Legislature(1993 - 1994)
01/27/1994 03:00 PM House HES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE HEALTH, EDUCATION AND SOCIAL SERVICES
STANDING COMMITTEE
January 27, 1994
3:00 p.m.
MEMBERS PRESENT
Rep. Cynthia Toohey, Co-Chair
Rep. Con Bunde, Co-Chair
Rep. Gary Davis, Vice Chair
Rep. Al Vezey
Rep. Harley Olberg
Rep. Bettye Davis
Rep. Tom Brice
MEMBERS ABSENT
Rep. Pete Kott
Rep. Irene Nicholia (Excused)
COMMITTEE CALENDAR
Presentation: Critical Strategic Plan for State Health
Laboratories
WITNESS REGISTER
DR. PETER NAKAMURA, Director
Division of Public Health
Department of Health and Social Services
P.O. Box 110610
Juneau, Alaska 99811-0610
Phone: (907) 465-3090
Position Statement: Answered questions
NEWTON CHASE, Chief of Facilities
Department of Health and Social Services
P.O. Box 110650
Juneau, Alaska 99801-0650
Phone: (907) 465-3037
Position Statement: Introduced steering committee members
and answered questions
LEIF SELLKREGG, Representative
Heery International
621 W. 15th Ave
Anchorage, Alaska 99501
Phone: (907) 279-8765
Position Statement: Conducted a presentation and answered
questions
MICHAEL PRESS, Representative
Coopers & Lybrand
C/O Coopers & Lybrand
130 Avenue of the Americas
New York, New York
(212) 259-2279
Position Statement: Answered questions
DR. KATHERINE KELLY, Representative
Centers for Disease Control
3247 S. Flower Rd.
Atlanta, Georgia
(404) 454-6221
Position Statement: Answered questions
MARTHA ROBBINS, Representative
Coopers & Lybrand
203 N. LaSalle
Chicago, Illinois 60601
(312) 701-6422
Position Statement: Answered questions
MARGARET LOWE, Commissioner
Department of Health and Social Services
P.O. Box 110601
Juneau, Alaska 99811-0601
Phone: (907) 464-3030
Position Statement: Discussed need for action on
recommendations
ACTION NARRATIVE
TAPE 94-05, SIDE A
Number 000
CHAIR TOOHEY called the meeting to order at 3:04 p.m. and
asked for a roll call to be taken. Rep. Kott was not in
attendance and Rep. Nicholia had been excused. Chair Toohey
stated that the meeting was concerning the consolidation of
Public Health Laboratories. She opened the meeting for
discussion.
Number 065
DR. PETER NAKAMURA, Director, Division of Public Health,
Department of Health and Social Services (DHSS), stated that
the state of Alaska was at a critical point regarding the
infrastructure for public health for the next 30 years and
the presentation would focus on the strategic laboratory
plan. He introduced the "critical steering committee" for
the strategic laboratory plan. Dr. Nakamura referred the
meeting over to Newton Chase.
Number 161
NEWTON CHASE, Chief of Facilities, Department of Health and
Social Services (DHSS), stated he was also a member of the
steering committee and project manager for DHSS in regards
to the strategic laboratory plan. For background, he said
that there are three public health labs (in Fairbanks,
Juneau, and Anchorage) that are outmoded facilities. He
mentioned that a conditions assessment combined with
recommendations from the Center of Disease Control from
Atlanta and the National Institute for Occupation Safety and
Health (NIOSH) was done on the state of conditions of the
three labs. He stated that as a result of the evaluations
the state labs were found to be in very serious condition in
regards to safety and health to the staff and to the public.
Subsequently, funds for $200,000 were granted to proceed
with a strategic plan based on the recommendations from the
agencies involved in the evaluations. The three options -
privatization, consolidation, or centralization - were
offered as solutions to the state labs problem. Mr. Chase
stated that the presentation was the result of the study
undertaken to evaluate the three options.
Number 293
CHAIR TOOHEY asked when the $200,000 was appropriated and
when the strategic plan study began.
Number 295
MR. CHASE answered that the appropriation was made in fiscal
1994 and that the strategic study started in October of
1994.
Number 312
(CHAIR TOOHEY stated that Rep. B.Davis and Rep. Brice
arrived at 3:08 p.m. and 3:11 p.m., respectively.)
Number 317
MR. CHASE stated that a final report would be forwarded to
the legislature upon its completion.
Number 335
REP. BUNDE asked for the approximate date.
Number 340
MR. CHASE said approximately three weeks.
Number 356
LEIF SELLKREGG, Representative, Heery International, stated
that he was part of the consulting team selected by the
DHSS. He introduced other members of the consulting team:
Martha Robbins, Michael Press, Tom Livingston, and Nolan
Watson. Mr. Sellkregg presented the committee with the
recommendations from the final steering committee meeting,
held a day earlier.
(Note: Mr. Sellkregg referred to charts, graphs, and also
printed text that can be found in Attachment 1.)
MR. SELLKREGG stated that the strategic plan had been
requested to provide specific recommendations regarding the
most cost-effective provision of quality public health
services in Alaska. The areas of strategies focused on:
operational effectiveness, position of laboratories for
future growth, and aligning operational and fiscal goals.
He stated that great effort was exerted to include the
public in this discussion.
MR. SELLKREGG said that their recent studies piggybacked
thirteen previous studies conducted since 1985. Throughout
those years, he said, the consistent theme has become more
and more urgent. He stated that the steering committee had
also been asked to address the medical examiner/state morgue
issue. He continued on to say that a cost analysis had also
been done.
Number 553
CHAIR TOOHEY asked if he had the results, the cost, and the
outcome of the recommendations.
Number 556
MR. SELLKREGG responded that he did not have the cost
results.
Number 563
MR. CHASE said that to his knowledge the only cost to the
state was the $225,000 that he had talked about.
Number 595
MR. SELLKREGG said that Alaska health labs interacted with
national public health labs. He said the national health
labs extract data from state health labs to assess the
health of the population's well being and referred to the
process as a core function. He distinguished public health
from health care by saying that public health deals with
economic, social and cultural well-being of communities, and
health care deals with the individual's well-being.
MR. SELLKREGG stated that recognizing trends, detecting
clusters of infection, recognizing unusual subtypes of
agents, and providing surveillance for resistance were
operations of Alaska public health labs endeavoring to
understand sources and effects of disease.
MR. SELLKREGG stated the difference between private and
public health labs was that public health labs address
community health risks, while private labs address
individuals and their health risks.
MR. SELLKREGG described the route specimens take to be
tested in the public health labs. He said that information
from the specimen is fed directly into epidemiology. He
also stated that private labs in Alaska do not do large
numbers of tests, and their results are not reported to
epidemiology, therefore, a great deal of information is
lost.
MR. SELLKREGG said the Alaska public health labs face
serious problems; all labs occupy leased space and require
significant expenditures to solve safety and efficiency
problems. He stated that due to physical building
conditions, Anchorage and Juneau health labs were putting
staff, other tenants of the facilities, and the public at
risk to T.B. and multiple drug resistant strains of T.B. He
said that both the Juneau and Anchorage health labs were in
office buildings. He continued to describe the services
offered in Alaska public health labs. He said there were
currently 37 FTE (full time equivalents) working in the
three lab locations.
MR. SELLKREGG stated that, in comparison to three other
states (Arizona, Delaware, and Tennessee) efficiency was
looked at from the standpoint of overall productivity of
staff (administrative and technical). The overall
productivity of administration was average and technical
productivity was above average in the state of Alaska.
MR. SELLKREGG discussed privatization of public health labs.
He said that Arizona, the most privatized state for public
services, determined as the result of a state study that it
is not appropriate to privatize public health labs. He
stated that advocacy for public health, who raises concerns
in the public interest and who is alert to solving
previously unseen problems, are difficult concerns to
privatize. He said that privatization would run the risk of
losing vital information fundamental for epidemiology. He
said that public health labs out-source to private labs,
citing pap smears, western blood tests, and blood lead
tests. He said that public health labs are the cutting edge
for disease control and that as solutions to managing
disease are discovered, they inevitably move on and often
leave the testing to the private sector. He also said that
the practice of fee-for-service reduces state government
financial participation and it allows the public sector to
compete for lab services.
MR. SELLKREGG stated that the consolidation option that
would combine the three public health facilities into only
two facilities would provide an opportunity for improving
efficiency in service and in cost. He stated that to
consolidate it would mean the renovation of the Fairbanks
lab and the combining of Juneau and Anchorage labs into one
brand new facility.
Number 921
REP. BUNDE asked if a new facility meant building one from
the ground up.
Number 926
MR. SELLKREGG said, "part of the problem that we have today
is that we have labs existing in converted office buildings.
That is really the wrong way to approach putting a public
health lab operation into operation. It's different than a
private lab, which is shipping many of their more complex
tests out of state to a specialized lab facility and keeping
their drawing services in an office building. We have a
very high degree of air-handling, isolation, and materials
have to be of a very high specification for the type of
tests that are being done. You can only do that properly,
efficiently, and probably cost-effectively if you build a
new facility. If you go to renovate or convert, the numbers
will show you that you spend as much if not more money
trying to convert an office building into a public health
lab than if you were to build it from the ground up."
MR. SELLKREGG said the advantages of consolidation were more
efficient use of equipment, facility space, computers,
office and technical supplies and staff reduction.
MR. SELLKREGG stated that centralization would provide the
greatest opportunity to improve efficiency in service and
cost. The advantages would be a reduction in FTEs, office
and technical supplies, and most importantly there would be
a centralized lab facility that would meet all regulatory,
biological, fire, and other safety standards. He said that
was not the case for the existing public health labs. He
said the state is at high risk, for millions of dollars,
from a potential claim from a staff person, a tenant of an
existing structure, or the public being exposed (to harmful
disease or physical conditions of existing structures).
TAPE 94-05, SIDE B
Number 000
CHAIR TOOHEY asked for the combined square footage of the
three facilities.
Number 012
MR. SELLKREGG said, after some discussion, that it was
approximately 18,000 square feet. He went on to say that
the centralization option costs included construction,
equipment, consultants, project administration, and project
contingency, approximately totalling $13.6 million. He
listed the projected savings over 20 years if the
centralization option were utilized. He said that in net
savings compared to the status quo, in 20 years the
consolidation option would save $1.9 million and the
centralization option would save $7.7 million.
Number 074
REP. BUNDE said, "and that's a savings on what total
operating costs?"
Number 076
MR. SELLKREGG replied that it was "on the total operating
costs, if you were to take your status quo and project it
forward into 1998... if you keep operating in your existing
facilities... you will spend in 1998, these will be the net
savings on that comparison."
(Note: Mr. Sellkregg was pointing to numbers on a chart
contained in Attachment 1.)
Number 081
CHAIR TOOHEY said, "conversely, you'd be spending that if
you saved status quo."
Number 083
REP. BUNDE said he understood that but asked, "what's it
going to cost to operate the lab to save that much money?"
Number 085
MR. SELLKREGG said $3.9 million would be spent in 1998 on
status quo and referred to his demonstration chart to show
the annual net savings.
Number 101
REP. BUNDE said, for clarification, that "you are
anticipating the operating cost of 4.6 and 4.2 (million
dollars) in 1998 dollars."
Number 105
MR. SELLKREGG said the total annual cost in 1998 dollars,
including operating and capital costs, would be $4.8 million
for status quo, and $4.6 million for the consolidation
option, and $4.2 for the centralized. He referred to Mr.
Michael Press to help support those figures.
Number 124
MICHAEL PRESS, Representative, Coopers & Lybrand, said that,
"in forecasting forward, we use things like the consumer
price index (CPI) forecasts by Wharton and Conametrics, and
we used a medical component for that, as well as a general
component for that. And, we divided each of the objects up
into two groupings. A grouping that was most appropriate to
use the medical inflation rate and then another grouping,
which was everything else, for instance, the courier
service; we use just a general CPI forecast for that,
whereas others were in the medical category. Forecasting
those forward and adding them up in 1998, when it's (we're)
basically saying that we would have the first fully
operating year under any of the scenarios, so we could do an
apples to apples comparison in that year. We come out with
these numbers for annual cost differentials. And as far as
the total number here, that is displayed, this has to do
with accumulation of costs over the full span up to the year
2012."
Number 050
MR. SELLKREGG felt that an interesting point was that the
state was going to spend $75,000,000 over the next 20 years
in our public health labs. He said there are opportunities
to reduce that number and, at the same time, address serious
safety and facility risks.
MR. SELLKREGG mentioned other state agencies with laboratory
operations. He stated that there were two other lab
facilities with compatible lab functions: the Department of
Environmental Conservation (DEC), which does environmental
testing in Palmer and Juneau; and Public Safety's Crime lab,
which does forensic testing in Anchorage. He said that
neither of the aforementioned would facilitate biological
testing that takes place in public health labs. He also
mentioned that the universities had labs for teaching but
not for analysis.
Number 073
CHAIR TOOHEY asked if any of the aforementioned labs
volunteered to add on and let the public health labs use
their facilities.
Number 077
MR. SELLKREGG said none have said that specifically. He
stated that some were in serious states of disrepair. He
again said that for various reasons none of the other state
agencies' health labs were compatible.
MR. SELLKREGG stated that the state morgue was designed for
a capacity of 70 bodies and it now is projecting a need to
deal with 750 bodies a year, indicating serious health and
safety issues. He felt the state morgue should co-locate
with the new proposed facility.
MR. SELLKREGG urged that immediate action should be taken to
address the serious conditions of public health labs. He
stated that the options have been identified that would save
the state millions of dollars over 20 years, and the final
report would support all the recommendations mentioned.
Number 188
CHAIR TOOHEY asked if there were any questions.
Number 091
REP. VEZEY asked Mr. Sellkregg if population growth or
demand services growth factor into the projected status quo
over 20 years.
Number 212
MR. SELLKREGG said they projected two percent per annum,
which he felt was realistic. He said they did not increase
staff.
Number 223
REP. VEZEY said he noticed that. Prefacing his next
question by saying he had worked in the agricultural area of
health, Rep. Vezey asked Mr. Sellkregg why one industry
would prefer to go through the public sector and another
would prefer to go through the private sector for testing.
Number 263
MR. SELLKREGG said that no states were found that were
totally privatized. Almost all states are looking for
privatization opportunities, and wherever possible, specific
tests are going to the private sector where it can be
determined that there are real cost savings associated with
that process. He said that it does not threaten the core
function of public health labs. He speculated that the
responsibility of national health could not be delegated to
the private sector; it resides with state government.
Number 304
DR. KATHERINE KELLY, Representative, Center of Disease
Control, Atlanta, Georgia, said she agreed with Mr.
Sellkregg. She stated that most states are charging their
state government with the responsibility for community
health. She offered, as an example, that there were persons
within the population who could not afford the type of care
that would provide them and everyone around them protection
from disease.
Number 371
CHAIR TOOHEY stated that the outcomes from the testings
would be the charge of the state, not the physical "petri
dish" result.
Number 383
REP. VEZEY said, "I couldn't follow, you didn't state, to
the extent of what percent of lab services or public health
laboratory work had been privatized in Arizona or anything
else. And, I didn't see anywhere in your numbers where you
were talking about current expenditure levels, what portion,
if any, of that was going out to the private sector for
private services. And so, I couldn't extrapolate into that
into the future. Could you elaborate?"
Number 399
MR. SELLKREGG said he did not know what the total volume of
testing by private labs was. He stated that Smith/Klein (a
private lab) told him they processed 80,000 specimens last
year. He compared that with a total of 120,000 performed by
the public health labs last year. He suspected that the
private sector was providing more tests in the state than
the public health labs.
Number 451
REP. VEZEY asked Mr. Sellkregg, "where do those reflect in
the numbers that you're showing us about operating the
public health labs? Are they not in there at all?"
Number 454
MR. SELLKREGG said that they were not, and that the public
health labs were not in competition with private health labs
for testing.
Number 469
REP. VEZEY, for clarification, stated that the numbers that
were being reviewed are strictly the cost of operating the
public health labs and not the total public health labs
services the state was providing or paying for.
Number 475
MR. SELLKREGG disagreed, saying that those numbers were the
total costs for the public health labs services, not the
total costs of all lab services going on in the state. He
said private labs do not publicize those numbers.
Number 486
REP. VEZEY asked how the state would pay the bill if private
labs did not give numbers.
Number 490
DR. NAKAMURA answered by saying that it would be difficult
if not impossible to track the tests being done privately by
request of the public health labs. He referred to a
community that sent out all their tests to another state.
Tests that showed for hepatitis came back to the community
but never were reported to the public health labs. It was a
hepatitis epidemic.
Number 527
REP. B. DAVIS asked if there were reporting procedures for
those types of test results.
Number 532
DR. KELLY stated that there is no legal requirement on a lab
that is outside the jurisdiction of the state to report back
to the state.
Number 540
REP. B. DAVIS asked if that information is, indeed, sent
back to the state.
Number 545
MR. SELLKREGG said only if requested do they return that
information to the state.
Number 547
REP. B. DAVIS, stating her confusion, questioned if the test
done in another state would come back to the state or the
doctor.
Number 552
CHAIR TOOHEY said it would return to the private doctor.
Number 553
REP. B. DAVIS said the private doctor should have the
responsibility to report that to public health.
Number 558
DR. KELLY said that is the way it should happen, but it
rarely does.
Number 559
REP. B. DAVIS asked, if indeed core functions were being
maintained by the public health labs, could the remaining
testing be done by private labs?
Number 579
MR. SELLKREGG said that there is a difference in the way
that a private lab and a public health lab look at
performing a test. He said the private lab's job is to come
up with the result as efficiently as possible, citing that
they look for what they are asked to look for, but nothing
more. The public health labs look for what was asked for
but they also look for other critical diseases that may be
there. He stated it was the extra effort taken by the
public health labs to protect the population that was
impossible to privatize.
Number 603
CHAIR TOOHEY said, "but, if there were checklists on T.B.
(bacillus), then you would check that off. And that could
also be the function of the private lab, or you would find
another private lab to do it."
Number 607
MR. SELLKREGG asserted that it would be difficult to create
a document that would articulate carefully enough to the
private sector all the things that they would have to do to
perform a public health lab service. The challenge of
developing that contractual relationship would be close to
impossible. He said an example of privatization of a public
service was trash pick-up. He said that the private sector
would be contracted to pick up three cans, throw them in the
back of a truck and drive off. He said it was very straight
forward contractual agreement. But, he felt the checklist
approach did not cover the entire spectrum of services that
public health labs provide.
Number 646
MARTHA ROBBINS, Representative, Coopers & Lybrand, said that
the way commercial labs make their money is by providing a
very specific service at the quickest, automated rate. If
further tests needed to be done on that specimen, additional
fees would be added for each different test.
Number 681
MR. SELLKREGG said that the state has an active program of
identifying tests that should not be performed within the
public health lab and finding more cost-effective ways of
getting the tests done.
Number 701
CHAIR TOOHEY asked if Mr. Sellkregg was finished with the
presentation.
Number 709
COMMISSIONER MARGARET LOWE, Commissioner, Department of
Health and Social Services (DHSS), said that she wanted to
call the committee's attention to the urgency of the public
health labs situation, which she felt was the most
"terrifying" to the DHSS. She said the state was on the
edge of very serious health hazards. She encouraged
immediate action to address those health problems.
Number 730
REP. B. DAVIS asked if the anticipated full report would
include recommendations to the legislature.
Number 741
MR. CHASE responded yes.
Number 747
REP. BRICE asked what the state's liability would be if in
some type of natural disaster, some airborne diseases, were
to escape into the general population.
Number 764
DR. NAKAMURA said that if the power went out at a facility
that was working with specimens with T.B., the organisms
would circulate throughout the building, exposing others in
the building. The liability is there.
Number 793
CHAIR TOOHEY asked if the military had any shared labs that
the state could use. She then asked what were the short-
term plans for public health labs.
Number 803
MR. SELLKREGG said the military does have labs, but they are
not available to the state. He referred to Nolan Watson to
answer questions about short-term plans.
Number 834
NOLAN WATSON, Representative, McLellan & Copenhagen,
Seattle, Washington, said that an office building that has
been converted into a public health lab cannot respond to
modern technical requirements. He said a prioritized report
would list the short-term goals.
Number 876
REP. BRICE stated that he not only had concerns for the
general public at risk from health labs in poor states of
repair, but he was also concerned for the employees working
in public health labs. He suggested that it may be a cost
saving measure to update and/or build new facilities than to
undergo costly liable suits and then be ordered to make the
proposed changes as well.
Number 896
MR. SELLKREGG mentioned, "that we've had discussions with
risk management. We are trying to help the state become
aware of what it means to have a staff person contract T.B.
through the work place, and what dollar number (exposure),
and we're not in any way inflating numbers when we talk in
terms of millions."
Number 904
CHAIR TOOHEY said that one could get T.B. down on Fourth
Avenue in Anchorage or in your neighborhood.
Number 906
REP. BRICE indicated that there was a difference between
contracting T.B. on Fourth Avenue than contracting it the
work place.
Number 909
CHAIR TOOHEY addressed Rep. Brice's comment by stating that
people who work in labs take a somewhat inherent risk to
exposure.
Number 914
MR. PRESS said that because the state facilities are below
standard, there would be great legal difficulty in defending
the state in the cases of accidental exposure.
Number 922
CHAIR TOOHEY said, "let me state, right now, that if that is
the case, that I will recommend that the state labs be shut,
right now! If they are in such bad condition that they are
damaging the workers, then we will put out the word and we
will close the state labs. And we will privatize,
privatize, until those labs are brought up to task. Because
I cannot see that if those workers are in that much danger,
that they should remain in the work place."
Number 931
REP. B. DAVIS remarked that, as she understood Mr. Press, it
was more the possibility than inevitability for those health
risks to become reality due to poor conditions at public
health labs.
Number 937
REP. VEZEY asked about the liability of the public school
system in regards to approximately two dozen cases of
exposure to T.B. in the Fairbanks/North Shore Borough School
District.
Number 947
MR. CHASE said that if a person is working with T.B. in a
lab situation, liability of the state would be easier to
prove. But, if a person who works, or attends, in the
school system were to contract T.B., it would be difficult
to say where it was contracted.
Number 960
CHAIR TOOHEY said she had much faith in Commissioner Lowe
and Dr. Nakamura that if they felt there was a health hazard
in a public health lab, they would immediately address the
problem.
Number 971
DR. KELLY asserted that lab managers and DHSS have done
everything possible to ensure employee protection.
TAPE 94-06, SIDE A
Number 000
MR. CHASE reiterated that the issues brought up by the
committee will be addressed in the upcoming final report.
Number 016
CHAIR TOOHEY thanked all those present.
Seeing no further business before the committee, CHAIR
TOOHEY adjourned the meeting at 4:25 p.m.
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