Legislature(2001 - 2002)

03/19/2002 08:10 AM House CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
              HOUSE COMMUNITY AND REGIONAL AFFAIRS                                                                            
                       STANDING COMMITTEE                                                                                     
                         March 19, 2002                                                                                         
                           8:10 a.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Representative Kevin Meyer, Co-Chair                                                                                            
Representative Carl Morgan, Co-Chair                                                                                            
Representative Andrew Halcro                                                                                                    
Representative Drew Scalzi                                                                                                      
Representative Lisa Murkowski                                                                                                   
Representative Gretchen Guess                                                                                                   
Representative Beth Kerttula                                                                                                    
MEMBERS ABSENT                                                                                                                
All members present                                                                                                             
COMMITTEE CALENDAR                                                                                                            
HOUSE BILL NO. 474                                                                                                              
"An Act relating to public rights-of-way and easements for                                                                      
surface transportation affecting the Anchorage Coastal Wildlife                                                                 
     - MOVED CSHB 474(CRA) OUT OF COMMITTEE                                                                                     
HOUSE BILL NO. 407                                                                                                              
"An Act relating to the certificate of need program."                                                                           
     - HEARD AND HELD                                                                                                           
HOUSE BILL NO. 299                                                                                                              
"An Act providing for the naming and renaming of Alaska                                                                         
geographic features."                                                                                                           
     - SCHEDULED BUT NOT HEARD                                                                                                  
PREVIOUS ACTION                                                                                                               
BILL: HB 474                                                                                                                  
SHORT TITLE:ANCHORAGE COASTAL WILDLIFE REFUGE                                                                                   
SPONSOR(S): REPRESENTATIVE(S)GREEN                                                                                              
Jrn-Date   Jrn-Page                     Action                                                                                  
02/19/02     2315       (H)        READ THE FIRST TIME -                                                                        
02/19/02     2315       (H)        CRA, RES                                                                                     
03/05/02                (H)        CRA AT 8:00 AM CAPITOL 124                                                                   
03/05/02                (H)        Heard & Held                                                                                 
03/05/02                (H)        MINUTE(CRA)                                                                                  
03/19/02                (H)        CRA AT 8:00 AM CAPITOL 124                                                                   
BILL: HB 407                                                                                                                  
SHORT TITLE:CERTIFICATE OF NEED PROGRAM                                                                                         
SPONSOR(S): REPRESENTATIVE(S)COGHILL                                                                                            
Jrn-Date   Jrn-Page                     Action                                                                                  
02/13/02     2232       (H)        READ THE FIRST TIME -                                                                        
02/13/02     2232       (H)        CRA, HES                                                                                     
03/04/02     2469       (H)        COSPONSOR(S): JAMES                                                                          
03/13/02     2530       (H)        COSPONSOR(S): SCALZI                                                                         
03/14/02                (H)        CRA AT 8:00 AM CAPITOL 124                                                                   
03/14/02                (H)        Scheduled But Not Heard                                                                      
03/18/02     2593       (H)        COSPONSOR(S): DYSON                                                                          
03/19/02                (H)        CRA AT 8:00 AM CAPITOL 124                                                                   
WITNESS REGISTER                                                                                                              
LAURA ACHEE, Staff                                                                                                              
to Representative Joe Green                                                                                                     
Alaska State Legislature                                                                                                        
Capitol Building, Room 404                                                                                                      
Juneau, Alaska  99801                                                                                                           
POSITION STATEMENT:  Testified on behalf of the sponsor of HB
474, Representative Green.                                                                                                      
JANEL FEIERABEND, Director                                                                                                      
Friends of Potter Marsh and the Anchorage Coastal Wildlife                                                                      
Refuge (ACWR)                                                                                                                   
3170 Marathon Circle                                                                                                            
Anchorage, Alaska 99515                                                                                                         
POSITION STATEMENT:  Testified that [HB 474] helps protect [the                                                                 
CHERYL SHOYER, Member                                                                                                           
Oceanview Community Council                                                                                                     
PO Box 113264                                                                                                                   
Anchorage, Alaska 99511                                                                                                         
POSITION STATEMENT:  Testified in support of HB 474.                                                                            
JIM DOKOOZIAN, President                                                                                                        
Bayshore/Klatt Community Council                                                                                                
1700 Shore                                                                                                                      
Anchorage, Alaska 99515                                                                                                         
POSITION STATEMENT:  Testified in support of HB 474.                                                                            
RYNNIEVA MOSS, Staff                                                                                                            
to Representative John Coghill                                                                                                  
Alaska State Legislature                                                                                                        
Capitol Building, Room 102                                                                                                      
Juneau, Alaska  99801                                                                                                           
POSITION STATEMENT:  Testified on behalf of the sponsor of HB
474, Representative Coghill.                                                                                                    
ELMER LINDSTROM, Deputy Commissioner                                                                                            
Department of Health & Social Services                                                                                          
PO Box 110601                                                                                                                   
Juneau, Alaska 99811-0601                                                                                                       
POSITION STATEMENT:  Testified on HB 407.                                                                                       
CATHY CRONIN                                                                                                                    
North Star Hospital                                                                                                             
(No address provided)                                                                                                           
POSITION STATEMENT:  Offered to work on the expansion of the                                                                    
psychiatric beds in the House Health, Education and Social                                                                      
Services Standing Committee.                                                                                                    
DAVID McGUIRE, Independent Practitioner                                                                                         
(No address provided)                                                                                                           
POSITION STATEMENT:  Urged passage of HB 407.                                                                                   
ELIZABETH RIPLEY, Director                                                                                                      
Community Health Planning                                                                                                       
Valley Hospital                                                                                                                 
PO Box 1687                                                                                                                     
Palmer, Alaska 99645                                                                                                            
POSITION STATEMENT:  Recommended establishing a working group                                                                   
comprised of legislators and providers in order to examine the                                                                  
CON process.                                                                                                                    
REBECCA PARKER, Employee                                                                                                        
Providence Alaska Medical Center                                                                                                
3200 Providence Drive                                                                                                           
Anchorage, Alaska 99508                                                                                                         
POSITION STATEMENT:  Testified in opposition to HB 407.                                                                         
ALLAN SNIDER                                                                                                                    
PO Box 16216                                                                                                                    
Two Rivers, Alaska 99716                                                                                                        
POSITION STATEMENT:  Testified in support of HB 407.                                                                            
JOHN LUNDQUIST, Employee                                                                                                        
Fairbanks Memorial Hospital                                                                                                     
752 Donohue Drive                                                                                                               
Fairbanks, Alaska 99709                                                                                                         
POSITION STATEMENT:  Testified in opposition to HB 407.                                                                         
MARTY O'LONE, Employee                                                                                                          
Fairbanks Memorial Hospital                                                                                                     
3825 Ridgeview Drive                                                                                                            
Fairbanks, Alaska 99709                                                                                                         
POSITION STATEMENT:  Testified in opposition to HB 407.                                                                         
LIZ WOODYARD, Nurse                                                                                                             
PO Box 85109                                                                                                                    
Fairbanks, Alaska 99708                                                                                                         
POSITION STATEMENT:   Testified in  opposition to changes  to the                                                               
CON program.                                                                                                                    
CORLIS TAYLOR, Employee                                                                                                         
Fairbanks Memorial Hospital                                                                                                     
1335 Viewpointe Drive                                                                                                           
Fairbanks, Alaska 99709                                                                                                         
POSITION STATEMENT:  Testified in opposition to HB 407.                                                                         
ACTION NARRATIVE                                                                                                              
TAPE 02-15, SIDE A                                                                                                              
Number 0001                                                                                                                     
CO-CHAIR  KEVIN MEYER  called the  House  Community and  Regional                                                               
Affairs  Standing  Committee  meeting   to  order  at  8:10  a.m.                                                               
Representatives  Morgan,   Meyer,  Scalzi,  and   Murkowski  were                                                               
present at  the call  to order.   Representatives  Scalzi, Guess,                                                               
and Kerttula arrived as the meeting was in progress.                                                                            
HB 474-ANCHORAGE COASTAL WILDLIFE REFUGE                                                                                      
CO-CHAIR MEYER announced  that the first order  of business would                                                               
be HOUSE BILL  NO. 474, "An Act relating  to public rights-of-way                                                               
and easements for surface  transportation affecting the Anchorage                                                               
Coastal Wildlife Refuge."                                                                                                       
LAURA  ACHEE, Staff  to Representative  Joe  Green, Alaska  State                                                               
Legislature,   informed   the    committee   that   Tim   Rogers,                                                               
Municipality of  Anchorage, shared  his concerns  with her.   She                                                               
said  that   Mr.  Rogers  felt  that   the  original  legislation                                                               
encroached on  the municipality's authority over  their land that                                                               
extends  into the  refuge.    Upon review,  she  agreed with  Mr.                                                               
Rogers  and thus  she had  an amendment  drafted.   She explained                                                               
that on  page 1,  lines 13-14,  HB 474  says, "a  right-of-way or                                                           
other easement  for surface transportation  may not  be created",                                                           
with which  the municipality took issue  because the municipality                                                               
does have  some land  that extends into  the refuge.   Therefore,                                                               
the amendment  changes the aforementioned language  to read, "the                                                           
state  shall  not  acquire  or create  a  right-of-way  or  other                                                           
easement for  surface transportation".   With the  amendment, the                                                           
municipality would  be able to  place any  surface transportation                                                               
on their land that extends into the refuge.                                                                                     
REPRESENTATIVE MURKOWSKI related her  understanding then that the                                                               
issue is the state acquiring the easement.                                                                                      
MS. ACHEE  replied yes.   In  further response  to Representative                                                               
Murkowski, Ms.  Achee said that this  was the only issue  she was                                                               
aware that the municipality had.                                                                                                
Number 0648                                                                                                                     
JANEL  FEIERABEND,  Director, Friends  of  Potter  Marsh and  the                                                               
Anchorage   Coastal  Wildlife   Refuge   (ACWR),  testified   via                                                               
teleconference.     She   mentioned  that   the  [goal]   of  the                                                               
organization is  to protect  the integrity  of the  marsh through                                                               
education.   Ms. Feierabend discussed the  Lesser Sandhill Crane,                                                               
which eats, sleeps, and nests in  the ACWR because the habitat so                                                               
perfectly supports its well being.   The 32,000 acres of ACWR was                                                               
designated as  a state refuge  in 1988  by the legislature.   The                                                               
state was wise  to think of the future and  establish the refuge.                                                               
Ms. Feierabend  mentioned the February  19, 1991,  Alaska Coastal                                                               
Wildlife  Refuge  Management  Plan  by ADF&G,  which  includes  a                                                               
comprehensive list  of those  species found in  the refuge.   She                                                               
noted                                                        that                                                               
the list has grown since that time.                                                                                             
MS. FEIERABEND  emphasized that talk  of development of  any kind                                                               
in  this   state  refuge  should   raise  major  concern.     Any                                                               
possibility  of encroachment  into the  refuge should  be studied                                                               
and analyzed  by state decision  makers.  She suggested  that the                                                               
state  decision  makers should  read  "The  Wildlife Study  2001:                                                               
South Extension  of the  Coastal Trail Final  Report" as  well as                                                               
books regarding  the human and  canine impact to wildlife.   This                                                               
state refuge  is a unique and  special place that hosts  a wealth                                                               
of  plant  and invertebrate  communities,  and  a range  of  wild                                                               
animals.   She expressed the  need for wise statesman,  who think                                                               
beyond municipal borders  and concerns, to be part  of the check-                                                               
and-balance  system when  it relates  to state  and even  broader                                                               
funded projects.  "It is up  to the state legislators to weigh in                                                               
on the  protection of the very  area it deemed worthy  to reserve                                                               
as a  refuge," she said.   Ms. Feierabend said that  HB 474 helps                                                               
to protect this treasure, [ACWR], that belongs to all of Alaska.                                                                
Number 0946                                                                                                                     
CHERYL  SHOYER, Member,  Oceanview  Community Council,  testified                                                               
via  teleconference in  support  of  HB 474.    As  a whole,  the                                                               
Oceanview Community  Council values  the ACWR.   In participating                                                               
in   the   process,   the  council   has   become   disappointed,                                                               
disillusioned,  disheartened,  and   discouraged.    The  council                                                               
attempted to stay  neutral, but that turned out  to be impossible                                                               
after going through the public process  at length.  Over and over                                                               
it seemed  as if [the  council] had  never been there,  which was                                                               
very discouraging.   Ms. Shoyer  informed the committee  that the                                                               
council hired individuals  to review the process,  but time after                                                               
time those individuals would report  that the process was biased.                                                               
She felt that the worst of  it was when the governor announced he                                                               
wanted the trail to go through  the marsh.  Therefore, Ms. Shoyer                                                               
felt that  it would be  great if  the legislature had  a watchdog                                                               
over this  obvious bias  from the governor.   She  expressed hope                                                               
that HB 474 could balance this obvious imbalance.                                                                               
Number 1290                                                                                                                     
JIM  DOKOOZIAN,  President,   Bayshore/Klatt  Community  Council,                                                               
testified  via  teleconference  in  support   of  HB  474.    Mr.                                                               
Dokoozian  announced  that  he  was  present  on  behalf  of  the                                                               
president  of the  Oceanview  Community Council  as  well as  the                                                               
president  of the  Sand Lake  Community Council.   Mr.  Dokoozian                                                               
informed the committee  that all three of  the community councils                                                               
voted in separate  votes in favor of the inland  trail if a trail                                                               
was to  exist.  It was  only after a few  concerned citizens were                                                               
frustrated that  they advocated a  trail that would  connect [the                                                               
communities] on  an inland route,  the gold  route.  There  was a                                                               
great amount of support from  the community councils for the gold                                                               
route.    Furthermore,  there  is  a  petition  with  over  2,500                                                               
signatures,  including  the  former   governor  Jay  Hammond,  in                                                               
support of preserving the refuge.                                                                                               
MR.  DOKOOZIAN turned  to the  governor's  announcement that  the                                                               
trail should go through the  marsh.  That announcement galvanized                                                               
the residents of  south Anchorage, who thought they  were part of                                                               
a public process of evaluating various  routes.  "We are weary of                                                               
the lack  of responsiveness of the  project team," he noted.   He                                                               
also indicated that  there is much disappointment  in the process                                                               
and thus expressed the need to have [legislative] oversight.                                                                    
CO-CHAIR MEYER, upon  no one else wishing to  testify, closed the                                                               
public testimony.                                                                                                               
Number 1515                                                                                                                     
REPRESENTATIVE   MURKOWSKI  moved   that   the  committee   adopt                                                               
Amendment 1, which reads as follows:                                                                                            
     Page 1, line 10, after "and Fire Island.":                                                                                 
          Insert, "Except for the public right-of-way and                                                                   
     utility  corridor   created  in  this   subsection  and                                                                
     identified in  the management  plan, for  a realignment                                                                
     of  the right-of-way  for the  new Seward  Highway, and                                                                
     for a  realignment of the  right-of-way for  the Alaska                                                                
     Railroad,  the  state shall  not  acquire  or create  a                                                                
     right-of-way    or   other    easement   for    surface                                                                
     transportation below the crest  of the coastal bluff or                                                                
     below Campbell  Lake without the prior  approval of the                                                                
     legislature by law."                                                                                                   
REPRESENTATIVE KERTTULA surmised that  all the amendment is doing                                                               
is stopping  DOT&PF from  acquiring.  She  asked whether  a legal                                                               
opinion had been  obtained regarding the right  of the department                                                               
to proceed without approval.                                                                                                    
MR. ACHEE replied  that she spoke with the  Legislative Legal and                                                               
Research Division, who said that it was a gray area.                                                                            
CO-CHAIR MEYER asked if there was  any objection.  There being no                                                               
objection, Amendment 1 was adopted.                                                                                             
Number 1625                                                                                                                     
REPRESENTATIVE SCALZI  moved to report  HB 474 as amended  out of                                                               
committee  with individual  recommendations and  the accompanying                                                               
zero fiscal  note.  There  being no objection, CSHB  474(CRA) was                                                               
reported from  the House Community and  Regional Affairs Standing                                                               
The committee took a brief at-ease.                                                                                             
HB 407-CERTIFICATE OF NEED PROGRAM                                                                                            
CO-CHAIR MEYER announced that the next order of business before                                                                 
the committee would be HOUSE BILL NO. 407, "An Act relating to                                                                  
the certificate of need program."                                                                                               
Number 1685                                                                                                                     
RYNNIEVA  MOSS,  Staff  to Representative  John  Coghill,  Alaska                                                               
State   Legislature,  testified   on  behalf   of  the   sponsor,                                                               
Representative Coghill.   Ms. Moss read the  sponsor statement as                                                               
     Representative  Coghill  feels   that  [in]  trying  to                                                                    
     preserve  the   free  enterprise   system,  legislators                                                                    
     should do all  they can to protect the  open market and                                                                    
     consumer choice.   This bill  is an attempt to  do this                                                                    
     in the world of health care.                                                                                               
     Under  the current  state statutes,  if  a health  care                                                                    
     provider  in  Fairbanks  or Mat-Su  Borough  wanted  to                                                                    
     build a $10  million dollar clinic, they  would have to                                                                    
     obtain a  Certificate of Need  (CON).  In  applying for                                                                    
     that  Certificate [Of  Need] they  would  have to  show                                                                    
     that they  would not adversely affect  any other health                                                                    
     care  facilities  in   the  vicinity.    Representative                                                                    
     Coghill  feels that  the question  needs  to be  asked:                                                                    
     "Whatever happened  to competition and the  open market                                                                    
     place?"    He  doesn't   believe  that  by  eliminating                                                                    
     Certificates  Of Need  requirements for  larger Alaskan                                                                    
     communities,  there  will  be  a large  influx  of  new                                                                    
     medical facilities.   This may have been  true when the                                                                    
     federal  government  subsidized   Certificate  of  Need                                                                    
     programs, but  the federal Certificate of  Need law was                                                                    
     repealed  in 1996.   Since  the repeal  of the  federal                                                                    
     law, 14 states have  repealed their Certificate of Need                                                                    
     statutes.     Another   ten   states  have   eliminated                                                                    
     Certificate  of   Need  requirements  for   acute  care                                                                    
     facilities,  and  an  additional  nine  states  do  not                                                                    
     require  Certificates of  Need for  ambulatory surgical                                                                    
     More  ambulatory surgical  centers  in Fairbanks  would                                                                    
     not  mean less  business for  existing facilities.   It                                                                    
     would  mean  that  fewer  Fairbanksans  would  have  to                                                                    
     travel  to  Anchorage  or  the  Lower  48  for  medical                                                                    
     procedure[s].   The savings in travel  alone could have                                                                    
     a  positive effect  on the  medical  costs and  medical                                                                    
     insurance  costs.     According  to  an   article  from                                                                    
     "Heartland" in  1996 - and  I've attached  this article                                                                    
     to  your background  information  -  the Federal  Trade                                                                    
     Commission   estimated   that   Certificate   of   Need                                                                    
     regulations  increased   the  cost  of   hospital  care                                                                    
     nationwide by more than $1.3  billion annually.  Health                                                                    
     care is expensive and the  lack of competition could be                                                                    
     a  partial reason  for that.    This legislation  would                                                                    
     encourage   competition    in   the    larger   Alaskan                                                                    
     communities  where  the  population would  support  the                                                                    
     competition  while protecting  the  fragile balance  of                                                                    
     health care services in smaller Alaskan communities.                                                                       
MS.  MOSS turned  to the  question  as to  why HB  407 chose  the                                                               
population figure  of 55,000 and  provided the committee  with [a                                                               
document entitled,  "What is the  Right Population Number?"   She                                                               
explained  that  the 2000  U.S.  Census  considers a  significant                                                               
community to  be one with  a population  of 25,000.   The federal                                                               
formula  for Alaska  provides  an additional  25  percent on  any                                                               
figure.   Therefore,  the  population [of  what  is considered  a                                                               
significant community] would  be brought up to 31,250.   Then the                                                               
Medicaid formulas  for medical reimbursements were  reviewed, and                                                               
the  middle, 175  percent,  was chosen  and  thus the  population                                                               
requirement  would rise  to 54,688.    Therefore, the  population                                                               
figure  of 55,000  was chosen.   Ms.  Moss pointed  out that  the                                                               
aforementioned document  lists the  populations of  the organized                                                               
boroughs  in  order  to  illustrate  which  communities  will  be                                                               
impacted by HB 407.   Obviously, the Anchorage Borough, Fairbanks                                                               
North  Star Borough,  and the  Matanuska-Susitna Borough  will be                                                               
Number 1930                                                                                                                     
MS.  MOSS  directed  attention  to  the  fiscal  implications  of                                                               
nonprofit  medical providers.   She  pointed out  that Providence                                                               
Alaska Medical Center will have  excess revenues of approximately                                                               
$189 million  between 1998  and 2004.   Although she  wasn't sure                                                               
where  that excess  revenue goes,  she  was fairly  sure that  it                                                               
didn't stay in  Alaska.  Therefore, Ms. Moss  felt that Anchorage                                                               
has an  atmosphere for  competition in  medical facilities.   She                                                               
reiterated that Representative Coghill  feels that competition is                                                               
good in all free enterprises,  including medical facilities.  Ms.                                                               
Moss provided  the committee  with a  chart that  specifies which                                                               
states have a CON program.   She also provided the committee with                                                               
an article  entitled, "Certificates  of Need:   A Bad  Idea Whose                                                               
Time  Has Passed."   That  article discusses  the results  of CON                                                               
programs, which  are the creation  and staffing of  new taxpayer-                                                               
funded   bureaucracies   with    expensive   and   time-consuming                                                               
application processes.   Those  costs are passed to the consumer.                                                               
The  CON   programs  have  also   resulted  in   local  community                                                               
dissatisfaction with health care planners  who are often far away                                                               
and perceived as insensitive to local needs.                                                                                    
MS. MOSS  turned to the  fiscal note, and informed  the committee                                                               
that Representative  Coghill will  be requesting  some amendments                                                               
to  HB 407  in the  House Health,  Education and  Social Services                                                               
Standing  Committee.   Those amendments  would eliminate  most of                                                               
the fiscal note through the  exemption of nursing homes and acute                                                               
psychiatric   beds.      Therefore,  the   elimination   of   the                                                               
aforementioned beds  would eliminate  page 2  of the  fiscal note                                                               
and result in a fiscal  note of approximately $150,000.  However,                                                               
Representative  Coghill  believes  that nursing  home  and  acute                                                               
psychiatric beds should  be addressed, and that  the state should                                                               
reimburse hospitals  for beds  that aren't  being used.   Perhaps                                                               
the Medicaid formula  [for hospitals] would be  changed such that                                                               
Medicaid money  is only used for  the beds that are  used and the                                                               
services that are delivered.                                                                                                    
Number 2098                                                                                                                     
REPRESENTATIVE SCALZI inquired as to why there is a fiscal note.                                                                
MS. MOSS  explained her understanding  that the state pays  for a                                                               
certain number of [psychiatric] beds  whether those beds are used                                                               
or not, which is also the case  with nursing home beds.  Ms. Moss                                                               
recalled that there is an 80 percent user rate that is paid.                                                                    
REPRESENTATIVE SCALZI related his  understanding then that if the                                                               
CON is eliminated,  the funding for those beds,  whether they are                                                               
used or not, would be eliminated as well.                                                                                       
MS. MOSS clarified  that if the CON is eliminated  the beds would                                                               
still  be  paid for  albeit  the  bed  might  be in  a  different                                                               
facility that might be full.   Therefore, two beds are being paid                                                               
REPRESENTATIVE SCALZI surmised then that  [the state] may pay for                                                               
duplicate services, if the CON is eliminated.                                                                                   
MS. MOSS replied yes.                                                                                                           
CO-CHAIR  MEYER asked  if that  is how  Ms. Moss  arrived at  the                                                               
$150,000 annual operating cost.                                                                                                 
MS. MOSS answered yes.                                                                                                          
Number 2196                                                                                                                     
REPRESENTATIVE  GUESS turned  to the  concept of  cherry picking,                                                               
which she  feels is the  controversial conflict.  When  there are                                                               
situations  in  which  there  is  an oligopoly  and  one  of  the                                                               
participants  is  regulated,  she asked  whether  cherry  picking                                                               
would  exist because  those facilities  that accept  all patients                                                               
will be at a disadvantage.                                                                                                      
MS.   MOSS  said   that   she  believes   that   is  the   reason                                                               
Representative Coghill  is willing  to amend  HB 407  because the                                                               
cherry  picking is  going to  happen with  nursing home  care and                                                               
psychiatric beds.   In regard to the rest [of  the beds] there is                                                               
a larger  share of private  pay.   The cherry picking  will occur                                                               
for the beds  that are Medicaid paid, which are  the nursing home                                                               
and psychiatric beds.                                                                                                           
REPRESENTATIVE GUESS related her  understanding that in Ms. Moss'                                                               
analysis of  basic medical  situations, the  market is  such that                                                               
there won't be any [cherry picking].                                                                                            
MS. MOSS replied, "We don't believe so."                                                                                        
REPRESENTATIVE GUESS asked  if there is an  analysis from someone                                                               
that supports that belief.                                                                                                      
MS. MOSS explained  that this belief was  developed after reading                                                               
[various]  articles,  two of  which  have  been supplied  to  the                                                               
committee.  One of the  articles is actually testimony before the                                                               
Joint  House  and  Senate  Health  Committees  in  the  State  of                                                               
Number 2312                                                                                                                     
REPRESENTATIVE   MURKOWSKI  pointed   out  that   there  is   the                                                               
possibility  of  eliminating the  CON  program  entirely for  all                                                               
communities.      Therefore,  she   inquired   as   to  why   the                                                               
aforementioned option wasn't chosen.                                                                                            
MS.  MOSS said  that Representative  Coghill was  concerned about                                                               
the  smaller   communities  where   there  are   private  medical                                                               
facilities.   For instance,  in Tok  and Delta  nonprofit medical                                                               
facilities  have  moved in  and  made  it difficult  for  private                                                               
medical clinics to compete with nonprofit medical facilities.                                                                   
REPRESENTATIVE  MURKOWSKI  related  her understanding  then  that                                                               
Representative  Coghill  believes  that the  smaller  communities                                                               
aren't going to have access to a larger health care market.                                                                     
MS. MOSS replied yes.                                                                                                           
Number 2389                                                                                                                     
REPRESENTATIVE  SCALZI  noted   that  Representative  Coghill  is                                                               
interested in reducing  state spending and the  amount of dollars                                                               
the state  puts into health care  and how those dollars  could be                                                               
used more efficiently.   According to the fiscal  note, there may                                                               
be an  impact;  however,   he questioned  how the removal  of the                                                               
CON would benefit the state in the long term.                                                                                   
MS.  MOSS  said  that  the  articles  she  has  provided  to  the                                                               
committee  will offer  some of  the thinking  that Representative                                                               
Coghill has.  In the  long run, Representative Coghill feels that                                                               
[elimination of the CON] will  create better services at a better                                                               
REPRESENTATIVE SCALZI said, "If  we're somehow going to eliminate                                                               
the  duplication of  services  and  empty beds  in  the long  run                                                               
because  those beds  will eventually  be full  and paid  for.   I                                                               
guess the  qualification of  the -- whether  it's a  nonprofit or                                                               
private enterprise that comes in,  the tie theoretically will not                                                               
be  split and  pay  for empty  beds.   ...  is  that where  we're                                                               
MS. MOSS agreed that is a  problem and that is why Representative                                                               
Coghill is willing  to amend that in the  House Health, Education                                                               
and Social Services Standing  Committee.  However, Representative                                                               
Coghill  feels that  with  a new  administration  the process  of                                                               
paying  for  medical  services  could change.    That  change  in                                                               
process  would merely  require that  the Department  of Health  &                                                               
Social   Services  change   its   agreement   with  the   federal                                                               
government.  Part  of that change would be to  only pay for those                                                               
services that are delivered.                                                                                                    
Number 2514                                                                                                                     
REPRESENTATIVE  MURKOWSKI  turned  to   the  letter  from  Valley                                                               
Hospital in  opposition to HB 407.   The final paragraph  of that                                                               
letter recommends that the legislature  create a working group of                                                               
legislators and providers to examine  the CON process.  Also, she                                                               
recalled  that the  Senate is  reviewing a  measure to  establish                                                               
such a task force.  She requested that Ms. Moss comment.                                                                        
MS. MOSS  clarified that  Representative Murkowski  was referring                                                               
to  SB  256,  sponsored  by   Senator  Green.    Senator  Green's                                                               
legislation  deals  with  changing  the  application  process  in                                                               
certain  areas that  she is  exempting, which  Ms. Moss  recalled                                                               
were  the psychiatric  beds  and  nursing home  beds.   Ms.  Moss                                                               
explained that Representative  Coghill chose to narrow  HB 407 to                                                               
the whole concept of CON  because Representative Coghill wants to                                                               
push the  concept of free  enterprise and competition.   Ms. Moss                                                               
remarked  that  the  working  group   is  one  of  Representative                                                               
Coghill's  concerns  and  the  other  is  the  nursing  home  and                                                               
psychiatric  beds.     In  further  response   to  Representative                                                               
Murkowski,  Ms.   Moss  specified  that   Representative  Coghill                                                               
wouldn't  be adverse  to  establishing a  working  group on  this                                                               
Number 2643                                                                                                                     
ELMER  LINDSTROM, Deputy  Commissioner,  Department  of Health  &                                                               
Social  Services,  began  by  saying  that  HB  407  impacts  the                                                               
department's  business  in many  ways.    He explained  that  the                                                               
purpose of  the CON  program is  two-fold.   The CON  program was                                                               
designed  to provide  some assurance  that very  expensive health                                                               
facilities are  built only  if they  are needed  and economically                                                               
efficient.  Over time, the CON  program has taken on an aspect of                                                               
cost control, which relates to the Medicaid program.                                                                            
MR. LINDSTROM remarked that it  is important for the committee to                                                               
understand who  pays for  health care in  Alaska.   For instance,                                                               
the nursing home  and psychiatric beds are paid for  by the state                                                               
and  the State  Medicaid  program.   If  one  isn't eligible  for                                                               
Medicaid upon  entrance into  a nursing  home facility,  odds are                                                               
that  person will  be shortly  thereafter because  the cost  of a                                                               
nursing home bed  in Alaska is thousands of dollars  a month.  In                                                               
total,  the Medicaid  program pays  for about  85 percent  of the                                                               
total  budget for  nursing  home  beds.   As  a cost  containment                                                               
issue, the department is keenly  supportive of the CON process as                                                               
it  relates to  long-term care  beds.   Therefore,  he urged  the                                                               
committee  to consider  adjusting HB  407 so  that the  CON would                                                               
still apply to  nursing home beds.  He  related his understanding                                                               
that  Representative Coghill  isn't hostile  to that.   The  area                                                               
that [the  state] pays is  for the acute psychiatric  beds, which                                                               
he urged the committee to give that some thought as well.                                                                       
Number 2800                                                                                                                     
MR. LINDSTROM  said, "Intuitively it  makes some sense,  I think,                                                               
the bill trying  to differentiate between the  health care market                                                               
in a  large community  ... like  Anchorage, and  maybe Fairbanks,                                                               
and maybe  the Mat-Su as  opposed to  other areas in  the state."                                                               
However, there  is no data  to paint  that picture and  thus [the                                                               
department] can't  say that  it can support  that approach.   The                                                               
CON program  in Alaska consists  of one staff person  who reviews                                                               
all  the CONs.    Historically, the  CON program  was  part of  a                                                               
larger health planning  process.  Mr. Lindstrom  pointed out that                                                               
along   with  the   elimination  of   the  federal   government's                                                               
requirement,  all  the federal  funding  that  supported the  CON                                                               
program as  well as  a broader  health plan  was eliminated.   He                                                               
explained that  typically the evaluation  of a CON would  be done                                                               
in the context  of a community health plan or  state health plan.                                                               
The  last state  health plan  was written  in 1983  and thus  the                                                               
planning  infrastructure  that  would  support  the  CON  program                                                               
doesn't  exist in  Alaska.   He  reiterated  that the  department                                                               
doesn't have the data to  support whether the concept of treating                                                               
Anchorage, the Mat-Su, and Fairbanks makes sense or not.                                                                        
Number 2927                                                                                                                     
MR. LINDSTROM  turned to the  fiscal note and  directed attention                                                               
to  page  2, which  includes  a  list  of potential  projects  in                                                               
Anchorage, Fairbanks,  and the  Mat-Su.   He didn't  believe that                                                               
CONs had  been submitted for  all these projects,  although there                                                               
has   been  some   indication  that   these  projects   could  be                                                               
constructed.   Whether  these facilities  are constructed  or not                                                               
would  be decisions  by the  various entities.   The  fiscal note                                                               
merely sums the total of  [possible] CON projects and applies the                                                               
percentage of  what the  [state] pays.   In  the case  of nursing                                                               
home [beds], in excess of 85 percent  of the cost will be paid by                                                               
the  state.   A  similar percentage  applies  to the  psychiatric                                                               
beds.   Mr.  Lindstrom acknowledged  that the  fiscal note  isn't                                                               
CO-CHAIR  MEYER advised  the committee  not to  get too  involved                                                               
with the  fiscal note but  rather leave  it to the  House Finance                                                               
Committee to debate.                                                                                                            
TAPE 02-15, SIDE B                                                                                                              
REPRESENTATIVE HALCRO  asked if all  the beds are full  every day                                                               
of the year.                                                                                                                    
MR.  LINDSTROM said  that he  didn't know.   However,  he guessed                                                               
that  the assumptions  do [assume]  that  all the  beds are  full                                                               
every day.                                                                                                                      
Number 2995                                                                                                                     
REPRESENTATIVE  HALCRO   questioned  how  the  fiscal   note  was                                                               
derived.  He  related his interpretation that every  bed would be                                                               
full every day of  the year.  He asked if the  plan is for people                                                               
to get sick.   He also asked  if there is concern  with regard to                                                               
disbursement of existing patients into these facilities.                                                                        
MR. LINDSTROM pointed  out that over the last  decade [the state]                                                               
has done a good job of  not building nursing home beds.  However,                                                               
the home and  community-based system has been nurtured  to try to                                                               
put in  place less  costly alternatives to  nursing home  care in                                                               
communities [with]  assisted living  home beds.   Ten  years ago,                                                               
there were no  assisted living home beds,  and furthermore Alaska                                                               
didn't  even  have  a licensure  for  something  called  assisted                                                               
living.   That system has grown  over the last ten  years so that                                                               
there are probably  more people in assisted living  beds than are                                                               
in  nursing  home  beds.    Using the  CON  has  discouraged  the                                                               
building of those  nursing home beds.  In the  absence of the CON                                                               
process,  it's likely  that a  number of  these projects  will be                                                               
built and people  will gravitate to those  more expensive nursing                                                               
home  beds.   However, whether  those  beds are  full moves  into                                                               
another  very complicated  issue in  regard to  how the  Medicaid                                                               
system reimburses nursing  home and acute care  facilities.  [The                                                               
Medicaid  system]  has  a  formula   with  its  own  rate-setting                                                               
mechanism that  is partly governed by  some federal requirements.                                                               
However, he  pointed out that in  the end beds that  might not be                                                               
filled  are  paid  for  in  some  sense.    To  the  extent  that                                                               
utilization is less than 100 percent,  the unit cost for that bed                                                               
will be  higher than it  would otherwise.   He clarified  that 85                                                               
percent of the cost of those beds will be borne by the state.                                                                   
Number 2848                                                                                                                     
REPRESENTATIVE  SCALZI related  his  understanding that  although                                                               
most  states support  CONs, those  states  also strongly  support                                                               
long-term care.   That  support of  long-term care  is consistent                                                               
with the sponsor's comments.   Representative Scalzi recalled the                                                               
struggle  the local  hospital  on the  Kenai  Peninsula had  when                                                               
attempting to  obtain its long-term  CON.   Representative Scalzi                                                               
remarked,  "Long-term care  makes  sense because  you can't  tell                                                               
when a person's going to check out."                                                                                            
REPRESENTATIVE  SCALZI turned  to the  issue of  psychiatric beds                                                               
and  related his  belief that  without  an incentive  for a  cure                                                               
ratio, then the  problem may be exacerbated because of  a need to                                                               
fill  the beds.    Therefore,  there is  a  disincentive for  the                                                               
private sector  to develop a cheaper  method of service.   In the                                                               
long  term,  everyone's  objective  is to  provide  care  to  the                                                               
community.  Therefore, he inquired  as to Mr. Lindstrom's view of                                                               
Alaska's  health care  system  in the  long term.    He asked  if                                                               
Alaska  is  providing  a  disincentive   by  continuing  the  CON                                                               
MR. LINDSTROM  reiterated that [the  state pays about  85 percent                                                               
of the cost] for long-term care  and psychiatric beds.  For other                                                               
acute care  services [in  facilities subject to  a CON  the state                                                               
pays]  about 20  percent of  the cost.   Mr.  Lindstrom suspected                                                               
that  others  would  be  able  to  provide  a  better  answer  to                                                               
Representative Scalzi.                                                                                                          
MR.  LINDSTROM  turned to  the  fundamental  purpose of  the  CON                                                               
program, which is to ensure that  the [health care] system in any                                                               
community  is efficient  and  that  facilities aren't  needlessly                                                               
built.  He posed an example  in which a community has a community                                                               
hospital and  an ambulatory  surgical facility.   "If  the demand                                                               
for the  services isn't  really there, then  "the pie"  is simply                                                               
being divided  between more facilities, and  therefore there will                                                               
be  some  inefficiencies in  the  system.   He  attributed  those                                                               
inefficiencies  to the  rate-setting system.   He  explained that                                                               
because there  will be  fewer units of  surgery performed  at the                                                               
hospital,  the unit  cost  is  going to  increase  and thus  [the                                                               
state] will  reimburse at  a higher  rate for  a fewer  number of                                                               
procedures  at  that  hospital.   In  regard  to  the  ambulatory                                                               
surgical  center, it  won't be  reimbursed  through the  facility                                                               
rate-setting system but  rather will be treated  as an outpatient                                                               
[facility], he explained.  In  short, Mr. Lindstrom believes that                                                               
the  CON  program  will  provide a  more  efficient  system  than                                                               
Number 2621                                                                                                                     
REPRESENTATIVE MURKOWSKI  pointed out  that one of  the arguments                                                               
against  the   CON  program  is   that  it  just   doesn't  work.                                                               
Representative Murkowski  turned to  information provided  to the                                                               
committee that  says that in the  past five years 100  percent of                                                               
all hospital CON  applications were approved, while  0 percent of                                                               
nonhospital  [applications] were  approved.    She explained  the                                                               
argument  as follows:   "The  hospitals have  what the  hospitals                                                               
have and  ... they are able  to maintain that, and  anybody who's                                                               
looking to  come in  and through  the process, as  it is  set up,                                                               
work within that  process and obtain a certificate  of need, they                                                               
are denied  while the hospitals  are not  denied."  She  asked if                                                               
the  argument that  hospitals are  able  to obtain  CONs [due  to                                                               
what] they  have, while others  [attempting] to obtain a  CON are                                                               
denied is accurate.                                                                                                             
MR. LINDSTROM answered that although  he wasn't sure whether that                                                               
argument  was   true,  he  could   provide  the   committee  with                                                               
information.    He  wasn't  sure  of  the  number  of  ambulatory                                                               
surgical  facility applications  that have  been received  in the                                                               
last  few years.   However,  he  recalled that  there were  three                                                               
[such facilities trying to obtain  CONs] in Fairbanks.  All three                                                               
of  those  applications  were  denied   because  the  CON  review                                                               
indicated that no new operating  facilities were necessary in the                                                               
area.   He also  recalled that  there was a  desire to  replace a                                                               
surgical center  in Anchorage, which resulted  in legislation two                                                               
years  ago.    That  legislation passed  and  thus  allowed  that                                                               
operator to  replace the facility  without going through  the CON                                                               
Number 2515                                                                                                                     
REPRESENTATIVE MURKOWSKI said  that if it is  true that hospitals                                                               
are being  approved for CONs while  ambulatory facilities aren't,                                                               
then she is  curious as to why.   Representative Murkowski turned                                                               
to the  notion that  hospitals are attempting  to get  around the                                                               
CON  requirement   by  leasing  equipment  or   using  a  captive                                                               
foundation  to  build  a   facility.    Representative  Murkowski                                                               
expressed her  curiosity as to  the administration's  response to                                                               
these remarks.                                                                                                                  
MR. LINDSTROM  offered to respond to  those [arguments] point-by-                                                               
point once he  has received the document  to which Representative                                                               
Murkowski is referring.                                                                                                         
Number 2451                                                                                                                     
REPRESENTATIVE  GUESS inquired  as to  the regulations  regarding                                                               
who  has to  take Medicaid  patients and  who can  choose not  to                                                               
accept Medicaid patients or those who can't pay.                                                                                
MR.  LINDSTROM related  his belief  that no  one is  compelled to                                                               
enroll  as  a Medicaid  provider.    He suspected  Representative                                                               
Guess' question is  really in regard to  what community hospitals                                                               
are required to  do.  As a licensure requirement,  there are some                                                               
requirements regarding the hours of  operation and who is served.                                                               
That   licensure   requirement    isn't   related   to   Medicaid                                                               
REPRESENTATIVE GUESS asked if HB  407 received a Finance referral                                                               
because upon introduction, it didn't have a Finance referral.                                                                   
CO-CHAIR  MEYER related  his belief  that  since the  bill has  a                                                               
fiscal note, it would automatically receive a Finance referral.                                                                 
Number 2330                                                                                                                     
CATHY CRONIN, North Star  Hospital, testified via teleconference.                                                               
Ms. Cronin  shared Representative  Coghill's concern  with regard                                                               
to an  expansion of psychiatric  beds and  thus she said  she was                                                               
prepared to  work on that  matter in the House  Health, Education                                                               
and Social Services Standing Committee.                                                                                         
DAVID   McGUIRE,   Independent    Practitioner,   testified   via                                                               
teleconference.   Mr. McGuire characterized the  [CON program] as                                                               
one which never worked.   It's fundamental theory is upside down.                                                               
The notion  that to  have cheaper  gasoline would  require having                                                               
one  gas  station  in  town  doesn't work.    Similarly,  such  a                                                               
situation wouldn't  work in  the health  care realm.   Therefore,                                                               
the federal government  eliminated [the CON program].   The [CON]                                                               
process has  become highly  political and  unfair.   For example,                                                               
the Fairbanks  Memorial Hospital was  allowed to construct  a $10                                                               
million oncology center  without a CON.  That was  done by having                                                               
the Board  of Trustees  own the  facility.   Since [the  Board of                                                               
Trustees] wasn't  a health care  provider, Mr. Pearce  (ph) ruled                                                               
that no  CON was  necessary.   "We, in turn,  asked for  the same                                                               
treatment by  having a nonprofit  agency buy the building  and we                                                               
were told that would not  be allowed; principally because he said                                                               
so," Mr. McGuire explained.                                                                                                     
MR. McGUIRE  turned to the issue  of cherry picking.   He related                                                               
his  belief  that  patients  want  to go  where  they  feel  most                                                               
comfortable  that  the care  [desired]  will  be delivered.    He                                                               
wasn't sure that a patient's  primary interest is ensuring that a                                                               
nonprofit,  perhaps an  inefficient nonprofit,  stays profitable.                                                               
Mr. McGuire  urged the committee  to pass HB 407  from committee.                                                               
He noted that he wasn't sure  of the fiscal note, and offered the                                                               
information that  outpatient facilities  are reimbursed  less for                                                               
the  same  procedure,  than  inpatient  facilities.    Therefore,                                                               
outpatient  procedures   should  save   the  state  money.     He                                                               
questioned whether that is reflected in the fiscal note.                                                                        
Number 2121                                                                                                                     
ELIZABETH  RIPLEY, Director,  Community  Health Planning,  Valley                                                               
Hospital, testifying via teleconference  noted that she had faxed                                                               
written testimony  to the committee.   Ms. Ripley  clarified that                                                               
Valley  Hospital is  a private  nonprofit free-standing  hospital                                                               
that  is opposed  to the  population delimiter  in HB  407.   She                                                               
pointed  out  that [the  Mat-Su  Borough]  is  one of  the  three                                                               
communities  that would  fall outside  the population  delimiter.                                                               
In  regard   to  the  earlier   question  of  what   happened  to                                                               
competition, Ms. Ripley acknowledged  the benefits of competition                                                               
and asserted that the proposed  delimiter does nothing to support                                                               
a  level playing  field.   She  expressed  concern regarding  the                                                               
establishment of medical boutiques and cherry picking.                                                                          
MS. RIPLEY  turned to how  [Valley Hospital] competes  right now.                                                               
She  explained  that  Valley Hospital  competes  with  Anchorage.                                                               
Although [Valley  Hospital] has  sole community  provider status,                                                               
studies show that most of  the 16,000 Valley residents commute to                                                               
Anchorage  and most  get their  [health care]  services there  as                                                               
well.   Those commuters  make more than  those who  don't commute                                                               
and a  much higher  percentage have health  insurance or  a third                                                               
party  insurance.   Currently, 6  percent of  [Valley Hospital's]                                                               
patients are  on Medicare, which  is expected to double  in eight                                                               
to ten  years.   Additionally, [Valley Hospital]  has one  of the                                                               
highest  rates  of  Medicaid  persons  per  capita  per  borough.                                                               
Furthermore,  those  Medicaid  persons are  the  fastest  growing                                                               
payer  segment   for  [Valley   Hospital].     Moreover,  [Valley                                                               
Hospital]  has seen  its  self-pay double  in  the last  quarter,                                                               
which is drastic.                                                                                                               
Number 1992                                                                                                                     
MS. RIPLEY announced  support for keeping the CON  program at the                                                               
$1  million  threshold for  equipment  and  raising  it to  a  $2                                                               
million threshold for building.  Ms. Ripley said:                                                                               
     If you  care about preserving competition,  then you'll                                                                    
     consider the  following.  First of  all, all providers,                                                                    
     including private  physicians, must  meet the  terms of                                                                    
     the CON. Right now, a  private provider doesn't have to                                                                    
     [meet the  terms of  the CON]  -- one  single physician                                                                    
     opening  up something  specific.    All providers  must                                                                    
     provide for  all financial classes and  their payer mix                                                                    
     must reflect the  payer mix of the  locale within which                                                                    
     they  operate.    And  Dave Pearce  (ph)  and  the  CON                                                                    
     department could track this.                                                                                               
MS. RIPLEY recalled a prior  question regarding whether hospitals                                                               
are getting around [the CON program]  with leasing.  To that, Ms.                                                               
Ripley  suggested   making  all   expenditures  fall   under  the                                                               
aforementioned $2  million threshold.   In  regard to  the fiscal                                                               
implications of  a nonprofit, Ms.  Ripley emphasized  that Valley                                                               
Hospital takes its nonprofit status  seriously.  She informed the                                                               
committee that Valley  Hospital's net revenues for  the past five                                                               
years have run between $2-$3 million.   From that net revenue, 10                                                               
percent is  returned to  the community  in a  healthy communities                                                               
program that is  designed to raise health status.   For instance,                                                               
a dental  clinic in Talkeetna was  created.  That net  revenue is                                                               
also reinvested into the equipment  because [Valley Hospital] has                                                               
to compete  with the Anchorage  providers.  Furthermore,  the net                                                               
revenue is reinvested  in the staff.   Therefore, Valley Hospital                                                               
is barely making it with a net revenue of $2-$3 million.                                                                        
MS. RIPLEY concluded  by relating her belief that  there are many                                                               
problems  with HB  407.   She  recommended  that the  legislature                                                               
establish a working group comprised  of legislators and providers                                                               
in order to examine the CON process.                                                                                            
Number 1828                                                                                                                     
REPRESENTATIVE SCALZI inquired as to  whether [Palmer] has a mill                                                               
rate that contributes to Valley Hospital.                                                                                       
MS. RIPLEY replied  no, and reiterated that Valley  Hospital is a                                                               
private  nonprofit free-standing  hospital.   She explained  that                                                               
the Mat-Su Borough  has limited health powers,  and therefore the                                                               
borough does virtually nothing in the  health care arena.  In her                                                               
opinion,  she  didn't believe  that  the  borough would  consider                                                               
doing anything in the health care arena.                                                                                        
Number 1780                                                                                                                     
REPRESENTATIVE HALCRO said that he  has heard those supportive of                                                               
eliminating the  CON process express  concern that in  the larger                                                               
cities  the  nonprofit hospitals  use  the  CON  as a  shield  to                                                               
competition and  therefore, are able  to amass a great  amount of                                                               
dollars  that  fuels  their  growth  and  needlessly  holds  down                                                               
competition.    In  Anchorage,  this wealth  has  been  used  for                                                               
purchases    unrelated    to    providing    medical    services.                                                               
Representative Halcro requested that  Ms. Ripley respond to those                                                               
charges and explain the federal  requirements the nonprofit falls                                                               
MS.  RIPLEY  answered  that  as   a  private  nonprofit,  [Valley                                                               
Hospital]  is  accountable.   She  related  her belief  that  the                                                               
country  is  at  a  crossroads  in  regard  to  whether  to  make                                                               
[medical]  nonprofits accountable.   Valley  Hospital's Board  of                                                               
Directors has  reviewed that and created  the Healthy Communities                                                               
Program in  an attempt  to be accountable.   She  reiterated that                                                               
Valley Hospital invests 10 percent  of its net revenues back into                                                               
the community.   However, typically most  hospitals reinvest less                                                               
than  1 percent.   She  said  that although  she believes  Valley                                                               
Hospital's board and  chief executive officer agree  with some of                                                               
the statements regarding how nonprofits  can be held accountable,                                                               
[they] feel that Valley Hospital has  more than stepped up to the                                                               
plate to be held accountable to the community.                                                                                  
MS. RIPLEY  turned to  the mention  of providers  amassing funds,                                                               
and  explained  that is  why  [Valley  Hospital] established  the                                                               
criteria it did.  If one wants  to have a level playing field and                                                               
competition,  she  suggested  making all  hospitals  and  private                                                               
providers meet these  terms as well as making sure  that they are                                                               
providing  care to  all financial  classes.   "Because we're  not                                                               
seeing  that," she  said.   Valley  Hospital already  experiences                                                               
competition in  its outpatient sector  for radiology.   Ethically                                                               
and legally,  Valley Hospital's ER  has to take anyone  who comes                                                               
in.   However, individual  providers don't  have to  do so.   For                                                               
instance, there  are providers in  [the Mat-Su] Valley  who don't                                                               
accept patients  with Medicaid or  Medicare.  She  reiterated her                                                               
earlier statement  that [Valley Hospital's] outpatient  sector is                                                               
supporting  the  inpatient  sector.   Ms.  Ripley  expressed  her                                                               
belief  that [Valley  Hospital]  could  support legislation  that                                                               
built   in  a   level  playing   field  and   accountability  for                                                               
Number 1505                                                                                                                     
REBECCA  PARKER,  Employee,  Providence  Alaska  Medical  Center,                                                               
testified via teleconference.  Ms.  Parker informed the committee                                                               
that the Providence Alaska Medical  Center has served hundreds of                                                               
thousands of  Alaskans regardless of  their ability to pay.   Ms.                                                               
Parker  also  informed  the   committee  that  Providence  Alaska                                                               
Medical Center  spent over  $40 million  to expand  its emergency                                                               
room.  The prior year  Providence Alaska Medical Center purchased                                                               
a new  helicopter and thus  expanded the number of  patients that                                                               
can be carried in  an emergency.  In the next  five to ten years,                                                               
Providence  Alaska Medical  Center  will be  investing over  $100                                                               
million  in capital  improvements and  expansions merely  to meet                                                               
the  emerging  needs  of  various  programs  in  health  care  in                                                               
MS.  PARKER  explained  that  Providence  Alaska  Medical  Center                                                               
opposes  HB  407 because  it  places  many existing  programs  in                                                               
jeopardy.    Furthermore,  this legislation  will  allow  surgery                                                               
centers to  be built  without any review  or consideration  as to                                                               
whether the  community can  financially support  such facilities.                                                               
Ms.  Parker  said  that  nationwide   a  duplication  of  medical                                                               
services has  contributed to the  existing costs of  health care.                                                               
Providence Alaska Medical Center  provides services that it knows                                                               
won't be  reimbursed to  cover the  real cost.   Five  years ago,                                                               
Providence  Alaska Medical  Center provided  over $11  million in                                                               
charity costs,  which has risen  to more  than $25 million.   She                                                               
acknowledged the  expectation to  see less dollars  available for                                                               
primary health care and health  care reimbursements from both the                                                               
federal and  state government.   Furthermore,  there is  also the                                                               
expectation  that  the aforementioned  will  impact  the cost  of                                                               
charity  care during  this  time when  revenues  are expected  to                                                               
decline.   Ms. Parker specified  that [Providence  Alaska Medical                                                               
Center's] greatest  concern is  maintaining the  programs already                                                               
in place while  increasing those that are expected  to grow, such                                                               
as the cancer therapy center.   "Who, if we don't, will offer the                                                               
broad  spectrum of  services to  Alaska's  patients," she  asked.                                                               
Eliminating the  CON process in  urban areas would allow  for new                                                               
surgery centers that  will serve only a small  number of patients                                                               
who can  afford to  pay, which will  quickly erode  the financial                                                               
stability of  the medical center  and its ability to  provide the                                                               
many unreimbursed costs  of operating a true  tertiary acute care                                                               
center for all Alaskans.                                                                                                        
Number 1273                                                                                                                     
CO-CHAIR  MEYER  recalled  that Anchorage  has  competition  that                                                               
seems  to  be  working.   Therefore,  he  didn't  understand  why                                                               
[Alaska Providence Medical Center] would be opposed to HB 407.                                                                  
MS.   PARKER  agreed   that  Anchorage   currently  has   healthy                                                               
competition.  However,  with the passage of HB  407, the building                                                               
of new surgical  centers are anticipated.   Those surgery centers                                                               
will be able  to serve those who can afford  to pay, while Alaska                                                               
Providence Medical  Center will  remain open 24  hours a  day and                                                               
serve  everyone  regardless of  their  ability  to pay.    Today,                                                               
Alaska Providence  Medical Center's charity costs  amount to over                                                               
$25  million and  that  is expected  to continue  to  grow.   She                                                               
reiterated,  "Who in  the community  will serve  those people  if                                                               
Providence doesn't?"                                                                                                            
REPRESENTATIVE MURKOWSKI  turned to the sponsor  statement for HB
407, which refers to the repeal  of the federal CON program.  The                                                               
sponsor  statement  says since  the  federal  repeal of  the  CON                                                               
program,  14  states  have  repealed  the  CON.    Representative                                                               
Murkowski asked if Ms. Parker  has any information regarding what                                                               
has happened  in those  states, especially  in relation  to those                                                               
hospitals similar to Alaska Providence  Medical Center, where the                                                               
CON program has been repealed.                                                                                                  
MS. PARKER  said that  she didn't have  any information  on that,                                                               
but offered to provide statistics to Representative Murkowski.                                                                  
Number 0984                                                                                                                     
MS. PARKER, in response to  Representative Halcro, confirmed that                                                               
charity costs are  defined as [the cost for]  those patients that                                                               
are unable  to pay for  their services.   In further  response to                                                               
Representative Halcro,  Ms. Parker reiterated that  charity costs                                                               
for  Alaska  Providence Medical  Center  has  increased from  $11                                                               
million  to $25  million  over  five years.    That charity  care                                                               
segment is growing rapidly.                                                                                                     
CO-CHAIR  MEYER asked  if Ms.  Parker would  anticipate the  same                                                               
numbers  [in  regard  to  charity   costs]  for  Alaska  Regional                                                               
MS.  PARKER answered  that  she  didn't know.    She related  her                                                               
impression that Alaska Providence  Medical Center is serving more                                                               
of the underserved in the community than anyone else.                                                                           
Number 0836                                                                                                                     
REPRESENTATIVE  MURKOWSKI referred  to a  document in  the packet                                                               
that  addressed  the  1998-2004   projections  for  revenues  and                                                               
expenses  for Alaska  Providence Medical  Center.   This document                                                               
indicates that charity  was $11 million for 1998  and $15 million                                                               
for 2001.   Those  figures are under  the heading  of contractual                                                               
allowances.   She asked if  those figures refer to  charity costs                                                               
that Ms. Parker has said have risen to $25 million.                                                                             
MS. PARKER replied yes.                                                                                                         
REPRESENTATIVE  SCALZI  asked  if  CON  programs  pay  for  other                                                               
services in the hospital or is  it more like a dedicated program.                                                               
He  asked if  the hospital  finds that  it collects  more revenue                                                               
than [patients it]  takes care of and so that  money is disbursed                                                               
to other services in the hospital.                                                                                              
MS.  PARKER clarified  that  [Alaska  Providence Medical  Center]                                                               
serves acute care needs and  long-term care mental health as well                                                               
as many  other services.  Furthermore,  Alaska Providence Medical                                                               
Center  serves   Medicaid  and   Medicare  patients   that  other                                                               
facilities won't accept.                                                                                                        
Number 0578                                                                                                                     
ALLAN SNIDER testified  via teleconference in support  of HB 407.                                                               
He  related a  personal  experience in  which  he had  orthopedic                                                               
surgery on his  hand at the Tanana Valley Clinic  in his doctor's                                                               
office for a cost of $400.   However, Fairbanks Memorial quoted a                                                               
cost of  approximately $5,000 for outpatient  orthopedic surgery.                                                               
Mr. Snider discussed his insurance coverage as a carpenter.                                                                     
JOHN LUNDQUIST, Employee,  Fairbanks Memorial Hospital, testified                                                               
via  teleconference.   As a  50-year resident  of Fairbanks,  Mr.                                                               
Lundquist said  that he has seen  many changes.  One  of the good                                                               
changes  occurred after  the flood  when the  community supported                                                               
and  funded  a debt-free  community  hospital.   He  related  his                                                               
belief that Fairbanks Memorial Hospital  has served the community                                                               
well  and  maintained  relatively  low prices.    Therefore,  Mr.                                                               
Lundquist stated  his opposition to  HB 407 because  removing the                                                               
CON  restrictions will  result in  cherry picking  as well  as an                                                               
increase   in  prices.     The   CON  program   protects  against                                                               
unnecessary facilities.                                                                                                         
REPRESENTATIVE  MURKOWSKI  inquired as  to  whether  the beds  at                                                               
Fairbanks Memorial Hospital are full or over capacity.                                                                          
MR. LUNDQUIST answered that although  the hospital doesn't run at                                                               
capacity,  he wasn't  sure of  the  percentage.   There are  many                                                               
empty beds.                                                                                                                     
Number 0113                                                                                                                     
MARTY  O'LONE, Employee,  Fairbanks Memorial  Hospital, testified                                                               
via teleconference.  Mr. O'Lone  indicated that he took exception                                                               
with the  statistics that  mix Alaska with  the Lower  48 because                                                               
Alaska does  have a  smaller population  compared to  the average                                                               
Lower  48  state.    Specifically,   Mr.  O'Lone  questioned  the                                                               
comparison of Alaska  to Georgia because the  suburbs of Atlanta,                                                               
Georgia, itself have  the same population of the  entire state of                                                               
Alaska.   Mr. O'Lone  said that  he is in  favor of  a reasonable                                                               
level  of state  oversight  of  new programs.    However, if  the                                                               
current CON  regulations were changed or  eliminated, the results                                                               
would  be  negative  on  the  community  and  the  only  Interior                                                               
hospital  that  has  served  the   community  since  1972.    The                                                               
population  of  the  Fairbanks North  Star  Borough  isn't  large                                                               
enough to  support the unnecessary  facilities that  would emerge                                                               
if the current CON was changed or eliminated.                                                                                   
TAPE 02-16, SIDE A                                                                                                              
MR. O'LONE mentioned that [research  has shown] that hospitals in                                                               
states  without  CONs  have  lower   patient  levels  but  higher                                                               
treatment  costs   to  patients.     Mr.  O'Lone   announced  his                                                               
opposition to HB  407, and he requested that  the CON regulations                                                               
be strengthened rather  than weakened in order  that the Interior                                                               
population would  have access  to the high  quality of  care that                                                               
already exists locally.                                                                                                         
Number 0099                                                                                                                     
LIZ WOODYARD, Nurse, testified via  teleconference.  Ms. Woodyard                                                               
informed  the  committee  that  she  supported  the  current  CON                                                               
program.  Therefore, she opposed  any proposed changes to the CON                                                               
program because  she believes that  the CON program  protects the                                                               
public  from  any  unnecessary  services.    She  echoed  earlier                                                               
testimony regarding  the need  to strengthen  not weaken  the CON                                                               
program.    Ms.  Woodyard  said,  "As  a  nurse,  too,  I'm  also                                                               
concerned about the nursing shortage  and the workforce shortage,                                                               
and feel that  the CON program does really look  at the community                                                               
to see if we need any  additional services, and also looks at the                                                               
workforce that's needed to support any services."                                                                               
Number 0180                                                                                                                     
CORLIS TAYLOR,  Employee, Fairbanks Memorial  Hospital, testified                                                               
via teleconference.   She noted  that she  is also a  consumer of                                                               
health care and has probably  received services from almost every                                                               
facility in  Fairbanks.  Ms. Taylor  said that she is  opposed to                                                               
HB 407.   She explained that  she is concerned with  the shortage                                                               
of health care workers, specifically  there are shortages of RNs.                                                               
This shortage is  nationwide.  Therefore, elimination  of the CON                                                               
would result  in an even  thinner spread of health  care workers,                                                               
which she  said would  impact the  quality of  care.   Ms. Taylor                                                               
explained  that the  CON process  allows review  of the  services                                                               
that are  provided in order  to determine whether  those services                                                               
are necessary in a given community,  which helps with the cost of                                                               
health care.   In other words,  if there are too  many beds, then                                                               
[all facilities] suffer  because no place has  enough patients to                                                               
maintain their financial health.   Therefore, each facility would                                                               
need to increase its costs in order to survive.                                                                                 
MS. TAYLOR turned  to the comparison of health care  to a grocery                                                               
store.  She  pointed out that if  she goes to a  grocery store to                                                               
purchase a  loaf of bread,  she knows  exactly what to  look for.                                                               
However, as a consumer of health  care, the consumer has to trust                                                               
what the health  care provider says.   Therefore, facilities that                                                               
feel  the  need   to  increase  their  finances   may  result  in                                                               
affiliated  physicians ordering  unnecessary  tests  in order  to                                                               
meet a financial obligation of the facility.                                                                                    
MS. TAYLOR  remarked that community hospitals  have an obligation                                                               
to  treat all  who enter,  regardless of  whether the  person has                                                               
insurance or  the means to  pay.  Furthermore,  hospitals provide                                                               
services  that most  clinics and  free-standing facilities  don't                                                               
want to  offer.  For  example, the Fairbanks  [Memorial] Hospital                                                               
provides  mental health  services, nursing  home services,  and a                                                               
cancer treatment  facility.   In regard  to the  cancer treatment                                                               
facility, Ms.  Taylor explained that  the facility  was primarily                                                               
built to keep patients in the community rather than for money.                                                                  
Number 0647                                                                                                                     
MS.  TAYLOR recalled  earlier testimony  regarding the  notion of                                                               
excess  revenue that  facilities  are stockpiling.   Any  revenue                                                               
generated by  Fairbanks Memorial  Hospital is  put back  into the                                                               
community  in  many  ways  such   as  the  aforementioned  cancer                                                               
treatment center.  Therefore, she  feels that most facilities put                                                               
excess revenue back into the community.                                                                                         
CO-CHAIR  MEYER apologized  for not  being able  to complete  the                                                               
public  testimony today.   Therefore,  he announced  that HB  407                                                               
would be heard again on Thursday.                                                                                               
There being no  further business before the  committee, the House                                                               
Community  and Regional  Affairs Standing  Committee meeting  was                                                               
adjourned at 9:59 a.m.                                                                                                          

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