SB 245-HEALTH CARE: PLAN/COMMISSION/FACILITIES  6:09:50 PM CHAIR DAVIS announced the consideration of SB 245 and asked for public testimony. 6:10:19 PM ROD BETIT, CEO, Alaska State Hospital and Nursing Home Association (ASHNHA), thanked the Chair for the rewrite and noted that a summary of his comments was included in the committee members' packets. He mentioned specifically that Section 4 added a reference to critical access hospitals, which were located in Cordova, Dillingham, Ketchikan, Kotzebue, Nome, Petersburg, Kodiak, Seward, Valdez, Barrow, Sitka and Homer; that became important with regard to the CON language and which communities would have special protections because of the size of the community. Section 5 contained the piece that replaced the repeal of CON and was extremely important to clarify the ongoing disputes between hospitals, imaging centers and physicians about what was and was not subject to CON review when there was imaging equipment in the facility or office. This language was worked out subsequent to the negotiated rule-making committee breaking up and would eliminate about 80 percent of the appeals and law suits that were before the department. It provided that, to be outside CON and to get the benefit of the physician office exemption in statute, the physicians in question had to actually work in the practice, own at least 50 percent of the practice and equipment, and must actually interpret the images that their imaging equipment produced. If they met that criteria and were in a community with a population greater than 60,000, they would not be subject to CON. They felt it was a fair way to take that particular issue off the table and move forward to deal with the other parts of this legislation; most of ASHNHA's membership was tremendously supportive of that language. He summarized that there was still much to be done; this bill, unlike the House version, left the discretion and authority with the commission to make decisions regarding who would need to report, what they needed to report and when. That was important in his mind, because so much needed to be accomplished and they would have to learn a lot along the way to give them that kind of discretion and to make this work in a positive way for consumers. 6:13:42 PM SENATOR ELTON asked if, with Section 5, no CON study was needed [under SB 300]. MR. BETIT answered that this just set aside most of the disputes that were costing the department time and money. He agreed with the committee that they would never reach a conclusion about whether Certificate of Need helped or hurt consumers in Alaska unless they took a hard look at that question. Placed in the hands of someone credible, with sufficient experience and no axe to grind, he thought the study would point out the concerns they had been expressing as far as a level playing field. 6:15:45 PM JIM L. LYNCH, Chief Human Resources Officer, Fairbanks Memorial Hospital (FMH), Fairbanks, AK, asked for clarification on several points. He asked whether, on page 5, line 1 of Version \O, the reference to a borough with a population of 60,000 or more meant that CON would apply in the Fairbanks North Star Borough with the modifications Rob Betit referenced as supported by ASHNHA. CHAIR DAVIS confirmed that Fairbanks would fall under the specification of a borough with a population greater than 60,000. MR. LYNCH agreed and explained that they were trying to interpret the implications to CON based on that measure. CHAIR DAVIS said this didn't change the CON. MR. LYNCH apologized for the confusion, but said it appeared to read like a new sub-section. CHAIR DAVIS said he was correct, there was a new sub-section on page 4. MR. LYNCH continued that they did support the statements of Rob Betit and ASHNHA in general, but sought detailed clarification of that issue to ensure that the CON stayed in place to meet the needs of the Fairbanks community. CHAIR DAVIS advised Mr. Lynch that she would get clarification for him. 6:20:19 PM MR. LYNCH thanked Chair Davis and said he would be happy to work with the committee, but did not want the North Star Borough and the Anchorage municipality to be written out of CON with this new language. 6:21:05 PM STANLEY ARCHER, representing himself, Fairbanks, AK, said that as a long-time resident of Fairbanks with considerable experience with medical systems as a patient, he was concerned that the Fairbanks Memorial Hospital (FMH) would be harmed by the loss of the CON. He said he had watched FMH grow into a facility that could handle many types of medical procedures that previously were available only in Anchorage or Seattle. He said he understood how a free-market economy worked, but that FMH was not a retail enterprise and should not be compared to one. FMH was not a for-profit medical facility and had obligations to the community that for-profit clinics and facilities would not have to honor; it was tasked with taking care of all patients, regardless of their ability to pay. He wondered if for-profit medical facilities that are not obliged to, would be willing to do the same, and warranted that they would not. Fairbanks physicians were unwilling even to take Medicare and Medicaid patients because the level of reimbursement was not up to their standards. He said in his experience the majority of physicians in Fairbanks would not take patients who could not show proof of legitimate health care insurance or demonstrate in some way their ability to pay, and some were requiring a non-refundable fee simply to be on their patient list. MR. ARCHER feared that if CON were eliminated, the new facilities would heavily court private pay and insurance business. They would have to do so in order to fill their facilities to pay for their heavy investment costs, leaving no room for charity or pro-bono medical care. With that, FMH would be left with all the charity cases and insufficient income to support the facility, leading to the degradation of their community hospital. In closing he asked that the committee consider the all of evidence carefully and leave the CON in place. 6:24:41 PM JEFF COOK, President, Greater Fairbanks Committee Hospital Foundation Board, Fairbanks, AK, said the board was established in 1968 to build health care facilities in Fairbanks. It succeeded the Sisters of Charity, which had St. Joseph's hospital and chose not to operate it because of financial and other issues. In two City & Borough elections, the voters chose not to operate the hospital; fortunately, the foundation was formed by foresighted citizens who gathered the money to open the new Fairbanks Memorial Hospital in 1972. MR. COOK spoke against elimination of the CON, saying it had worked very well in Fairbanks and was important to the future of health care in Fairbanks. The CON had not impeded state-of-the- art health care in Fairbanks. The Foundation Board's motto was to always act as if there was competition. He said they had a state-of-the-art cancer center, a new heart catheterization lab, a new outpatient imaging center, and a newly expanded emergency department that treated everyone who walked through the door, regardless of their ability to pay. He asserted that the CON had not impeded physician recruiting or retention either. In the past 3 years, 23 physicians had left Fairbanks or ceased practicing, but they had gained 27 new physicians during that time. He added that physician recruiting was a problem across the country and Fairbanks was not unique in that regard. Fairbanks was actually quite successful due in part to their acquisition of Tanana Valley clinic and the many employment options they could offer new physicians. 6:27:21 PM SENATOR ELTON asked Mr. Cook if they would solve two problems with the CON issue by modifying Section 5 to add a 3) that said "accepts any Medicare and Medicaid patients." So to get out of the CON you would still have to be in a city with a population of 60,000 or more; the facility would have to be owned by one or more licensed physicians; and it would have to accept Medicare and Medicaid patients. He felt that would level the competitive field while encouraging physicians to accept Medicare and Medicaid patients. MR. COOK contended it was not just a matter of taking Medicare and Medicaid patients; it was also treating the uninsured. He agreed that would be a step forward, but said he would feel more comfortable dropping the CON if those who wanted to provide service did so 24 hours a day, took emergencies including psychiatric emergencies, helped with the chronic inebriates and did all the other things that only FMH did. CHAIR DAVIS said they had quite a few people from Fairbanks Memorial Hospital signed up to testify, but they were running out of time. She asked if they were all in favor and, if so, if they would be willing to come forward and simply state their position. 6:29:54 PM JUDY BOGARD, Fairbanks Memorial Hospital, Fairbanks, AK, supported maintenance of the CON. 6:30:13 PM KARL SANFORD, Associate Administrator, Fairbanks Memorial Hospital, supported keeping the CON. 6:30:28 PM KAREN PERDUE, Board Member, Fairbanks Memorial Hospital, Fairbanks, AK, wanted to point out how fragile the system was. She explained that Fairbanks was a city of only about 100,000 people trying to support a Hospital that might normally serve a population of 250,000 or more, and emphasized that they did not have the volume Anchorage did. FMH had done everything they could to increase volumes; they were the only hospital in the state serving the Indian Health Service (IHS); they served Alaska Native Beneficiaries; and they did a lot of military work. Finally, she said that if they were going to start eroding the CON, there should be a requirement for providers to serve the uninsured. That was the field the hospital was playing on. 6:32:32 PM SENATOR ELTON said he thought the section was not as broad as it was being interpreted. The way he read it, the 60,000 population for a borough only applied to one component and that was diagnostic imaging. This bill would not eliminate the CON in total; it would only eliminate the CON for diagnostic imaging centers. CHAIR DAVIS agreed. 6:34:41 PM RICK CAULFIELD, Director, University of Alaska, Fairbanks (UAF), Tanana Valley Campus, echoed the concerns of others from the Fairbanks area. He said their campus worked very closely with Fairbanks Memorial Hospital and Denali Center (FMH/DC) to meet work force needs in the health care field and they did not want the CON eliminated. He was encouraged to see that the commission envisioned under this legislation would focus on developing a sustainable health care work force in the state, but could not think of a better partner than FMH/DC in identifying and meeting work force needs in the health care field; he was concerned that doing away with the CON would negatively impact their ability to partner with FMH. 6:37:18 PM CHERYL KILGORE, Executive Director, Interior Community Health Center, said they were a nonprofit Health Center that provided a broad base of primary care services to people, many of whom were low income and uninsured or underinsured. She was also a Hospital Foundation board member and echoed their support for CON. She felt erosion of the program would make it difficult to meet the needs of the people in their community. 6:39:00 PM MARK ROWDEN, Inpatient Supervisor, Pharmacy Department, Fairbanks Memorial Hospital, Fairbanks, AK, and a member of the American Society of Hospital Pharmacists, spoke in opposition to any elimination of the CON. He said there had been a lot of publicity pro and con about the economic ramifications of the CON process; but shopping for the best price in health care didn't really work. He explained that if patients went to more than one physician, got multiple prescriptions and went to multiple pharmacies to fill them, they would not get the benefit of having their whole profile screened for drug interactions; he was concerned about patient safety. CHAIR DAVIS thanked him for his testimony and pointed out that SB 245 would not eliminate the CON. 6:40:54 PM DOUG BISHOP, representing himself, said he was not aware that the bill only eliminated the CON for out-patient imaging, which was an important point. Any elimination of the CON however, would cause deterioration of the program. He reiterated that they had an very good community hospital that put a great deal of money back into their facilities and improved services. He was concerned that erosion of the CON would dramatically effect health care and health care availability in their area and did not think enough research had been done to determine whether that was true. 6:43:06 PM DON KUBLEY, Lobbyist, Mat-Su Regional Health [Medical] Center (MSRMC), wanted to echo some of the statements that had been made about this bill. As Senator Dyson said, there was a huge responsibility placed on hospitals to take care of anybody who walked through the door, 24 hours a day, no matter what the problem. He cautioned that he was pulling figures out of the air and asked the committee to bear with his "60,000 foot perspective," but said if you had twelve departments in a hospital, 3 of them might be making money. It was those 3 departments that allowed the other 9 critical departments to keep functioning. He said when they talked about leveling the playing field, Mat- Su had played by the rules and on a level field when they went against the odds to get a CON from the state. As a result of that they had invested approximately $120 million in the Center, as well as $15 million in federal money to build a water and sewer system from Palmer out to the facility. The Mat-Su Borough now had one of the most sophisticated, best hospitals in the world serving the fastest growing region in the state, and they got that by playing by the rules and jumping through all of the regulatory and monitoring hoops. He continued that before it even opened, another building began construction in front of it. It was Providence Hospital building an X-Ray facility right in front of them, even though they did not have the state mandated CON to build that facility. Accordingly, MSRMC filed a grievance with the State of Alaska and the state told Providence Hospital that the facility was illegal; but they went ahead. That facility opened despite the ruling and was sucking business from the Mat-Su Regional Hospital against the rules that MSRMC had followed. He admonished that anyone who told them this simple "tweak" to the CON would level the playing field, was simply trying to grandfather in a facility that had been wrong from the day ground was broken. This bill was trying to change the rules in th the 9 inning of the World Series with 2 outs; suddenly they wanted 4 outs instead of 3. MR. KUBLEY admitted that he had not intended to testify today and said, with all due respect to Mr. Betit and his organization, of which MSRMC was a part, when he said a vast majority of their members were in support of this he was correct; but the 2 facilities that did not agree with that position were the second and third largest facilities in the state. Speaking for Mat-Su Regional, he felt this was just another attempt to change the law and retroactively give them [Providence Hospital] permission do run a facility they were told was illegal. He said he believed the committee a had letter from MSRMC's CEO Norm Stevens that outlined the severe damage that facility was doing to their hospital. He hoped the committee would take a good hard look at what that small change would actually do to the level playing field in this state as it had been for a long time. 6:49:42 PM CHAIR DAVIS said SB 245 wasn't new. It had been heard twice before. MR. KUBLEY said he appreciated that and had testified on it before, which was why he did not intend to do so today; but there was a change in the title that put in X-Ray imaging centers and completely changed the bill for Mat-Su Regional and for the second largest hospital in the state, which was not present because they did not know about the change. CHAIR DAVIS argued the point, saying the change was not new. MR. KUBLEY said it was the first time he had seen "diagnostic imaging" in the title. CHAIR DAVIS said he was right. 6:51:13 PM PAUL FUHS, Lobbyist, Alaska Open Imaging Center, LLC., Anchorage, AK, said what they had just heard was a complete mischaracterization of what was going on with this bill. He said this [diagnostic imaging] was in the Governor's bill and in the original version, it just was not in the title. Now that the bill was restricted to this, it was proper to add it to the title. He insisted that Alaska Open Imaging had also played by the rules. The legislature passed a bill in 2003 but did not define what the terms meant; this bill would just define the terms. It had led to several lawsuits, and no one could make any decisions with regard to imaging equipment in the state. It had put the department in a no-win situation, so the Attorney General said they had to at least define the terms and that was what this bill did. CHAIR DAVIS held SB 245 in committee.