Hospital hunts for real estate

PALMER -- When Valley Hospital Association announced last week that its board intends to start talks with Dallas-based Triad Hospitals Inc. on the formation of a joint venture, VHA's announcement promised a new facility would be "in a central location in between Palmer and Wasilla." Hospital officials say the location is still an unknown factor, however. Hospital spokesperson Elizabeth Ripley said the site would be outside the city limits of both Palmer and Wasilla, would be near an "arterial" roadway and that there is more than one potential site.

The hospital membership could vote on a partnership with Triad next month. VHA CEO George Larson said he wasn't sure if site selection would be a part of the vote or not. Larson has said at past public presentations that the hospital wants to avoid inflating land values by telegraphing its intentions. On Friday, Larson indicated that the hospital's press releases were purposefully vague regarding site selection.

"If we narrow it too closely the price goes up. We're trying to be intelligent stewards for the people who we work for," Larson said.

VHA officials also noted that the hospital needed 25 to 40 acres to relocate and had plans for a 75-bed hospital that could be expanded to 150 beds in the long term. Previously, Larson had estimated a property size of 80 acres for the project. Ripley said the reduced land needs were probably due to further research and the fact that Triad comes to the table with "template" hospital designs.

VHA officials also acknowledged that when the hospital relocates, they expect utilities to be provided by one of the two cities or by the Mat-Su Borough. Palmer and Wasilla both have utilities in place within their boundaries. Palmer has customers outside its boundaries who have signed annexation agreements for an upcoming annexation. The borough doesn't operate a sewer or water utility in the core area, but does have a sewer system in place in Talkeetna.

"We're going to have to work with the borough and the cities on that," Ripley said when asked about utilities. "It's going to be a community question," she said.

Ripley said hospital officials were also concerned that the new hospital could draw private practice physicians out of their existing office spaces. This could be disruptive in two ways: The cities could lose tax-paying businesses and the physicians could face extra business expenses. A site between the clusters of medical offices around Valley Hospital in Palmer and Valley Hospital Medical center in Wasilla should mitigate some of those effects, according to Ripley.

"Physicians don't want their investment in their offices to be diminished in value," Ripley said. "And both cities were concerned about private practices leaving."

The state government will also be involved. In Alaska, a health care certificate of need (CON) is required for any construction worth more than $1 million. State regulators grant the CON after applications are filed. Valley Hospital has filed a letter of intent with state regulators to build a 75-bed hospital. The state has sent application information to the hospital. Pending a membership vote on the joint venture, Triad will likely provide some of the expertise for the CON process, according to Larson.

It's the hospital's responsibility to prove to the state that it should be allowed to expand from 39 to 75 beds. When asked how much it would cost to do that, Larson said he couldn't say for certain.

"It's going to take some attorneys," Larson said. "One thing that is working in our favor is that the state health department has already offered to come up and give us tutelage on the process."

If the joint venture is approved Triad and VHA could be breaking ground together sometime next year, Larson said, but there are many factors that can affect the timeline.

"If everything goes badly, we'd expect to have occupancy sometime in the spring or summer of 2005," Larson said. "We're looking at government time and we're also looking at what nature does to us."