Given the distances, high costs and problems in workforce recruitment, Alaska’s hospitals feel they’re doing OK in serving health care needs in the state.
National medical-care review groups seem to agree. Health Strong Index ranked two of the state’s smaller hospitals, South Peninsula Hospital in Homer and Ketchikan General Hospital, among the top 100 U.S. “critical access” hospitals.
Critical access is a special federal designation for small community hospitals that offer 24-hour emergency services.
Larger hospitals are getting some kudos, too. U.S. News & World Report recognized Alaska Regional Hospital in Anchorage as one of the nation’s best regional hospitals.
Doing OK despite some problems is one message the hospitals conveyed to state legislators in briefings in Juneau Feb. 29 and March 1.
A second was that some targeted state help is needed in a critical area: workforce recruitment. There is a need to attract more physicians and medical technicians in certain fields to Alaska, and there is a critical need to train more resident nurses who can assist in operating rooms to reduce the high cost of bringing in these specialized nurses from out-of-state.
It’s a serious issue. “Some operating rooms have about 50 percent travelers,” or specialty nurses brought in from Outside, said Karen Perdue, executive director of the Alaska State Hospital and Nursing Home Association, or ASHNHA, which organized the briefings for lawmakers.
The association is pushing for legislation that would help new physicians and technicians repay education loans if they agree to come to Alaska to practice, particularly in small communities.
House Bill 78 is now pending in the House Finance Committee.
As for the operating room nurses, the hospitals are also asking the Legislature for $85,000 to help finance curriculum design and instructional materials for the “perioperative” nurse training, which six hospitals already have under way with 15 student nurses in training.
Included in this is $25,000 for travel and lodging for student nurses from rural hospitals, legislators were told.
“Rural hospitals have limited staff and tight bottom lines. Still, they must be expected to bear the cost of paying the employee in training and lodging and travel expenses,” said Purdue.
Workforce recruitment is a bump in the road, though a big one, but the hospitals said things are going very well in another recruitment and training area, for registered nurses.
A University of Alaska Anchorage program that was started to train resident registered nurses a decade ago has been a resounding success and has met hospitals’ needs for entry-level nurses, Mike Powers, general manager of Fairbanks Memorial Hospital, told the Senate Health and Social Services Committee in the Jan. 29 briefing.
“We’re getting exactly the right number of newly graduated nurses we need. Thanks to the university, we’re holding our own,” Powers said.
The university has a two-year registered nurse program offered at 16 campuses around the state and a four-year program that grants a bachelor of science degree in nursing.
Just getting a new nurse isn’t enough, though.
“We have to remember that having a new nurse on the floor, with a degree, doesn’t mean she or he is ready to take over the full patient load. These people need mentoring,” Powers said.
Annie Holt, CEO of Alaska Regional and a registered nurse herself, appeared with Powers in the Senate committee briefing and said the challenge for hospitals now is having enough experienced nurses to serve as instructors for new recruits because older nurses are retiring.
Alaska is also doing well in another area that has plagued physicians and medical providers: malpractice liability.
“Malpractice insurance and liability is still a problem but much less so than before the Legislature passed a tort reform law several years ago. Because of that, Alaska is considered a favorable environment for practitioners. It’s actually a good recruiting tool,” said Pat Branco, general manager of Ketchikan General Hospital, a city-owned hospital.
Low Medicare reimbursement for senior citizen care is a continuing problem, but hospitals are generally paid at higher rates than Medicare pays physicians. Also, the federal government pays the full costs of care for seniors in small community hospitals designated as critical access by the federal government, according to Perdue.
There is some concern that the federal government may change this, which will have to be watched, Perdue said.
Overall, because Alaska’s population is still relatively young, Medicare patients are not as large a part of a hospital’s business compared to the Lower 48, Powers said.
“Medicare is only 35 percent of our business, but in Phoenix it is 70 percent to 90 percent of some hospitals’ business,” he said.
The goal of most hospitals is to break even on Medicare, but this isn’t possible in Alaska, where costs are higher.
“If the costs aren’t recouped, they are shifted to commercial payers, who are about 50 percent of our business,” Powers said.
Branco, of Ketchikan General, said Medicare payments are not uniform in the Lower 48 and there can be lot of variation between one part of the nation and another.
In Alaska, access to primary care for senior citizens, particularly physicians and particularly in Anchorage, has been a serious problem. Powers said that Fairbanks Memorial’s affiliation with the multi-specialty Tanana Valley Clinic has opened up more services for Medicare patients, easing the problem in the Fairbanks area.
In Anchorage, an affiliation between Alaska Regional and the nonprofit Alaska Medicare Clinic has helped boost the patient load at that clinic, helping secure its financial viability.
Alaska Medicare Clinic opened last year to address the shortage of primary care for seniors. It serves Medicare patients in the Anchorage area as does Anchorage Neighborhood Health Clinic, another nonprofit.
Providence Alaska Medical Center also sends patients to Alaska Medicare Clinic and operates its own service for seniors, Perdue said.
‘Cherry picking’ competition
Meanwhile, competition from “niche” health providers is a continuing problem for hospitals, Powers said. Competitors, usually groups of physicians or a private company, would open an out-patient clinic in competition with the services offered by the community hospital.
“They take the specialty services that are the most profitable, arguing they can perform them faster and cheaper. It’s an ongoing debate,” Powers said.
The issue is that by “cherry picking” the profitable specialties, the competitors leave the community hospital with the less-profitable services.
Since hospitals are required to remain open for emergency service and to take all-comers regardless of ability to pay, this can undercut the viability of a local hospital.
Central Peninsula Hospital in Soldotna is currently engaged in a battle with competitors who plan competing surgery centers. The state Department of Health and Social Services licenses new medical facilities above a certain size and has yet to make a decision in the area’s competition.
Another trend in health care that is manifesting itself in Alaska is increasing “alignment” between local physicians and hospitals, which in some cases takes the form of the physicians simply becoming employees at the hospital.
Branco said all physicians in Ketchikan are now employed in the hospital, having dropped their independent practices because of low reimbursements and the small size of the community.
Fairbanks Memorial is now affiliated with Tanana Valley Clinic, which has a group of 45 physicians offering out-patient services. This is causing some tensions with physicians who are not aligned, Powers said, and the hospitals have to be sensitive to that.
“These changes are happening because both physicians and hospitals are requesting it to prepare for a more integrated health care future,” Perdue said.
Economies of health
Meanwhile, hospitals make a big economic contribution in the communities they operate in. Branco said Ketchikan General has a $28 million local payroll but when employees of various service and support companies are added, and the multiplier effects are included, the total direct and indirect payroll effect is $100 million, which is huge for a small community like Ketchikan, he said.
Like all hospitals , Ketchikan has its share of uncompensated care, or services not paid or fully paid. That came to $6.5 million last year, Branco said.
Holt, Alaska Regional’s CEO, said her hospital, one of three major facilities in Anchorage, employs 823 people with a $53 million annual payroll and an additional $13 million in benefits.
The hospital is privately owned and pays municipal and state taxes. Alaska Regional paid $3 million in local and state taxes last year, Holt said.
Small community hospitals have special challenges. Recruitment of physicians and key technical staff is a problem for all hospitals in the state, but Branco has learned he has to be brutally up-front with potential recruits to Ketchikan.
“Ketchikan is a beautiful place, but we have to tell them about the rain. It rains a lot,” he told the legislators.
It wasn’t believed at first, which resulted in Ketchikan General having a 30 percent turnover among new physicians, a huge cost item.
“We decided we had to really tell them about the rain,” Branco told the legislators. The new policy, to be bluntly frank, has paid off. More new recruits who come to Ketchikan stay, he said.
Logistics is another challenge for small community hospitals, Branco said. Oxygen, for example, must be shipped in to Ketchikan by barge from Seattle. Once, when there was a disruption in barge service, “we were within hours of running out of medical oxygen,” Branco said.
The biggest challenge all hospitals face, however, is to keep up with rapidly advancing, and increasingly expensive, technology and to able to offer as many services as possible in relatively small population areas, even in Alaska’s largest cities.
“The challenge we face is that we are offering advanced services like cancer and cardiac care, and the concern is how robust these services can be in a community of 100,000 people,” Powers said.
This will get even more complicated as the graying of Alaska’s population continues. Seniors tend to seek more medical care and they prefer to have it available locally.
Alaska’s senior population was estimated at about 55,000 in 2010. If current trends continue it will be about 92,000 by 2010.