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BRH negotiating purchase of Juneau Medical Center

Funding outlook for adolescent treatment center positive

Posted: November 23, 2011 - 1:03am

Two reports given to the Bartlett Regional Hospital Board show progress on one construction project and one potential acquisition.

The board heard from CEO Shawn Morrow on Tuesday about the status of purchasing Juneau Medical Center. The two have apparently been working on the proposal for a few years, but the bulk of the negotiations started late last year.

The initial asking price for the center by its partners was $1.5 million, including provisions that keep two clinics in the building for at least a few more years, and lease terms.

The hospital countered with $1,025,000 after getting an appraisal for a value of the building which ranged between $975,000 and just over $1.1 million.

Morrow’s letter to the center said their offer is dependent upon lease revenues, which are 10-18 percent lower than surrounding facilities because those other facilities have been renovated in recent years.

Ultimately, Bartlett has proposed a final offer of $1,150,000 for the facility, according to a Nov. 4 letter. Morrow said the hospital has not yet received a response and he will get in touch with the seller if he hasn’t heard anything after the Thanksgiving holiday.

The interest Bartlett has in the purchase is for future expansion prospects. Juneau Medical Center is on the hospital campus. Bartlett’s most recent Master Facility Plan — which is still in draft form until medical staff gives input — includes several preliminary proposals for the medical center space. Some things that could happen there are either a renovation of the existing building or demolition and construction of a new building. One such proposal for that new building would be a new surgery facility.

“It’s a location that, if negotiations are successful, provides some opportunity for expansion,” said Jim Strader, Bartlett director of communications and marketing. “Everything is still proposals at this point. ... I wouldn’t anticipate seeing any changes in the next few years.”

Changes to the center, if negotiations end positively, would require a lot more board discussion, medical staff input and funding sources.

In other business, board members discussed progress on finding funding for the Child/Adolescent Mental Health Unit (CAMHU).

The project is estimated to cost $23 million and the board both last year and this fiscal year set aside $5 million. Board president Kristen Bomengen and Morrow visited with city staff and the mayor about the potential for funding through the 1 percent temporary sales tax set to expire after next year.

“We discussed options for funding through city means and also through state means,” Bomengen said.

She said her feeling, coming away from that meeting, was that the city was “positively inclined” to funding a portion of the remaining project costs but not necessarily the full amount.

Morrow said they threw out numbers to see what would be reasonable. The city told them that there is about $150 million in requests for projects from potentially renewing that 1 percent tax — which must be voter approved — while the five year life of the tax if expanded would only generate about $40 million.

“To get a portion out of that for the adolescent center would be good,” Morrow said. “I didn’t see any opposition or barrier for them that there wouldn’t be some funding there.”

Board members Lauree Morton and Bob Storer spoke with representatives of the Alaska Mental Health Trust as well about funding potential. Storer said they have pledged $100,000 for the program, but also believes the Trust is likely to spend more.

Storer said he spoke with Jeff Jessee, CEO of the Trust, and Jessee wants to see the hospital fine-tune their numbers more. Storer said the rough estimate of $23 million is about $2 million per bed for the 12-bed facility, and Storer said that Jessee felt they should be able to do it for closer to $1 million per bed.

“He was really complimentary about the mental health pieces here,” Storer said.

Morton said Jessee thought it may be too late to get funding through the legislature this year, but they could vet the project more closely and be ready to pitch it next year. Storer wanted to make sure they double check that it’s too late to run the proposal in this legislative session.

• Contact reporter Sarah Day at 523-2279 or at sarah.day@juneauempire.com.

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