More Health Services Than Fairbanks Can Afford?

Back in 1967-68, after the 1967 Fairbanks Flood and the loss of St. Joseph’s Hospital in downtown Fairbanks, WC was among the group of high school kids who worked to raise funds for a new hospital in Fairbanks. Lots of conversations with fellow students, some door-to-door work in the community; it was a good cause and a unifying mission at a dark time for the area. You can find a plaque in the elevator in Denali Center acknowledging a substantial gift from WC’s law firm, too.

Some 50 years down the road, that community-wide fundraising drive has morphed into the Greater Fairbanks Community Hospital Foundation. The Foundation doesn’t operate any medical facilities; it is the landlord to Fairbanks Memorial Hospital, to the Carroll Cancer Treatment Center, to Tanana Valley Clinic, and to the medical service providers at the Medical-Dental Arts Building. The Foundation has done very, very well. The rent it charges for its facilities has hugely expanded the physical plant, The new Fairbanks Imaging Center is so big and so under-utilized that it will be years, if ever, before Fairbanks grows in to it. Big chunks of the main buildings are vacant. Ready for growth that hasn’t yet happened.

All that excess space is nice, but it was paid for by the hospital operator, who obtained the money by charging you and WC more to use the facility. Those $10 boxes of Kleenex™. Sure, a lot if was paid for by health insurance companies: Aetna, and Premera/Blue Cross. But that was just the premiums we paid coming back around. And that’s the problem. The Hospital Foundation now has total assets, according to the 2013 IRS Form 990, of more than $283 million net of liabilities. It had revenues in 2013 of some $44 milion, expenses of $29 million and a surplus of almost $15 million. The medical care buildings have to be replaced over time, of course, but no worries, that’s fully funded, too: there some $210 million in depreciation allowance. And $13 million in cash.

On the one hand, that’s pretty sweet. From nothing in 1968, the Foundation has created a nonprofit business worth more than a quarter billion dollars.

On the other hand, at a time when health insurance costs should be everyone’s concern, there’s more than a suggestion here that the physical plant, by a considerable margin, is simply too big for Interior Alaska. At a time when outpatient care is the norm, we have a lot of in-patient resources we may not ever need.

Some of WC’s best friends are trustees of the Foundation. This may sound like criticism of their work; it’s not. WC has nothing but respect, admiration and gratitude for their hard work as volunteers.

But it is a time of transition. The company that operates all those health care facilities, the Foundation’s tenant, is changing. Since Fairbanks Memorial opened its doors, it’s been operated by Banner Health, formerly known as Lutheran Hospitals & Homes Society. That’s changing. For reasons that haven’t been disclosed by Foundation management to the community that owns the Foundation, Banner Health is leaving.1

And now we are told that it will all be operated by Western HealthConnect – who dreams up these names, anyway – which is part of Providence Health and Services. A new lease, or, more likely- several leases, will be negotiated. All the physicians who work for Banner will become employees of Western HealthConnect, instead. Maybe, just maybe, the rent paid by the new tenant can be adjusted in an effort to reduce the cost of health care to Interior Alaskans. Maybe we don’t need to expand the physical plant any further. Maybe a development plan should focus instead on the lowest responsible rent, instead of new additions. Maybe that new lease should set targets for the lowest cost o quality health care possible, and not fair market values.

Full service health care, with all the latest technology and equipment, may not be practical, rational or economic, as WC has explained before. Remember the debate about shipping State of Alaska employees Outside for medical treatment back in the summer of 2012? Economies of scale are very real. At the risk of inflicting more of WC’s writing on his readers, WC’s invites you to look back on WC’s essay on the hypothetical Hultburg Machine and the lessons and challenges to be drawn from it. Because, at this point, the Hospital Foundation is operating a Hultburg Machine in the form of its health care services infrastructure in Interior Alaska.

Interior Alaska needs the best health care service system it can afford. Not a system it can’t afford. Not a system that causes the State of Alaska or insurers to ship Alaska patients stateside for services that are too expensive in Fairbanks.


  1. Sure, there are rumors. FMH failed an accreditation test. The FMH administrator, Mike Powers, retired. There are rumors Premera/Blue Cross is dissatisfied with some aspects of the Carroll Cancer Treatment Center. But WC has no idea if these facts and rumors have anything to do with the sudden departure of Banner Health. Unless they affect the quality of health care, they are mostly irrelevant to WC’s points in this blog post.