony  in previous  hearings  regarding  the lack  of  a                                                               
comprehensive health care  plan.  He pointed out  that during the                                                               
course  of  the  hearings,  the  committee  has  heard  two  very                                                               
different views of what HB 407  will do.  Mr. Lindstrom said that                                                               
he hasn't  been very  helpful in  deciding how  to make  sense of                                                               
those arguments  because DHSS doesn't  have the data to  make the                                                               
determination as  to which view  is correct.   "My guess  is they                                                               
could both well be true and  even in the same community, although                                                               
at different points in time," he  said.  Therefore, to the extent                                                               
that  a [comprehensive]  health plan  would provide  the data  to                                                               
better  evaluate these  CONs,  [the amendment]  would  be a  good                                                               
idea.   Mr. Lindstrom said  that he  wasn't sure what  the fiscal                                                               
note would look like, although [there would be one].                                                                            
                                                                                                                                
Number 0982                                                                                                                     
                                                                                                                                
REPRESENTATIVE COGHILL announced that  he would be voting against                                                               
the amendment, although he felt some  plans should be made by the                                                               
state.    He  noted  his  struggle with  regard  to  whether  the                                                               
government always  knows best.   Representative Coghill  said, "I                                                               
know  we  already  have comprehensive  plans,  except  for  we're                                                               
asking this one  to be a focus now to  develop community specific                                                               
health  information that's  going to  assist  the CON.   And  I'm                                                               
trying to say  we have people doing business plans  that do that.                                                               
I  just  struggle with  it."    He  mentioned that  perhaps  it's                                                               
different debate, which he didn't want to include in this bill.                                                                 
                                                                                                                                
REPRESENTATIVE STEVENS related that  he would be more comfortable                                                               
if  more  people  were  involved  in  deciding  on  this  matter.                                                               
Representative Stevens turned to the  timeline in Amendment 1 and                                                               
asked why it couldn't be accomplished by January 1, 2003.                                                                       
                                                                                                                                
REPRESENTATIVE CISSNA responded, "I  think that's better than ...                                                               
what's happening  now, personally."   There  is huge  pressure to                                                               
deliver  affordable health  care.   In response  to Chair  Dyson,                                                               
Representative Cissna  said that she would  accept Representative                                                               
Stevens'  suggestion  to change  the  date  in the  amendment  to                                                               
January 1, 2003, as a friendly amendment.                                                                                       
                                                                                                                                
Number 1175                                                                                                                     
                                                                                                                                
CHAIR DYSON  related that there  is a  lot of frustration  in the                                                               
provider  community.    Therefore,  he felt  there  should  be  a                                                               
specific task  force with resources.   Although HB 407  is fairly                                                               
important, it will  have a fairly tough time  moving through this                                                               
session.  Amendment 1 will generate  some support for HB 407, but                                                               
will also contribute  to HB 407 not passing this  session.  Chair                                                               
Dyson announced that he would vote against Amendment 1.                                                                         
                                                                                                                                
A roll  call vote  was taken.   Representatives  Wilson, Stevens,                                                               
Cissna,   and  Joule   voted  for   Amendment  1   [as  amended].                                                               
Representatives  Coghill,   Kohring,  and  Dyson   voted  against                                                               
Amendment 1.   Therefore,  Amendment 1, as  amended, passed  by a                                                               
vote of 4-3.                                                                                                                    
                                                                                                                                
Number 1328                                                                                                                     
                                                                                                                                
JOE FAULHABER  testified via teleconference.   He  announced that                                                               
he is an  unpaid volunteer representing the  people of Fairbanks,                                                               
who own  the local hospital.   Mr.  Faulhaber stated that  HB 407                                                               
isn't about free  enterprise and competition.   He explained that                                                               
Fairbanks residents  support the local hospital  with hundreds of                                                               
thousands  of  dollars  of cash  donations.    Despite  community                                                               
support,  [the   hospital]  enjoys  nominal  excess   revenue  of                                                               
approximately a  million dollars, which  is scant in  the context                                                               
of  a $100-million  budget.   "As  a  practical matter,  patients                                                               
seldom choose where procedures are  to be performed, doctors do,"                                                               
he  said.    Therefore,  without CON  protection,  doctors  could                                                               
perform profitable procedures in  their [office] while performing                                                               
money-losing procedures in the  community hospital.  Furthermore,                                                               
if there was  a complication during a procedure  performed in the                                                               
doctor's  office,  where would  that  critically  ill patient  be                                                               
taken?    Mr.  Faulhaber  stated, "If  our  community  loses  CON                                                               
protection,  expect to  see us  in Juneau  next year.   We'll  be                                                               
asking for  an increase in  Medicaid rates and money  for capital                                                               
projects because you gave away our ability to self-fund."                                                                       
                                                                                                                                
Number 1453                                                                                                                     
                                                                                                                                
GEORGE LARSON  testified via teleconference.   Mr.  Larson turned                                                               
to  the  population  delimiter,  which  will  impact  only  three                                                               
communities  in  the  state:     Anchorage,  Fairbanks,  and  the                                                               
Matanuska-Susitna ("Mat-Su")  Borough.   Mr. Larson  stressed the                                                               
need for the committee to  consider how vastly different the Mat-                                                               
Su  Borough  is from  Anchorage  and  Fairbanks,  since it  is  a                                                               
second-class borough that covers an  area of 24,000 square miles,                                                               
about  the  size of  West  Virginia.    He further  informed  the                                                               
committee  that   this  size  of   borough,  with   an  estimated                                                               
population of  62,000, results in  a population density  of about                                                               
2.6  persons  per  square  mile.    The  most  heavily  developed                                                               
portion, the  core area, encompasses  Palmer and Wasilla  and the                                                               
developed areas  between and around these  two communities, which                                                               
accounts for  approximately 42,000  people.  Therefore,  the core                                                               
area falls well under the  55,000-population delimiter in HB 407.                                                               
However,  most  of  the  services provided  in  the  borough  are                                                               
located  within this  core area.    Mr. Larson  pointed out  that                                                               
there is an  acute-care facility in Palmer,  an outpatient center                                                               
in Wasilla, as well as a  history of collaboration with the rural                                                               
primary-care   providers   throughout    the   borough.      This                                                               
collaboration has assisted  in the improvement of  the quality of                                                               
care  and access  to  remote areas  outside the  core  area.   In                                                               
summary,  Mr. Larson  requested that  the committee  consider the                                                               
demography and geography of the Mat-Su Borough.                                                                                 
                                                                                                                                
Number 1580                                                                                                                     
                                                                                                                                
DEE  SKRIPS,   Registered  Nurse;  Administrator,   Health  South                                                               
Alaska, testified via  teleconference in support of HB  407.  Ms.                                                               
Skrips  said  that   Health  South  Alaska,  as   a  provider  of                                                               
ambulatory  services in  all 50  states  and internationally,  is                                                               
very aware  of the  rising costs  of health care  as well  as the                                                               
importance of  getting a handle  on these  costs.  As  a national                                                               
corporation, Health South has an  extensive background working in                                                               
this state  with and  without the  CON.   Ms. Skrips  pointed out                                                               
that to date, no states have  been on record as seeing a negative                                                               
effect as  a result of  the CON.  If  there have been  no adverse                                                               
effects  to  other states  without  the  CON,  then it  would  be                                                               
difficult  to  imagine  that  it's  different  in  Alaska.    She                                                               
informed the  committee that there  is no credible  evidence that                                                               
the  CON has  ever increased  the cost  of health  care to  those                                                               
states without it.                                                                                                              
                                                                                                                                
MS.  SKRIPS  highlighted that  ambulatory  care,  such as  Health                                                               
South Alaska,  is not  on a cost-reported  schedule like  that of                                                               
the  larger acute-care  hospitals.   Furthermore, ambulatory-care                                                               
facilities don't  have the ability  to shift costs  as acute-care                                                               
facilities  do.     Ambulatory   care  facilities  do   have  tax                                                               
liabilities, and as  a for-profit organization taxes  are paid on                                                               
all  aspects  of the  business.    However, nonprofit  acute-care                                                               
facilities don't pay  taxes.  "There is  a great misunderstanding                                                               
that the ambulatory or freestanding  surgical centers cherry pick                                                               
hand-picked  surgical  cases," she  noted.    In conclusion,  Ms.                                                               
Skrips  reiterated  her support  of  HB  407  due to  the  choice                                                               
provided to the patients.                                                                                                       
                                                                                                                                
Number 1697                                                                                                                     
                                                                                                                                
JOSHUA  JENSEN, Finance  Director, Heritage  Place Nursing  Home,                                                               
testified via teleconference in opposition  to HB 407 because the                                                               
current CON  requirements serve  the state's  best interest.   He                                                               
characterized the revisions  of HB 407 as confusing.   He related                                                               
his  belief  that  this  issue deserves  more  review  given  the                                                               
complexities  and impact  of the  legislative  action this  year.                                                               
Therefore,  Mr. Jensen  urged the  committee to  not pass  HB 407                                                               
without careful and  considerate review of all the  impacts.  Mr.                                                               
Jensen  relayed  his knowledge  that  committee  members and  the                                                               
House  leadership   are  concerned  with  any   legislation  that                                                               
requires a  mandated increase  in the  cost of  state government,                                                               
which is illustrated in the fiscal note for HB 407.                                                                             
                                                                                                                                
Number 1750                                                                                                                     
                                                                                                                                
MICHAEL KELLY testified via teleconference.   Mr. Kelly announced                                                               
that he strongly  opposes HB 407 because it will  harm the system                                                               
in  Fairbanks.   Furthermore,  elimination of  the  CON is  risky                                                               
experimentation.   Because of Fairbanks's  size and  location, it                                                               
has a limited  and fragile health care market.   Thirty years ago                                                               
the health  care market  in Fairbanks was  an absolute  mess, and                                                               
thus  the community  organized to  form a  nonprofit health  care                                                               
foundation  to provide  the  infrastructure  that was  necessary.                                                               
That  organization,  under  the  rules of  the  CON,  has  worked                                                               
superbly relative to  access, cost, and the provision  of a broad                                                               
range of excellent  health care services.  Mr. Kelly  said HB 407                                                               
is about a few  doctors who make "six figures" and  want to add a                                                               
bit more to that.  Although  that doesn't make those doctors bad,                                                               
"you  owe  a lot  more  to  the 90,000  folks  who  live here  in                                                               
Interior Alaska  than to  be just  listening to  a few  docs," he                                                               
said.   Furthermore,  there  is  the [push]  to  build a  surgery                                                               
facility in  order to  take the  more profitable  procedures from                                                               
the Fairbanks Memorial Campus.   Although the current CON process                                                               
isn't perfect,  it helps  to protect  against cherry  picking and                                                               
profiteering in  the limited health  care market.   Moreover, the                                                               
CON  process helps  to continue  the excellent  service that  has                                                               
taken 30 years to build up  in Fairbanks.  Mr. Kelly concluded by                                                               
saying HB 407 is bad law.                                                                                                       
                                                                                                                                
Number 1854                                                                                                                     
                                                                                                                                
HARRY  PORTER  testified via  teleconference.    He informed  the                                                               
committee that  he helped create the  Fairbanks Memorial Hospital                                                               
board.   He  noted that  he  has noticed  Fairbanks's failure  to                                                               
change even  though there was  open competition; he  related this                                                               
comment to all types of  business.  (Indiscernible.)  He remarked                                                               
that in  the minutes that  it will take to  vote on HB  407, "you                                                               
could put the  skids under the hospital that it  took 30 years to                                                               
create."                                                                                                                        
                                                                                                                                
Number 1935                                                                                                                     
                                                                                                                                
SUSAN  McLANE,  Registered  Nurse, Fairbanks  Memorial  Hospital,                                                               
testified via teleconference  in opposition to HB  407.  Although                                                               
she said she  understood the many concerns with  the existing CON                                                               
program, she  agreed it  could be difficult.   However,  she said                                                               
she didn't  understand the  sizable leap  from problems  with the                                                               
process to its complete elimination  in three areas of the state.                                                               
She indicated  the need to double  the tax (indisc.) in  order to                                                               
evaluate   the   effectiveness   of    the   program   and   make                                                               
recommendations for  improvement.   She mentioned  nationwide and                                                               
statewide  shortage of  nurses,  and that  the  emergence of  new                                                               
surgery centers  in Alaska would  further dilute the  labor pool.                                                               
Ms. McLane  closed by suggesting  that a task force  be appointed                                                               
to review this important issue.                                                                                                 
                                                                                                                                
Number 2000                                                                                                                     
                                                                                                                                
JENNIFER HOUSE, Employee,  Fairbanks Memorial Hospital, testified                                                               
via teleconference in  opposition to HB 407.  Ms.  House began by                                                               
saying  that HB  407 is  based on  the erroneous  assumption that                                                               
health care is a free market  and that this legislation will lead                                                               
to  increased  competition and  thus  result  in lower  costs  to                                                               
consumers.   However,  consumers of  health care  aren't informed                                                               
consumers and  have little or  no control over the  services they                                                               
receive.  Physicians  have the control, which is  why there won't                                                               
be a  decrease in the  cost of outpatient services  to consumers.                                                               
She  charged  that there  are  no  incentives for  physicians  to                                                               
provide these services  at lower prices.   However, she suggested                                                               
that  physicians are  likely  to charge  more  than the  hospital                                                               
because the  physician is in  a unique position to  influence the                                                               
patient.   Cost  is  rarely  an important  factor  for a  patient                                                               
determining where  to obtain health care  services.  Furthermore,                                                               
Ms. House said that this  competition won't cause the hospital to                                                               
lower its  prices.  She charged  that it would have  little to no                                                               
impact in retaining patient volume,  but would most likely result                                                               
in  increased  charges  that will  impact  consumers  across  the                                                               
state.  Ms.  House explained that the CON process  is critical in                                                               
ensuring  that  under-  and   over-capacity  in  our  communities                                                               
(indisc.).   [Elimination] of the  CON process will  only benefit                                                               
physicians  and  specialty providers,  not  the  majority of  the                                                               
population "you" represent.                                                                                                     
                                                                                                                                
Number 2090                                                                                                                     
                                                                                                                                
DR.   DAVID   McGUIRE,    Orthopedic   Surgeon,   testified   via                                                               
teleconference in support of HB 407.   He said, "The problem with                                                               
change  is always  that everybody  who  has to  suffer change  is                                                               
opposed to it."  Dr. McGuire remarked  that the CON was a bad law                                                               
to  begin with,  which the  federal government  realized in  1987                                                               
when  it eliminated  it.   The CON  hasn't controlled  costs, but                                                               
rather  has created  another bureaucracy  and the  opportunity to                                                               
maintain a  monopoly.  Dr.  McGuire said Fairbanks is  an example                                                               
of how  a good  law is applied  badly.  He  pointed out  that the                                                               
Fairbanks  Memorial Hospital  was given  permission to  build its                                                               
oncology center  without a CON.   Dr. McGuire stated that  if the                                                               
CON process  is to work,  everyone should  have to apply  [and be                                                               
treated equally under the process].                                                                                             
                                                                                                                                
DR. McGUIRE turned to the  assertion that patients are uninformed                                                               
health care  consumers.  He  said those aren't the  patients that                                                               
he sees.   "I  think, if the  hospitals are as  good as  they say                                                               
they are, then a surgery center  comes to town, nobody's going to                                                               
use it  because they recognize  the hospitals are better.   There                                                               
really shouldn't be a problem,"  he said.  Dr. McGuire reiterated                                                               
that the  CON process is a  bad law that hasn't  worked in Alaska                                                               
and hasn't amounted  to anything positive.   Furthermore, the way                                                               
in which  the CON process is  applied is unfair.   In conclusion,                                                               
Dr. McGuire urged the committee to vote for HB 407.                                                                             
                                                                                                                                
Number 2204                                                                                                                     
                                                                                                                                
ROBERT  GOULD testified  via teleconference  in opposition  to HB
407.   Mr. Gould informed  the committee  that in 2001  the gross                                                               
patient revenue of Fairbanks  Memorial Hospital was approximately                                                               
$147  million and  that  the net  income  was approximately  $1.4                                                               
million,  about 1  percent.   Mr. Gould  said he  would begin  by                                                               
reviewing  two reasons  why competition  won't decrease  costs in                                                               
Alaska.    He  recalled  that   three  years  ago  when  the  CON                                                               
discussions  began, Fairbanks  Memorial Hospital  had the  lowest                                                               
charges for the  most common outpatient surgery.   In those three                                                               
years, those charges haven't changed.   However, during that same                                                               
three  years, charges  [for the  most common  outpatient surgery]                                                               
has increased  22 percent.   Mr. Gould  noted that  Anchorage has                                                               
three  [ambulatory]   surgery  centers  and  thus   is  the  most                                                               
competitive market  in the state,  and yet the prices  are higher                                                               
than in Fairbanks.                                                                                                              
                                                                                                                                
MR.  GOULD turned  to MRI  (magnetic resonance  imaging) charges.                                                               
Recently  in Fairbanks  a clinic  has opened  a good  clinic MRI,                                                               
although  it isn't  a hospital-quality  MRI.   Those clinic  MRIs                                                               
don't produce  the same images nor  are those images as  clear or                                                               
similar  quality to  that  of  the hospital  MRI.   However,  the                                                               
clinic's  charges  are  43  percent   higher  than  the  hospital                                                               
charges.  Therefore,  it's an example of  when physicians control                                                               
patient referrals and thus it doesn't matter what is charged.                                                                   
                                                                                                                                
MR. GOULD  suggested that if  HB 407 passes, the  hospital should                                                               
immediately raise its prices 22 percent  plus the cost of a plane                                                               
ticket  to Anchorage  in order  to compete  with Anchorage.   "We                                                               
won't need to compete with the  physicians if they have their own                                                               
surgery  center because  all you're  going  to do  is divide  the                                                               
market between  who does their  surgeries at which  facility," he                                                               
explained.    Patients  will choose  which  physician  not  which                                                               
facility.    "Immediately, my  prices  don't  matter because  the                                                               
surgeon that  has the share  in their  own surgery center  is not                                                               
going to send  the profitable surgeries, the ones  where we still                                                               
get fair  reimbursement, over to  the hospital; they're  going to                                                               
do them in  their own shop.  That's the  problem with this bill,"                                                               
he said.   Mr.  Gould concluded  by urging  the committee  to not                                                               
throw away  30 years of  community planning  all for the  sake of                                                               
increasing  revenue  to  a few  individual  shareholders.    "The                                                               
reimbursement system is  what's broken, and you're  trying to fix                                                               
it by eliminating the CON legislation," he stated.                                                                              
                                                                                                                                
Number 2333                                                                                                                     
                                                                                                                                
JIM   LYNCH,  Director,   Human  Resources,   Fairbanks  Memorial                                                               
Hospital, testified  via teleconference in opposition  to HB 407.                                                               
Mr. Lynch  urged the committee to  take time to study  this issue                                                               
thoroughly.     He   turned  to   the  workforce   challenges  in                                                               
geographically  remote   locations  such  as  those   in  Alaska,                                                               
specifically, the nursing shortage.                                                                                             
                                                                                                                                
TAPE 02-28, SIDE B                                                                                                              
                                                                                                                                
MR.   LYNCH  stated   that  individuals   such   as  nurses   and                                                               
radiologists   are  hard   to  find,   and  their   salaries  are                                                               
increasing.    If  additional institutions  are  created  without                                                               
being able  to apply the  in-state labor that is  necessary, [the                                                               
state] will  fail miserably at  meeting its health care  needs at                                                               
any reasonable  cost.  He  requested that the  committee consider                                                               
that factor when considering HB 407.                                                                                            
                                                                                                                                
Number 2330                                                                                                                     
                                                                                                                                
BRIAN  SLOCUM,  Administrator,  Tanana Valley  Clinic,  began  by                                                               
informing  the committee  that the  Tanana Valley  Clinic is  the                                                               
largest  entity in  the  state, with  36  health care  providers.                                                               
Tanana Valley Clinic has been  providing patient care since 1959,                                                               
which is ten  years prior to the existence  of Fairbanks Memorial                                                               
Hospital.    Mr. Slocum  said  that  there  have been  some  very                                                               
concerning  claims.   The hospitals  across the  state have  been                                                               
raising the issue of cherry picking.   With respect to the Tanana                                                               
Valley Clinic, everyone who shows up  for care is served.  Due to                                                               
that [policy], the  clinic has lost 11 of its  28 doctors in less                                                               
than two  years.   Those physicians have  left, in  part, because                                                               
they can't make  the living at the clinic that  they could at the                                                               
hospital.                                                                                                                       
                                                                                                                                
MR.  SLOCUM  said  24  percent   of  the  clinic's  patients  are                                                               
Medicare/Medicaid patients,  and 9 percent  have no  insurance at                                                               
all; combined, this  is one-third of the patients.   He mentioned                                                               
that  over the  past three  years, the  clinic has  provided over                                                               
$17.7 million  in charity care.   "To  the extent that  the other                                                               
docs in the  community are doing the same thing,  then I'll think                                                               
you'll find  that the  charity care provided  ... by  the doctors                                                               
exceeds the  free care provided  by the  hospital, if you  add it                                                               
up," he  said.  The  clinic can't  continue to provide  that much                                                               
free   care  and   remain  a   taxpaying  for   profit  business.                                                               
Furthermore, such  free care  can't continue in  the face  of the                                                               
4.5 percent Medicare reduction that occurred in January.                                                                        
                                                                                                                                
MR. SLOCUM turned to the charge  that in those states without the                                                               
CON, the  patients receive worse  care.   The only study  that he                                                               
recalled  from testimony  was  a Florida  study  that dealt  with                                                               
cardiac  surgery.    Mr.  Slocum  said  there  is  probably  some                                                               
legitimacy to that  because cardiac surgery shouldn't  be done by                                                               
centers that  only do  a few  each year.   Therefore,  Mr. Slocum                                                               
announced  that no  cardiac surgery  would be  performed in  [the                                                               
clinic's]  ambulatory  care center.    The  center only  performs                                                               
those procedures on the federal  government's approved list.  Mr.                                                               
Slocum  informed  the  committee  that  there  are  studies  that                                                               
[refute the notion] of higher  mortality rates in non-CON states.                                                               
He  noted that  the committee  packet should  include three  such                                                               
studies illustrating  that those  states with  CON laws  or other                                                               
regulations  limiting  the   care  delivered  have  significantly                                                               
higher mortality and morbidity rates.                                                                                           
                                                                                                                                
MR.  SLOCUM pointed  out  that one  of the  letters  sent to  the                                                               
[committee] says,  "If the CON  law is modified, this  could very                                                               
likely  lead to  catastrophic  increases in  cost statewide,  and                                                               
perhaps  even to  the closure  of some  Alaska's most  vulnerable                                                               
hospitals."   However, Mr. Slocum  said that he has  provided the                                                               
committee with two  studies proving that there is  no increase in                                                               
statewide health care  costs and no decrease  in hospital profits                                                               
in  all of  the states  that have  eliminated the  CON laws.   In                                                               
regard  to the  assertion that  the elimination  of the  CON will                                                               
result in  hospitals being  unable to  provide charity  care, the                                                               
studies prove that  there is no decrease in  hospital profits and                                                               
no discernible  decrease in the  amount of charity  care provided                                                               
in the 15  states which have eliminated the CON.   Therefore, Mr.                                                               
Slocum urged the committee to support and pass HB 407.                                                                          
                                                                                                                                
Number 2054                                                                                                                     
                                                                                                                                
REPRESENTATIVE WILSON  inquired as to  the number of  doctors and                                                               
nurses that the  Tanana Valley Clinic employees.   She also asked                                                               
whether the clinic intends to employ more.                                                                                      
                                                                                                                                
MR. SLOCUM  answered that the  clinic has  a total of  28 doctors                                                               
and  10  mid-level  providers  who  are  nurse  practitioners  or                                                               
physicians assistances.   The clinic  is losing two  doctors next                                                               
week who  will be  replaced.  The  clinic recruited  four doctors                                                               
last year and will recruit five  more this year.  He informed the                                                               
committee  that it  costs about  $50,000 per  new doctor  brought                                                               
into the  community.  Without  the clinic providing  these costs,                                                               
the state would be faced with  them.  He explained that there are                                                               
about 1.5  to 2  nurses per  physician.   Those nurses  are often                                                               
brought   in  through   out-of-state   recruitment  and   nursing                                                               
magazines, and locals who come as  part of the Fort Wainwright or                                                               
Eielson  Air  Force Base  contingent.    In further  response  to                                                               
Representative Wilson, Mr. Slocum said,  "We continue to grow ...                                                               
because we seem to be the  only entity other than the hospital in                                                               
Fairbanks that continues  to be able to step up  to the plate and                                                               
deal with  these issues."   He mentioned that  nurses assistants,                                                               
medical assistants, LPNs, RNs, et cetera are utilized as well.                                                                  
                                                                                                                                
REPRESENTATIVE WILSON  pointed out  that the nursing  shortage is                                                               
the  biggest workforce  shortage in  the state  now.   Therefore,                                                               
[the  nursing  shortage]  might dilute  the  situation  as  well.                                                               
Representative Wilson  indicated that  she is conflicted  on this                                                               
issue.                                                                                                                          
                                                                                                                                
MR.  SLOCUM  acknowledged  that  he  has  often  heard  that  the                                                               
[clinic] shouldn't  offer new services to  the patient population                                                               
in the community because of  a lack of technical clinical people.                                                               
At its simplest the [question]  becomes whether doctors should be                                                               
brought  in to  provide  health care  services  to the  community                                                               
[even  though there  is  a] struggle  to find  nurses.   To  that                                                               
question, the  answer is yes; the  doctors need to be  brought in                                                               
to serve the needs of those leaving doctors.                                                                                    
                                                                                                                                
Number 1930                                                                                                                     
                                                                                                                                
MIKE   POWERS,  Fairbanks   Memorial   Hospital,  testified   via                                                               
teleconference.   Mr.  Powers commented  on  the difficulty  with                                                               
this issue in that professional  friends are on opposite sides of                                                               
this economic  issue.   This is tearing  apart the  community, he                                                               
said.  Mr.  Powers acknowledged that the Tanana  Valley Clinic is                                                               
a good neighbor in that  it takes Medicare and Medicaid patients,                                                               
which  not  every physician  in  Fairbanks  does.   However,  the                                                               
Tanana  Valley Clinic  isn't the  largest  property taxpayer  but                                                               
rather  the Greater  Fairbanks Community  Hospital Foundation  is                                                               
with its  physician office building.   He stressed that  there is                                                               
no profit  in the  foundation as  there are  considerable capital                                                               
costs associated.                                                                                                               
                                                                                                                                
MR. POWERS  turned to the  testimony regarding the  Tanana Valley                                                               
Clinic's mention  of a 4.5-percent  reduction in  Medicare, while                                                               
the hospital faces  a 17-percent reduction this year.   In regard                                                               
to  the Florida  study, Mr.  Powers explained  that the  study is                                                               
important relative  to the CON  because in states that  with CONs                                                               
there is higher efficiency, efficacy,  and equality.  With regard                                                               
to unreimbursed care, Fairbanks  Memorial Hospital provided $34.5                                                               
million in  unreimbursed care.   He  pointed out  that of  the 37                                                               
states that  have CONs,  two of those  states that  have repealed                                                               
the CONs brought  them back due to a  proliferation of ambulatory                                                               
surgery centers and cherry picking.                                                                                             
                                                                                                                                
MR.  POWERS concluded  by saying  that  this is  a very  divisive                                                               
issue and that the community needs  to work together to develop a                                                               
health plan  and recruit physicians.   This  is all an  effort to                                                               
eliminate barriers  so that physicians  can do what they  do best                                                               
while  [allowing] hospitals  to provide  technical components  of                                                               
services that  no one  else provides.   Mr. Powers  stressed that                                                               
[Alaska]  is in  a fragile  state because  every community,  save                                                               
Anchorage,   has  one   hospital.     The  numbers   alone  don't                                                               
substantiate the  need for  fundamental changes  to the  CON law.                                                               
Therefore, Mr.  Powers urged the  committee give this  much study                                                               
in  order to  develop a  CON law  that addresses  the needs  of a                                                               
rural state.                                                                                                                    
                                                                                                                                
Number 1757                                                                                                                     
                                                                                                                                
MR. LINDSTROM  commented that  Version O  is an  improvement over                                                               
the previous  [versions].  Mr.  Lindstrom noted  his appreciation                                                               
of the changes in Section 1  relative to conversion.  However, he                                                               
continued  to  express reservations  about  the  basic notion  of                                                               
dividing  the  state  into  communities  larger  than  55,000  or                                                               
smaller.   There  is  no  data to  determine  whether such  makes                                                               
sense.   He referred to page  2, lines 3-10, subsection  (e), and                                                               
said he  didn't understand the  language.  He related  his belief                                                               
that  subsection  (e) appears  to  be  contradictory or  subsumed                                                               
within  subsection  (d).   Section  2  regarding the  ability  to                                                               
replace a  facility without  going through a  CON is  still cause                                                               
for concern, particularly in smaller communities.                                                                               
                                                                                                                                
MR. LINDSTROM  indicated he also  didn't understand  the language                                                               
on  page 2,  lines 30-31,  and page  3, lines  1-2.   Although he                                                               
wasn't sure  it would allay  all of the  [department's] concerns,                                                               
Mr. Lindstrom suggested that the  language could say that nursing                                                               
home  or psychiatric  beds couldn't  be replaced  without a  CON.                                                               
That  language  would get  at  the  department's issue  with  the                                                               
department  being  the  primary  payer  of  those  two  types  of                                                               
facilities.                                                                                                                     
                                                                                                                                
MR. LINDSTROM informed  the committee that he had  a draft fiscal                                                               
note  to  Version  J,  which  he  believes  remains  relevant  to                                                               
Version O.   He  noted that  some of  the verbiage  would require                                                               
change, and thus those changes would  be made and the fiscal note                                                               
resubmitted.  The  estimated costs are significant.   He directed                                                               
attention to  page 3 of  the fiscal note, which  identifies those                                                               
facilities  that the  department  believes  might generate  those                                                               
additional costs.   Mr.  Lindstrom said,  "I cannot  stand before                                                               
you and say  that I have any high degree  of confidence that this                                                               
is the exact  number for a fiscal note, because  on all of these,                                                               
it  assumes  that  we  know  what a  Providence  or  a  Fairbanks                                                               
Memorial ...  are ultimately  going to do  as their  own business                                                               
decisions."   However, Mr. Lindstrom  related his belief  that HB
407  will  have   a  significant  impact  as   has  been  related                                                               
throughout the testimony.                                                                                                       
                                                                                                                                
Number 1555                                                                                                                     
                                                                                                                                
REPRESENTATIVE  WILSON asked  if  the bill  will  proceed to  the                                                               
House Finance Committee since a fiscal note has been attached.                                                                  
                                                                                                                                
CHAIR DYSON informed the committee  that the committee can accept                                                               
the department's fiscal  note or zero it out, or  can forward the                                                               
bill with  several fiscal notes.   In regard to the  latter case,                                                               
the  Speaker of  the  House  has the  authority  to decide  which                                                               
fiscal  note  the  legislation  has.   Chair  Dyson  related  his                                                               
understanding  that legislation  with  a fiscal  note mandates  a                                                               
Finance Committee referral.                                                                                                     
                                                                                                                                
The committee took an at-ease from 4:10 p.m. to 4:12 p.m.                                                                       
                                                                                                                                
CHAIR DYSON  announced that the vote  on HB 407 would  be delayed                                                               
until Thursday, per the request of  the bill sponsor.  He further                                                               
informed the committee that there  will be discussions with those                                                               
carrying the companion  bill to HB 407, in order  to develop some                                                               
congruence between the bills.  [HB 407 was held over.]                                                                          

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