Cordova hospital may close over FCC subsidy cuts
Federal funding cuts to a program which subsidizes rural hospitals’ telecommunications costs could shutter a Cordova hospital, which received a bill last week for nearly $1 million in back costs.
In a May 2 letter to the Cordova Community Medical Center, Alaska Communications asks the hospital to pay a total of $964,370 by June 30 – or face disconnection of its data services on July 1. Although officials say that the charges might be refundable if federal funding to the Rural Health Care Program is restored, they point out that “We cannot sustain our business this way.”
“Alaska Communications believes in your mission, and has endeavored to continue to provide you with service throughout this extraordinary delay,” the letter read. “In fact, despite not receiving payment for your telecommunications services, Alaska Communications has used its own cash to pay third parties to keep you in service – at the cost of reducing our workforce and reducing employee compensation.”
Scot Mitchell, the center’s president and CEO, said many of its systems – ranging from CT and X-ray scanning to telemedicine and payroll systems – rely on internet service.
“I don’t really see how we could operate without telephone and internet access, because our systems really work through the cloud,” Mitchell said. “I don’t think our staff would work for very long without getting paid.”
The hospital’s monthly telecom bill comes out to $80,000, Mitchell said, but with federal help it only pays $1,000 a month out-of-pocket. Hospital staff were looking into switching telecom providers as well as asking lawmakers for help, but the facility typically keeps just 10 to 12 days of operating expenses – about $400,000 – on hand as cash and can’t pay the Alaska Communications bill up-front.
“We’re still doing everything we can to schedule meetings and circumvent a collapse of the hospital just because of telephone service,” Mitchell said. “I’ve been in Alaska just under two years now, and I’ve never seen bills for telecoms as high as I have in Alaska.”
An industry group, the Alaska State Hospital and Nursing Home Association, released the letter Monday as it raised a red flag about the Federal Communications Commission’s planned cuts to the roughly $400-million-a-year program. Under its terms, participating healt care providers across rural America receive a 65 percent discount on “eligible expenses related to broadband connectivity.”
Becky Hultberg, the association’s president, wrote in an email that without internet-based record-keeping and reporting systems, the Cordova hospital “essentially cannot function” and may be forced to close. She said Tuesday that she was aware of at least one other hospital that had been sent a similar letter by Alaska Communications, one of several firms alongside GCI which provides hospital telecom services in the state.
“These companies have just been carrying this obligation and it just came to a point with [Alaska Communications] where they just thought they couldn’t carry it any longer,” Hultberg said.
GCI spokeswoman Heather Handyside said the funding reduction is "troubling" in Alaska, where telemedicine provides life-saving assistance to injured residents. This year's FCC funding decline, she said, came on the heels of a smaller reduction in the previous year.
"Because this year’s funding reduction is much greater than last year, it is causing deep concern for our rural health care customers," Handysaid said. "GCI has not proposed reducing or terminating service to any of our customers. We are continuing to work with them and other concerned parties to secure a responsible, long-term solution."
According to a post on the website MHealth Intelligence, the American Hospital Association went on the record last month against the FCC’s cuts – ranging from 15 percent for individual hospitals to 25 percent for rural-based health care consortiums.
Alaska was one of three states of particular concern AHA highlighted in that story, pointing out that the Alaska Native Tribal Health Consortium would be left “effectively paying 25 times the urban rate” for its broadband services.
Federal pressure has been brought to pressure on the situation, Hultberg said, with her association contacting Sens. Lisa Murkowski and Dan Sullivan to ask about it.
Murkowski spokeswoman Karina Petersen said Tuesday afternoon that the delegation has been trying to address the problem for more than a year, as an FCC evaluation of managing the Rural Health Care Program leaves Alaskan participants in “limbo.”
“Cutting off telemedicine delivery would put Alaskans back decades. Our goal is to make sure that never happens,” Petersen wrote. “If rural health clinics don’t have the affordable broadband services they need to treat patients on-site, they’ll have to resort to medevacing patients out for treatment.”
Sullivan’s office had similarly strong words on the subject, released by spokesman Matt Shuckerow.
“As detailed in a letter this week, Senator Sullivan believes that the Rural Health Care Program should be strengthened and the cap should be raised to better serve rural communities,” Shuckerow wrote. “His focus remains on protecting the end users – the patients and the health care providers that serve them.”
Rep. Don Young alluded to the issue in a May 8 Facebook post mentioning a call he placed to FCC Chairman Ajit Pai.
Pai sent Alaska Communications a letter on the same date, released by ASHNHA, saying he was “disheartened” by the company’s position and stating that it may neither cut off service to existing rural health care providers nor do so for lack of payments above and beyond the urban rate.
Alaska Communications spokeswoman Heather Cavanaugh said in an email Tuesday that the situation was complicated by the FCC’s failure to make funding decisions for its current fiscal year, which began in July 2017.
“We are committed to doing everything we can to resolve this matter quickly and avoid any loss of service,” Cavanaugh wrote. “We urge the FCC to quickly make decisions on the current fund year contracts.”
Asked if the FCC was threatening Alaska Communications over a problem created by the FCC itself, Hultberg said that was a “rational interpretation of that letter.”
“Our role has really just been to urge that a solution is found that is fair and reasonable and keeps these hospitals open,” Hultberg said. “This program is really critical for rural health care in Alaska and this situation needs to get resolved quickly.”
Mitchell said closing the hospital would be a severe blow to Cordova, where the hospital is the fishing community’s largest year-round employer. Its staff spend an estimated $4 million a year in town.
In addition, U.S. Coast Guard regulations mean losing the hospital would also cost the town’s economy the buoy tender Sycamore, currently homeported in Cordova with a crew of 50.
“If there’s going to be a community with a cutter, there has to be a hospital in case anybody gets hurt or has to receive medication,” Mitchell said.
Editor’s note: GCI is KTVA’s parent company.
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