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CITY OM SEWARD, ALASKA
~ RESOLUTION 200&018
A RESOLUTION OF T}IE CITV COUNGL OF THF, CITY OF SEWARD,
ALASKA, AUTHORIZING A 90-DAY EXTENSION OF THF.
MANAGEMENT AND OPERATiNC AGREEMENT RE'IWEEN THE
GTY OF SEWAHU AND PROVIDENCE STEALTH SYSTEM
WASHINGTON, OHA PROY[DENCF. HEALTH AND SF.HVICES,
ALASKA
WHF,REAS, Yrovidevw Health and Services, Alnakn C`Providence'9 leased the
1'rovidenee fimrord MWical Center ("PSMC') property and operamd a hospial thereon Gam
lune28, 1996 to Apri110, 2001 pummn[ to n ~asc aryl operaing sgccemcnl wilb the City; and
WHEREAS, We nnlwe of the Hospital Iwsa and operating apfecment changed when the
City and Prot~dence emcrcd into a management and operating agreement in Apol, 2W3, when
&ov(dence began operating thn wllomted hospital and long-teem wre facilities on the Ciry'a
bchalG avd
WHERF.AB, the management end opemting agreement between the Ciry ar,d Providenee
ie act m expiaon April 11, 2008; and
WIICREAS, at the Ocmbor B, 200] City Council Meelirrg, the SewaN Ciry C'.ouvcil gave
dimction to the adminixtration to begin negotiating o new con4acl with Providence; and
WHEREAS, the administration desiros m extend the aoacnl conmact by 90 days in ortler
to provide asswanw to Providence tlsat Thu now long-tarot care [ cilily bends hma been iseoed,
end [o work om the derails of [he reviecd contract to ensure that the corms of the new conbeot
provide moro liscal certainty with reb'ard m the allocation of indirwt costs, and which are
nnxlstent witlt Ne State of Alaska's vmtltodology for mhasing reimborxomenl rotes every kut
years.
NOW'IHEREI"ORE, REST RESOLVED HY THF. CITY COVNCIL OF THF.
CITY OF SEWARD, ALASKA, [hat:
Sents~ The Cily Manager is hereby aothonead to approve Amendomnt No. 2 to the
Mwagement and Operating Agreement hetween Yrovidcnce Hwlth end Servioea, Alaaka end the
City of Seward, In subetamially the form as attached hemto.
Seems. The Managcmcnl and Operating Agreement between Providence and the C'ily
~ is hembY cxlended to July 11, 2008.
CITY OF REWARD, ALASKA
RESOLUTION 5008-01 R
Sec[ioo ]. This Roeolotion shell take effect 70 days following its adoption.
PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this
I O[h day of March, 2UUR.
THE CITY OF SF.WARD, ALASKA
Clerk Carbritlge, Mayor
AYES: DuNum, Valdatta, RnMarsnn, Amberg, Smitb Kellar, Cmbridgc
NOER: Nonc
ABSENT: None
ABR"TAW'. None
ATTEST
lead Lew
is ~ -
Chy Clerk, CMC
(City 9 I)
ni
,~FOF r~~ _
Council Agenda Statement
'vleeting Uate: Man:h 10, 20(18
Through: Phillip Oa-es, Ciry Managc~
Prom: Kristin Crehingtt, F'inancc Dir~ur
~~Item: _ 90-Dav Gxte ion 9fCpntract with Providrncr
BACKGROUND & ,n1STIFICAT1pN
Providence Health and Services, Alaska ('Prnvidencc') (rased the Prnvidcr+cc Seward Medical ('enter
("PSMC") property and operated a hospital that farm Junr 28, I ~)G In April 10, 2001 pursuant to a lea4v
and operating agreemart with [he L ity. Under Utc I~ amutgrment, Providence was financially' responsible tier
throperntionsofthcho:;pity(,tManingthetany4inarK,ixlkvsseswececovetedhyProvidA~cu;e. Duringtheperind
Providence operated the facility under a kale arrangcna:nl, Providrnce lost appmximately S I million per year.
ticytinning in April, 20([3, the tteLUR of the City'x a~eement with lrmvidencc was changod from a Icac and
operating agreement to a management and operating agreement Under thin new model, the (:ity became
financialy nesponsihlc for the operatives of the hospital. I Iowever, the City abmxd to this model only eflcr
I'ac ilittuing collocatica+ between the hospital and the long-term care faciliry. Through collocation, dte two
facilities were able m merge under a single owner (the City), and a singly npc~rator (Pmvidence), oehieving
significant cost efficiencies in the arras ofttdministratitm, nursing, laundry, dietary, facilities matntetwta, etc.
Since collocating, the Providence Seward Medical .@ Care Center ("PSM(:('") egrcorated in a positive cash
position for four year,, until 2007, The short-temt loae+t's were predicted tit the tear fi,mra finanael pmjetnons
for the collocated fm:iliw. attd were the result of a rchasing of rates which provid~~ a lower reimbursement rete
lend cormpnnding annual deficits( from lanusry I, 2007, unnl the facility opens. What the new'ticiliry opem,
the new reimbursement rata will become etYcetive, bringing [fie facility track into s positive cash position.
The current management and operating agreement between the City and Pmvickttcc is sxt to expire April 1 t.
200$. At its meeting of (kycrher 8, 2907, the Seward City Ctwatcit disc»sged wMyfi~r w comfxtitively hid nut
the apctations ofttrc hrwpital and long-term care facility, ur whether to begin negotiations with Providence to
extend the current contract. A flee considering a numM r of Cxtors. including Pmviekrrce's successful history of
pscrvidinR healthcare w-rviuus in Seward, as well ~ flue parunetship between tta: City and Providence in
facilitating the migration to a new model of care under the Gtreo Howse Medcl in the new long-term cam
facility, the Council dineacd the administration to negwiate a contract extension with Providence.
The administratioes have made positive progress toward a new contract, with the City's pr¢nary goal being n~
provide more fiscal certainty with regard to the allocation of indirect costs. and to ensure consistency with the
Slate's methodology far rebasing reimbursement retr;.c every four years. A 90-day extension to the exfstin@
contract wtll allow dte city to ensure that its goals arc nati, and will provide astvrsm:c to Providence ehot the
lung-term care facility Mends have been issued. thereby eaxuring that Providentx will bu conducting long-term
care facility services in tla: new facility in the near firWrc.
C'O'NSISTENCY ('HF'CKLIS'1'
W'h~:n applicable, thts atremla vlatcn+cnt is consistent with tftc Seward City Code, (:heeler, Ganprehensive
Flans. l acrd Use Plans. ltrael~ic Pfart and City louneif Ru1ec of Prvicedores.
FISCAL NO"1•E: There is nu coat to rho City of extending dris contract
~yCOMMENDATION: Seward City Council approve Resolution 2008- 11~ aodtorizing a 90-stay
extension to Qa: Management and Upcretinfr Agreement between Providarax; and the (: ity of tieweni.
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