The board and staff of the Petersburg Medical Center this month tried to restart a discussion with Petersburg’s borough assembly about building a new hospital building. In a work session August 23, the mayor and two assembly members asked first to redefine the relationship between the municipal government and the community hospital.

Hospital board president Darlene Whitethorn said the future of the borough and its hospital are tied together if the community is going to survive. “Without medical services there’s not going to be much of a city left, or a borough,” Whitethorn said. “Our older people are going to have to be looking for places where they can move or they can get good medical care. People that are thinking about moving to this island. You know there’s a lot of good things about it but they’re going to be weighing the pros and the cons, what would be the best thing to do. One of the top things on their list will be whether there’s a good medical service or hospital here.”

The hospital was built in 1955 with the long-term care wing added in 1969. Other parts of the building were added in 1984 and 1994, with the clinic remodeled in 2011. A 2015 assessment by an architect found most systems in the aging building were near or beyond the end of their service life and needed to be replaced.

The building itself is owned by the borough but the borough does not provide any operating or capital project funding to the medical center. Oversight and spending decisions fall to the board. The medical center employs 116 people with an average annual salary of just under $60,000.

Whitethorn said the board wanted to talk with the assembly about how the medical center fit into the future of the borough, financially and politically.

“At this point we’re not asking you to do anything financially,” she said. “Our main concern right now is hopefully you’ll be supporting us. As you know we’ve been talking about building a new hospital or remodeling. That’s going to take a lot of funds but it’s also going to take a lot of support. And I feel, and I think our board does too, that if we don’t have the support of the assembly, we’re dead in the water.”

Whitethorn also said the medical center needed to decide whether it wanted to continue as a stand-alone hospital or partner with another entity.

The board has contracted with Dr. Monica Gross to write a community needs assessment, looking at the strengths and weaknesses of the medical center, opportunities and threats for a new or renovated building and recommendations for how to proceed. Gross’s draft is complete. It recommends a further analysis of medical center operations, developing a community engagement plan and a financing proposal for a new facility, along with a preliminary design and a timeline for that project. People responding to a survey Gross conducted were concerned about the community’s ability to afford a new hospital and noted concerns with care, management and billing at the medical center. Among her recommendations was the possibility of affiliating with an outside company or organization.

Meanwhile, a hospital committee has recommended pursuing the construction of a new facility, which is estimated to cost at least 40 million dollars not counting the land. Remodeling the existing building, which is another option, could cost in the upwards of 16 million.

The hospital’s chief financial officer Doran Hammett reported PMC was financially healthy with positive bottom line of almost 400-thousand dollars last fiscal year. He said 60 rural hospitals have closed across the country since 2010, another 700 are vulnerable to closing. “You’re not in that group that’s vulnerable to failure at this point, however, my experience also says that that change very, very rapidly,” Hammett said.

He said the hospital over the last decade has spent about six million dollars in building upgrades and equipment. This year, the board has authorized nearly a million dollars for new equipment and building repairs. He noted that Wrangell’s hospital, where he holds the same job, is also pursuing a new building. And Hammett wondered if the Petersburg would consider donating land or other services to prepare for a new building here.

The mayor and two assembly members at the work session voiced support for the hospital.

“I think as an assembly we’re very supportive of the hospital,” said mayor Cindi Lagoudakis. “We understand the impact of 100 jobs in this community. We appreciate having the services here. I don’t think you tell your story well enough to the public of all the different things that go on and I’ve asked several times put together a public involvement plan telling what you do for the community so that folks recognize the value to Petersburg.”

As for a new building, Lagoudakis said the borough has looked at several potential sites.

“One of the things we’re looking at because of the location and because we’re on a muskeg, we’re looking at how deep is that muskeg, what would it cost to do the site prep on that property,” Lagoudakis said. “But I’ve gotta back up to what is the relationship between the hospital and the borough? And the hospital board right now because of the way our charter and our ordinances are set up, you are in the driver’s seat. You need to tell us what you want that relationship to look like and then we can work through that so that we can get to this end point, but until we have that we really can’t go much farther.”

The potential sites looked at for a new hospital include four sites owned by the borough, near Haugen Drive, Twelfth Street or the ballfields. The top contender is near the end of Twelfth Street and the borough’s Mountain View Manor buildings. Bonding to fund construction of a new building would require approval by local voters.

The borough is receiving over 200,000 dollars a year in cigarette and tobacco tax. The hospital board had lobbied for that tax when voters approved it in 2014 and hoped at least some of that money would be paid to the medical center. However, the following year the assembly voted to keep that revenue in the borough’s general fund. Bob Lynn explained why he voted that way.

“If we just hand that money off and keep handing that money off and don’t know where it goes, why do I wanna do that?” Lynn wondered. “Now I can go back, that money goes into the general fund and we can see what happens to all those funds, the tobacco tax. It doesn’t mean it can’t change at some future time.”

The majority of the assembly also voted against giving the hospital a reduced electrical rate this year but did give that break to the schools. At this work session, the mayor and assembly members discussed having an assembly member attend hospital board meetings or even taking a seat on that board. That and other changes to the relationship could take a change to the borough’s charter and a public vote.