SENATE BILL NO. 88 "An Act authorizing the state bond committee to issue certificates of participation to finance the construction and equipping of residential housing to serve the Anchorage campus of the Alaska Native Medical Center; and authorizing the Department of Administration to enter into a lease-purchase agreement for the benefit of the Alaska Native Tribal Health Consortium." 2:44:46 PM Co-Chair Meyer noted that the bill had been previously discussed in committee. He believed that the question that remained before the committee was whether the project should be paid for up front with capital dollars, or should it be bonded for, with interest being paid on the bond. He admitted that the state was short funds for capital projects, but that the project proposed in the legislation was financially feasible because of solid revenue sources. 2:46:37 PM Co-Chair Meyer queried whether the department assigned to fiscal note number 1, for $35 million in estimated capital costs, should be the Department of Administration (DOA) or the Department of Revenue (DOR). 2:47:25 PM ANGELA RODELL, DEPUTY COMMISSIONER, TREASURY DIVISION, DEPARTMENT OF REVENUE, replied that the state would sell certificates of participation by DOR through the State Bond Committee. She relayed that the certificate represented the sale of participation in a lease agreement. She furthered that DOA would then take the proceeds of the transaction and hold them; the department would receive invoices as the project was under construction and would be in contact with the Department of Health and Social Services to ensure that the expenses were what had been agreed upon in the lease agreement. She stated that once the facility was open DOR would lease the building from DOA for 15 years; the lease payments made would be used to repay the certificates of participation. She stressed that the amount of Medicaid savings generated through use of the facility would reflect positively on the state's general fund. 2:49:20 PM WILLIAM STREUR, COMMISSIONER, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, commented that approximately 40 percent of the services currently provided to Alaska Natives were done through a native run system, which left 60 percent on the table. He said that assuming that 20 percent of specialty services were not available within the tribal system, or in Alaska, a 40 percent doubling of services could be provided by the tribal system. He thought that by moving as many services as possible over to the tribal system, the state would receive a 100 percent match from the federal government, resulting in less spending of general fund dollars. He noted that that the bill was a step towards getting tribal members medical help within the tribal system. He shared that receiving services consistently within the tribal system would result in continuity of care for recipients. He pointed out that there was a $1.1 million projected savings for general child health. He relayed that many surgeries currently being performed could be done through the tribal system, and would allow for better care prior to and immediately after surgery. He noted that ear, nose, and throat problems were prevalent in rural communities. He thought that the expanded capacity could result in a savings of $650,000. He spoke to telemedicine, which he believed was underutilized. He said that travel expenses were ever increasing in the state and that the memorandum of understanding had to include the continued development of telemedicine capabilities. 2:54:51 PM Co-Chair Meyer queried what was included in the memorandum of understanding. Commissioner Streur listed the items in the memorandum: cost based reimbursement for Medicaid recipient's room and board, preferential status for Medicaid recipients to assure priority access, required necessary transport, pre- maternal Medicaid services. He believed that the best Benefit to the state would be to ensure that the next generation received the best possible care. 2:55:31 PM Co-Chair Meyer inquired if the committee had a copy of the memorandum of understanding. Commissioner Streur replied that he could provide the document to the committee. 2:55:43 PM Commissioner Streur continued to discuss the memorandum of understanding. He said that the designated use of the facility must be maintained for the term of the bond. He stated that access and utilization of the services must continue to be developed under the terms of the bond. 2:57:39 PM Co-Chair Meyer reiterated his desire for a copy of the memorandum of understanding. He requested further clarification concerning the $35 million in capital funds under DOA, rather than DOR, as reflected in the fiscal note. 2:57:54 PM Ms. Rodell replied that once the bonds were sold, DOR would not administer the proceeds; the proceeds would be turned over to DOA because DOA would be entering into the lease agreements on the state's behalf. 2:59:05 PM Co-Chair Meyer welcomed Senator Bishop and Vice-Chair Fairclough to the committee table. 2:59:33 PM Co-Chair Kelly inquired whether Alaska Native Tribal Health Consortium (ANTHC) would be able to pay for additional costs if the project ran over budget. Ms. Rodell referred the question to representation from ANTHC. 3:00:03 PM Vice-Chair Fairclough queried how the state would ensure that contractors received their payments. Ms. Rodell replied that the invoices of payment would come to DOA, which she expected would coordinate with the Department of Health and Social Services (DHSS). 3:01:14 PM Vice-Chair Fairclough wondered how the cost estimation of the project had been determined before the project contractor had been selected. Commissioner Streur referred the question to ANTHC. 3:01:59 PM Vice-Chair Fairclough asked if the commissioner had reviewed the cost estimate documents associated with the project. Commissioner Streur replied yes. He added that the department would continue to review blueprints and cost estimates along with DOR and DOA. 3:02:37 PM VALERIE DAVIDSON, ALASKA NATIVE TRIBAL HEALTH CONSORTIUM (ANTHC), testified that the ANTHC would be responsible for operation and maintenance of the facility once construction was complete. She shared that the facility design included six floors; 5 of the floors would be financed by the state, but ANTHC would finance the 6th floor for patient education with a particular emphasis on well-baby and well-mother care. She relayed that tele-medical services would be made available in order to help homesick patients during longer hospital stays far from home. She stated that ANTHC recognized the need for a meaningful partnership with the state and was currently financing part of the facility. She highlighted that ANTHC had a positive track record of building facilities on-time and under budget. She shared that she had negotiated a number of agreements for services that had been clear and effective. She noted Commissioner Streur had been a diligent advocate for the state in negotiations. She stated that the issue of access to care came up at every board meeting; the key to better access to healthcare for people living outside of Anchorage was housing. 3:08:28 PM Co-Chair Meyer restated the question raised by Vice-Chair Fairclough concerning the fiscal noted for $35 million. He asked how the contracts would be awarded. Ms. Davidson replied that in addition to co-managing the Alaska Native Medical Center, the consortium had a large construction sector of its organization. She said that the consortium had a short list of contractors that would be meeting in the future to examine opportunities and review proposals. 3:09:49 PM Co-Chair Kelly queried if ANTHC would cover any cost overruns. Ms. Davidson replied that cost overruns were not anticipated; however, if additional funds became necessary to finish the project, ANTHC would not request the funds from the state. 3:10:24 PM Co-Chair Meyer inquired if language pertaining to cost overruns had been included in the memorandum of understanding. Ms. Davidson replied in the affirmative. 3:10:34 PM Senator Bishop directed the committee to Page 2, line 8 of the bill. He requested assurances on the record that Alaska hire would be at the forefront of the hiring process. Ms. Davidson responded that hiring Alaskans was important on all ANTHC projects throughout the state. She added that the consortium had a tribal preference policy as well. She stated Alaskans took pride in working on projects that would directly benefit Alaskans. 3:12:49 PM Senator Dunleavy inquired if there had been survey done to highlight why patients would use the new facility rather than receive services at already established medical centers. Ms. Davidson responded that conversations with beneficiaries that had chosen to receive care elsewhere had revealed several things: By law, Medicaid required patients to be offered a choice as to where they received care; many patients had requested ANTHC centers in order to be close to family. She added that ANTHC centers allowed for patients to be connected to their communities in ways that other places could not provide. She pointed out that transportation issues were one of the greatest challenges for people traveling to Anchorage for health services. She stressed that ANTHC would provide transportation from the airport to the housing facility, and that all of the services the patient would need could be provided under one roof. 3:16:09 PM Senator Dunleavy queried if there had ever been a formal survey conducted that compared the services provided in ANTHC facilities with services provided by other hospitals. Ms. Davidson stated that she did not know of a formal survey. She said that the consortium conducted regular customer experience surveys, which were then compared to surveys conducted by other facilities. 3:16:46 PM Senator Dunleavy appreciated that the federal government required that a choice be given to patients concerning where they would receive their medical care. He wondered if the people would still chose to go to Providence Hospital if they were given the choice of the new facility. Ms. Davidson replied that there were services that ANTHC was not yet at capacity to provide. She stated that, even with all of the expansion described in their business plan, the ANTHC facility's ability to accommodate patients was finite. She noted that there was $30 million in general funds that went to non-tribal facilities in Anchorage in order to provide care for Alaska Native Medicaid beneficiaries. She estimated that building the facility would result in an annual savings of $8.8 million. She pointed out that ANTHC operated the only level 2 trauma center in Alaska and was a "magnet hospital" with a high level of quality care provided by nursing staff. 3:20:05 PM Senator Dunleavy wondered if the facility would be able to accommodate patients at the same rate as Providence Hospital. Ms. Davidson replied yes. 3:20:37 PM Senator Hoffman queried how long it had been since Ms. Davidson had been staff to a previous Senate Finance Co- Chair. Ms. Davidson replied that it had been 27 years. 3:21:23 PM Vice-Chair Fairclough opined that more general fund dollars would expedite the process. 3:21:46 PM Co-Chair Kelly MOVED to REPORT SB 88 28-LS0629\N out of committee with individual recommendations and the accompanying fiscal notes. There being NO OBJECTION, it was so ordered. 3:22:06 PM SB 88 was REPORTED out of committee with a "do pass" recommendation and with a fiscal impact note from the Department of Administration, a fiscal impact note from Department of Health and Social Services, and a fiscal impact note from the Department of Revenue. 3:22:14 PM AT EASE 3:26:21 PM RECONVENED