State rejects freestanding Alaska Regional emergency room in South Anchorage

State officials have rejected Alaska Regional Hospital’s application to build a freestanding emergency room in South Anchorage.

Alaska’s health commissioner late last week denied the hospital’s Certificate of Need application in a sharply worded letter that faults numerous basic steps in the process and finds the new facility would neither improve access to quality care nor reduce patient costs.

Regional administrators earlier this year proposed building a $17.6 million freestanding emergency department in South Anchorage by the end of next year. Unlike more conventional emergency departments, Regional’s proposed facility would not be physically connected to a hospital where patients could be transferred for ICU care or surgeries.

Generally, the state review of need allows officials to determine whether there’s enough patient demand to justify the expansion of existing facilities or construction of new ones.

State health commissioner Heidi Hedberg found numerous faults with Regional’s application, starting with the lack of any need in the municipality for the stand-alone emergency room, according to a Sept. 28 letter from Hedberg to hospital chief operating officer Robert Stantus. The finding is based on a 49-page staff analysis by the state’s Certificate of Need section.

Regional’s application also “did not correctly interpret population data or correctly identify the service area,” Hedberg said.

And the hospital, which in its application referenced a critical shortage of emergency beds in Anchorage, used incorrect methodology when calculating the need for new emergency beds, health officials found.

A Regional spokeswoman on Monday emailed a statement from hospital CEO Jennifer Opsut expressing disappointment with the decision and saying hospital officials “believe there is a need for more emergency care in our community and remain focused on finding ways to enhance our services.”

Asked if the hospital planned to appeal the denial, Regional spokeswoman Kjerstin Lastufka said in an email that Regional officials are “carefully reviewing the feedback provided by the Department of Health to determine our next steps.”

Regional is one of three large hospitals in Anchorage — the others are the Alaska Native Medical Center and Providence Alaska Medical Center, the state’s largest — and is part of the for-profit HCA Healthcare Inc. chain of 182 hospitals in 20 states and the United Kingdom.

Even before the state’s decision was made public, the proposal drew concerns from a group of Providence emergency room physicians over the potential for the new facility to charge higher, emergency-level prices without being equipped to treat all types of emergencies.

Alaska Regional in May submitted an application to the state to build the nearly 11,000-square-foot “satellite” facility to include 12 emergency rooms and equipment such as a CT scanner, ultrasound machine, X-ray machines and five cardiac monitoring stations.

Regional last year had the highest emergency department volume in its history, averaging more than 2,400 patients per bed, according to the application, which predicted higher numbers this year. It also said the new ER would be connected to Alaska Regional by a “virtual hallway” and promised any transports between the two facilities would be free to patients.

But the staff analysis of the application found that Anchorage’s 65 emergency beds satisfy current demand and there is no “demonstrated need for additional emergency treatment rooms in the Municipality of Anchorage.” The analysis also faulted Regional for incorrectly including tribal beds in its calculation; the state doesn’t factor tribal or military hospitals into need calculations.

Hedberg, in last week’s letter, said the proposal came into conflict with “one of the department’s highest priorities” for Medicaid services: reducing emergency room visits and relying more on prevention such as primary care, urgent care clinics and crisis stabilization centers.

“From a health planning perspective, increasing access points to emergency room services may improve convenience for some, but does not necessarily improve access to the appropriate level of care,” she wrote. “Establishing additional access points for emergency room services contradicts the department’s priority and long-term planning to contain costs by curbing unnecessary use of emergency departments.”

The hospital also failed to conduct adequate planning or stakeholder involvement, as required, in how the project would fit into community, regional, state and federal health plans, state health officials found.

Alaska Regional Hospital is owned by Galen Hospital Alaska Inc., an indirect subsidiary of HCA Healthcare.