Cancer care nonprofit financing before Mat-Su assembly; Mayor vetoes measure but override is pending

A new health care nonprofit formed to own and operate cancer care clinics in Juneau, Soldotna, and Anchorage also hopes to operate in the Matanuska-Susitna Borough.

The Aurora Integrated Oncology Foundation’s goal is to purchase existing private cancer clinics including the Mat-Su Valley Cancer Center. The clinics will continue to operate but as nonprofits with more resources to offer better service, the Matanuska-Susitna Borough Assembly was told at its Sept. 5 meeting.

Bill Popp, former long-time executive director of the Anchorage Economic Development Corp, is chair of the foundation’s board.

The purchases of what would be the new nonprofit network would be through a $250 million tax-free bond financing. The concept is that the savings in nonprofit status and the efficiencies of having a network in several communities would result in lower costs to patients and better care through the purchasing of the latest technology, Sherrie Hinshaw, president of the new foundation, told the assembly.

Alaska badly needs new investment in cancer care, she said. “We have the worst outcomes in late-stage (cancer) diagnosis in the nation,” she said.

Dr. John Halligan, a veteran radiation oncologist who has been affiliated with the Providence Cancer Center in Anchorage, was introduced to the assembly Tuesday as the senior medical director of the Aurora foundation. He agreed with Hinshaw that the remote location of many Alaska communities mean that the quality of care is lacking in some cases. “We have older technology, not state-of-the art,” he told the assembly.

In an interview, Hinshaw said being able to finance the acquisition with tax-exempt funds would make resources available upgrade the services offered.

The bonds will be issued by the Public Finance Authority, a Lower 48 financial agency that facilitates public purpose tax-exempt financings for municipalities and nonprofits. Federal law requires approvals from local municipal governments where the facilities will operate.

Local governments in Anchorage, Juneau and the Kenai Peninsula have given their approval but it is still pending in Mat-Su after being presented at the borough assembly last Tuesday.

The approval has hit a snag, however. Borough Mayor Edna DeVries voiced opposition to the resolution favoring the tax-exempt financing because Mat-Su is a second class municipality that does not have health powers, she said.

Stephanie Nowers, a member of the assembly, also voiced opposition because it was not clear to her that the tax-exempt financing for the acquisition by a nonprofit of the privately-owned Mat-Su Valley Cancer Center would serve a public interest purpose, a requirement for federal tax-exempt status.

“This is a private transaction that could happen with private financing,” she said.

There was support voiced by other assembly members. Dee McKee, a member of the assembly, said: “If we can do more here (in treatment an diagnosis) maybe people wouldn’t have to go to Seattle,” for cancer consultation.

The resolution was brought to a vote and passed with only Nowers voting no. However, Devries vetoed the measure, citing the lack of health powers by the borough. The veto immediately prompted a motion to override the mayor’s action but a vote on the override was held until the assembly’s Sept. 26 regular meeting.

Supporters of the resolution point out that the assembly’s support for the tax-exempt financing does not impose any financial or operational obligation on the borough, with which the borough’s attorney agreed at the Tuesday meeting.

It is simply an expression of local support that federal law requires.

Because it is essentially a formality required by federal law the lack of health powers held by the borough does not come into play because the municipality really has no involvement other than the assembly passing the resolution.

Hinshaw said the $250 million bond transaction and acquisition of clinics will proceed even if Mat-Su’s assembly does not pass the resolution. However, it would mean that the purchase of the Mat-Su Valley Cancer Center will proceed with private, taxable financing, she said.

That would be more expensive and could result in fewer resources being available to upgrade facilities at the Mat-Su center.

Tax-free financing for public service nonprofits including in health care is common in Alaska but it is usually done through the state’s Alaska Industrial Development and Export Authority, which has federal permission to do tax-free financing.

The Aurora foundation considered working through AIDEA but determined that the state authority could not move fast enough in approving the bonds.

The foundation turned to the Public Finance Authority as an alternative, but that carried with it the requirement for municipalities to pass resolutions of support.