CCMC: Native Village of Eyak may purchase hospital within 6 months

Officials: Deal would improve Cordova health care

Cordova Community Medical Center. (Dec 27, 2019) Photo by Zachary Snowdon Smith/The Cordova Times
Cordova Community Medical Center. (Dec 27, 2019) Photo by Zachary Snowdon Smith/The Cordova Times

If all goes well, Native Village of Eyak may purchase Cordova Community Medical Center within the next six months, says Greg Meyer, chair of the CCMC Board of Directors.

At a Dec. 28 meeting, Cordova City Council directed Meyer and City Manager Helen Howarth to work together in evaluating the potential sale. The council also authorized Meyer and Howarth to secure legal assistance to prepare a list of options for consideration.

Throughout the 2010s, the council subsidized CCMC to the tune of roughly $900,000 per year, a considerable burden on the city’s finances. Putting CCMC under the management of NVE would allow the city to save money on those subsidies, as well as enabling the hospital to expand its services, Howarth said.

As a tribal government, NVE would be exempt from some of the state regulations that have undercut CCMC’s ability to operate, Meyer said.

“It’s a marriage meant to be,” Meyer said. “We have two willing parties … I’m just trying to take all the roadblocks out from making it happen.”

NVE has prioritized retaining all current employees both at CCMC and at NVE’s Ilanka Community Health Center, Meyer said. The hospital and the city have also agreed not to allow attorneys to introduce unnecessary complications, he said.

One potentially tricky issue to negotiate is the Alaska Public Employees’ Retirement System, or PERS, Howarth said. CCMC employees currently put 8 percent of each paycheck into PERS. If NVE were to purchase CCMC, employees’ PERS coverage would be terminated and replaced with a new retirement system. However, both current and retired employees who had paid into the PERS system would remain entitled to compensation.

The next step in the negotiation process will be an independent study to determine the extent of PERS liability, Howarth said. Though the exact amount will not be known until the study is completed, it can be expected to add up to millions of dollars, she said.

“It’s just one of the little sticky wickets in this polo game,” Howarth said.

A Sitka hospital was found to have a PERS agreement liability of around $23 million for 126 PERS members, Meyer said. Because CCMC has roughly half as many PERS members as the Sitka hospital, it can be expected that CCMC’s PERS agreement liability will be in the general neighborhood of $11.5 million, he said.

However, Meyer doesn’t foresee PERS as a problem area for negotiations.

“When anyone wants to bring up PERS, I take it off the table,” Meyer said. “It doesn’t even need to be brought up … It isn’t a roadblock.”

Some residents have voiced concern that a tribally run hospital might prioritize tribal members over non-members, Meyer said. However, NVE would risk losing substantial federal funding if it were to discriminate against non-members, so this shouldn’t be a source of concern, Meyer said.

Hospitals in Sitka, Wrangell and other Alaska communities have undertaken similar deals as state budget cuts have made health care harder to affordably provide, Meyer said.

“Our governor is making it worse,” Meyer said. “With the current administration, we’re just looking at more and more cuts each year, which isn’t making it feasible for these hospitals to operate.”

Though the proposed sale may be a lengthy and complex undertaking, Howarth is optimistic that it will ultimately result in cheaper and higher-quality health care for Cordova.

“NVE is a very eager and capable partner in this, and I think will do a great job running the hospital,” Howarth said. “Everyone is walking down this path together. No doubt there will be twists and turns, but, in the end, I’m really confident that this hospital is going to be much stronger, and that it will release some of the financial burdens that have been hitting the city.”