HomeMy WebLinkAboutRes1996-040
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Sponsored by: Garzini
CITY OF SEWARD, ALASKA
RESOLUTION NO. 96-040
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF SEWARD, ALASKA, ACCEPTING THE TERMS AND CONDITIONS
OF THE PROPOSED ALLIANCE BETWEEN THE SISTERS OF PROVIDENCE
WASHINGTON, DBA PROVIDENCE ALASKA MEDICAL CENTER, AND
URGING APPROVAL BY THE SISTERS OF PROVIDENCE
BOARD OF DIRECTORS
WHEREAS, at a special election in April 1982, the voters of Seward authorized a one
percent sales tax; and
WHEREAS, although the sales tax was not dedicated to hospital operations, it was the intent
of the City Council then serving to transfer all or a portion of the proceeds of the tax to help meet
the capital needs of Seward General Hospital; and
WHEREAS, the sales tax subsidy has continued since its inception and has generally been
used to offset rising operating losses of the hospital; and
WHEREAS, in 1985, the City acquired ownership ofthe hospital in an effort to provide an
opportunity for hospital employees to participate in the Alaska Public Employees Retirement
System; and
WHEREAS, efforts of the City and the now defunct hospital board have failed to improve
the financial outlook for the hospital, and City subsidies have reached an all time high equal to
roughly twice the value of the revenues raised through the one percent sales tax; and
WHEREAS, on October 3,1995, voters of the City of Seward, Bear Creek, and Moose Pass
were asked to complete a survey regarding the condition ofthe hospital, local hospital usage, health
care priorities and preferred hospital management options; and
WHEREAS, a majority of the respondents to the survey were opposed to increasing the tax
subsidy to support hospital, and they overwhelmingly chose Providence Alaska Medical Center
(Providence) as their preferred choice to assume control of Seward General Hospital; and
WHEREAS, the City has entered into negotiations with Providence to transfer operation of
the hospital and to provide continued quality medical services to the community; and
WHEREAS, on March 18, 1996, Providence officials presented the negotiated proposal to
the City Council; and
WHEREAS, if the proposed terms and conditions of the agreement are approved by the City
Council and later approved by the Sisters of Providence Board of Directors, the voters of the City
of Seward will be asked to ratify the transfer of the hospital's assets and liabilities to Providence and
CITY OF SEWARD, ALASKA
RESOLUTION NO. 96-040
to approve financing to construct a new hospital facility at a special election called by the City
Council to be held on May 21, 1996; and
WHEREAS, the City Council finds it in the public interest to agree to the terms and
conditions of transfer as outlined in the proposal submitted by Providence;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF SEWARD, ALASKA, that:
Section 1. The Terms and Conditions of the Proposed Alliance between Sisters of
Providence in Washington, dba Providence Alaska Medical Center, and Seward General Hospital,
a copy of which is attached and incorporated herein by reference, is hereby ACCEPTED.
Section 2. The Board of Directors of the Sisters of Providence of Washington is hereby
urged to approve the terms and conditions as set forth in the attachment referenced in Section 1,
above.
Section 3. This resolution shall take effect immediately upon its adoption.
PASSED AND APPROVED by the City Council of the city of Seward, Alaska, this 26th
day of March, 1996.
THE CITY OF SEWARD, ALASKA
AYES:
NOES:
ABSENT:
ABSTAIN:
Anderson, Bencardino, Crane, Deeter, Keil, Sieminski
None
King
None
ATTEST:
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Providence I Alaska
Medical Center
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3200 PROVIDENCE DRIVE
P.O. BOX 196604
ANCHORAGE, ALASKA
99519-6604
Tel 907 562-2211
March 14, 1996
Mr Ron Garzini
City Manager
PO Box 1 67
Seward, AK 99664
Dear Ron:
Please find attached the final version of the Terms and Conditions as agreed to
following our meeting on March 7, 1996 and revised by mutual consent on
March 13, 1996.
The changes, as agreed to yesterday,
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(a) Inclusion of the retirement fund liability as part of the City's
responsibility.
(b) Providence will accept the liability for the radiology equipment lease
at the time transition of ownership occurs. Providence reserves the
right to retire the lease immediately pending financial review.
If the attached document meets with your approval, please sign below and fax this
copy back as soon as possible. I will bring the original down on Monday for your
files.
Thank you for your help in clarifying this last difficult issue.
Sincerely
7~
Tim Cav augh
Operations Administrator
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Ron Garzini
City Manager,
3hy !C;?,
Date I
H:ISTELLAISL060
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TERMS AND CONDITIONS
Of the
PROPOSED ALLIANCE BETWEEN SISTERS OF PROVIDENCE IN WASHINGTON
D/B/A PROVIDENCE ALASKA MEDICAL CENTER AND
SEWARD GENERAL HOSPITAL
TERM SHEET
This Term Sheet describes the general terms of a proposed alliance between Sisters of Providence
in Washington d/b/a Providence Alaska Medical Center (providence), a Washington not-for-profit
corporation, and Seward General Hospital ("Seward"), which is owned and operated by the City
of Seward, an Alaska municipal corporation. Neither party shall be bound by any of the terms
contained herein until such time as both parties receive the necessary corporate and governmental
approvals.
I. PURPOSE OF TRANSACTION
A.
The parties understand that the best way to preserve and protect the availability of
high-quality, cost-effective health care services to the residents of the Seward area,
including the residents and visitors of eastern Kenai Peninsula, is to create a single
health care center that controls and coordinates the operation of all available health
care facilities and services in the Seward area. It is the parties intent that the City
of Seward will finance, and Providence will operate this health care center under
the name Providence Seward Health Center ("PSHC"). Through central control,
PSHC will be able to reduce costs, improve quality, and expand the geographic
coverage of its services and facilities in the Seward area.
B. The parties have always operated their facilities and services for the public benefit.
PSHC will continue this tradition by providing services to all members of the
community without discrimination and will provide charity care in accordance with
the philosophy, mission and values of Sisters of Providence.
C. The parties understand that the provision of cost-effective health care services is
critical to the success ofPSHC and that improving the efficiencies ofPSHC
operations is a significant objective of the alliance between the parties.
D.
The parties believe that effective cooperation between physicians and other health
care practitioners is a critical factor in providing cost-effective and high quality
health care services that improve the overall health of the community.
Accordingly, PSHC will pursue strategies to strengthen and enhance relationships
with physicians and other health care practitioners.
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E. The parties understand there is a benefit to the City in Providences' ability to
provide a continuum of care and access to a large medical resource network.
Providence has been invited to Seward to provide quality health care to all
Alaskans, working in partnership with the Seward community to better serve
patients, physicians, and technical staff within the new health care system.
II. CREATION OF A SINGLE HEALTH CARE ENTERPRISE
A. It is the parties intent that PSHC will be operated as a division of Sisters of
Providence in Washington or a department of Providence. Providence will manage
and operate PSHC, and may, at a later date, expand its provision of services to
other health care facilities in the Seward area.
B. One Seward resident will be eligible to participate as a voting member on the
Providence Health System in Alaska Board which votes on the operations and
interests ofPSHC. Two additional community members will be offered seats on
the Advisory Committee to the Chief Executive of Providence Health System in
Alaska.
III. TRANSACTION STRUCTURE
A. Providence will control and operate all assets ofPSHC and will agree to assume
those negotiated liabilities that are identified on Exhibit A, attached hereto and
incorporated herein by this reference, on a mutually agreed-upon date.
B. Providence will lease from City of Seward their hospital facilities and the land on
which the facilities are situated and such equipment as Providence may desire and
such other facilities and equipment of the City as the parties may agree on, for a
term of 15 years at a lease rate of $1.00 per year.
C. Providence will receive from City of Seward all negotiated non-cash current assets
of Seward General Hospital (excluding assets related to services or facilities that
continue to be operated by the City) and shall assume all non-debt current
liabilities of Seward General Hospital (excluding liabilities related to services or
facilities that continue to be operated by the City) all as identified on Exhibit B,
attached hereto and incorporated herein by this reference.
D. City of Seward will assume or forgive alllong~term liabilities of Seward, includ~
the long-term liability under its benefit retirement plan.
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E.
Providence will receive from City of Seward all cash, one half of the receivables,
inventories, prepaids, board designated assets and such other assets of Seward
General Hospital, all as identified on Exhibit C, attached hereto and incorporated
herein by this reference. City of Seward will retain and pay all accounts payable,
accrued liabilities, and other payables attributable to governmental payors,
including those resulting from termhlating cost reports of Seward General
Hospital. .
F. City of Seward will finance the construction of a new health center, the Providence
Seward Health Center, in accordance with the construction design as developed
and managed by Providence. Demolition costs and other construction
considerations to be paid by City of Seward are as identified on Exhibit D,
attached hereto and incorporated herein by this reference.
G. City of Seward will retain title to the land and improvements of Seward General
Hospital, and the land and improvements on which the Health Center is to be
constructed, and the physical therapy clinic and land, which shall all be leased and
operated by Providence, during the term of the 15 year lease.
IV. PLAN FOR PSHC OPERATIONS
A.
Seward understands that Providence is a Catholic health care organization, and as
such, Providence will provide all services under the terms of the definitive
agreement in accordance with the Ethical and ReliiPous Directives for Catholic
Health Care Facilities.
B. From the date of the signing of the definitive agreement, to the date on which
Providence Seward Health Center is completed, Providence will offer the services
listed on Exhibit E, attached hereto and incorporated herein by this reference, at
Seward General Hospital.
C. The parties intend that this alliance shall be effectuated through a Lease and
Operating Agreement between the parties, whose terms and conditions shall be
finalized as part of the definitive agreement.
D. Providence will offer employment to individuals based on the health care services
to be provided to the community by PSHC, and the applicant's experience and
qualifications.
E.
City of Seward will continue to fund the 1 % of general sales tax revenue to offset
the operational losses and transition costs to be incurred. The sales tax revenue
will be funded to PAMC commencing on July 1, 1996 and will continue until the
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new Health Center facility is constructed. During this tenn, Providence will
provide quarterly financial infonnation to City of Seward. It is anticipated that the
1 % of general sales tax revenue will be used to fund the debt service requirements
associated with the Health Center construction, equipping, and demolition costs.
F. City of Seward agrees to assume all claims or liabilities arising out of
employee severance costs, unfunded retirement costs, and other personal costs
associated with this transaction.
G. City of Seward will set up a funded depreciation account for the operation of
PSHC. The parties shall agree upon the tenns and conditions under which
Providence may access the funds in this account, within the limits of the City's
obligation as previously defined.
V. TIMING AND CONFIDENTIALITY
A. Seward and Providence hereby restate the importance of preserving the
confidentiality of their discussions. Providence and Seward acknowledge the
execution of a Confidentiality Agreement, dated March 7, 1996, and the parties
agree to continue to adhere to the tenns of that Agreement. Providence and
Seward agree to maintain confidentiality as to the fact of and content of their
discussions in private, fonnal, infonnal and public conversations. Further, before
any public announcements or statements are made concerning this Tenn Sheet or
the proposed definitive agreement, Providence and Seward shall develop a
mutually agreed upon press release or statement to guide their respective
communications to both internal and external audiences.
B. Upon both parties securing all necessary corporate and governmental approvals,
the parties shall make a good faith effort to enter into a definitive agreement
regarding the proposed transaction within 60 days of the last such approval.
VI. MISCELLANEOUS
A. Providence and Seward will cooperate with each other in undertaking and
completing all financial, legal and operational reviews and analyses and other steps
required to enable Providence and Seward to participate in detailed negotiations
and to prepare an appropriate definitive agreement in connection with the
transaction contemplated by these discussions. As part of this process,
Providence and Seward shall furnish such information to each other as may
reasonably be requested concerning their respective assets, liabilities, operations
and other relevant infonnation. Providence and Seward shall keep all such
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information exchanged confidential in accordance with the terms of this Term
Sheet and the Confidentiality Agreement, dated March 7, 1996. It is anticipated
that any such information exchanged shall be either returned to the other party or
destroyed as directed by the appropriate party.
B.
Providence and Seward recognize that each will incur separate costs in connection
with this transaction, including legal, consulting and other costs. Each is
responsible to pay its own separate costs incurred in connection with the proposed
transaction. The parties also recognize that there are certain costs which may be
shared among the parties. The parties agree to identify shared costs in advance
and to establish a cost allocation methodology.
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EXHIBIT A
LIABILITIES TO BE ASSUMED BY PROVIDENCE
To be provided at time of closing.
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EXHIBIT B
ASSUMPTION OF NON-CASH CURRENT ASSETS AND NON-DEBT CURRENT
LIABILITIES BY PROVIDENCE
To be provided at time of closing.
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EXHIBIT C
ASSETS TO BE PROVIDED PROVIDENCE BY SEWARD
To be provided at time of closing.
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EXIllBIT D
PROJECT CONSTRUCTION
GENERAL ASSUMPTIONS/REQUlREMENTS
1. City of Seward (Seward) will perform necessary re-platting of site to vacate easements,
rights-of-way and to remove any property lines separating lots 1,2,3,13,14,15,16,17, and
18 as necessary for this development.
Seward will vacate Lowell Street as necessary for this development.
Seward will relocate and/or modify all utilities as necessary to accommodate this
development.
Seward will provide all required utility connections for the development at no cost to
Providence (including electrical transformers, transformer pads, manholes, valves, etc.).
Seward will relocate all electrical distribution lines on or adjacent to the site underground.
Seward will make available a local disposal area for all concrete demolition material and
clean debris at no cost to Providence.
Seward will provide an acceptable geotechnical study to verify the adequacy and safety of
the site for this project (site must be judged acceptable for location of a critical disaster
facility). Concerns addressed must include risks of seismic, flood, or avalanche hazard.
Seward will provide a Phase I Environmental Site Assessment of the project site and
indemnify Providence for any known or discovered contamination.
Seward will provide abatement of all asbestos contained materials or hazardous materials
in hospital and clinic facilities, not already identified by Seward Hospital Plant Operations
Manager, at no cost to Providence.
10.
Seward will turn over all existing fixed and movable equipment in the existing Seward
Hospital and clinic to Providence at no cost to Providence.
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EXHIBIT E
SERVICES TO BE PROVIDED AT SEWARD GENERAL HOSPITAL
The following ambulatory care services will be provided in Seward:
1. Primary Care Medical Services - Primary care medical services provided through an
appropriate mix of physicians and mid-level practitioners. The current estimate is for 2
physicians and 2 mid-level practitioners. It is projected that a total of 3 physicians will be
required for the primary market area after reasonable patient volumes are achieved.
2. Emefl~en<<y Room - The emergency room will be configured, equipped, and staffed to
accommodate all levels and types of emergencies; i.e.. trauma, cardiac, thermal, etc.
3. Ancillary Services -
A. Laboratory - capable of providing the current level of services, and have a direct
communication link to P AMC for more sophisticated testing.
B. Radiology - capable of providing full radiographic, basic ultrasound and
mammography services. The service will be connected to P AMC through the use
of teleradiology.
C. Physical Therapy - capable of supporting the current level of services with the goal
of expanding the program to better support the medical clinic and home care
sefVlces.
4. Home Health Care - currently not provided widely available in Seward, home health is a
service P AMC will develop to support the move toward an outpatient focus.
5. 12.liQur Observation Beds - The focus ofPSHC will be on delivering outpatient care and
services, however, there is a need to provide some level of "short-stay" capability for
patients waiting to be transferred or requiring stabilization, i.e.. OB, peds, or cardiac
events. This service will be higWy flexible to accept the broad range of medical support
needs.
All of the services outlined above will be integrated into a single building to create operational
efficiencies and provide for greater patient convenience. Other potential health care services and
providers may te included in the programming for space, however, no specifics have been agreed
upon with either group(s).
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