The meeting was called to order at 6:10 p.m. by David Green.

Present: Julie Woodworth    Bettyann Steciw

Tammy Jones    David Green

Jackie Dentz    Karen Berg-Forrester

Stan Welles    Jay Kennelty

Excused: Angelo Hillas

Also Present: Charles Franz, CEO

Charlie Button, CFO

Ingrid Avril, BOD Representative

Tom Walpole, Director of Human Resources

Larry Dallas, Director of Support Services

Kimberly Mills, Administrator of Osteocare

Marsha Kinney, Homer Secretarial Services

Mr. Green requested adding a new Item VI, SAB Responsibilities. He also mentioned two corrections under New Business; Item A should read Sublease and Operating Agreement instead of Sublease and Option Agreement, and Item B should read Strategies/Planning to Sell Bonds instead of Strategies/Planning to Sell Boards.

Ms. Jones requested adding Secretary’s Report as Item G under Reports.

Kimberly Mills, Administrator of Osteocare, addressed the board re garding the bone density services they have provided to the community for the past three years, and the recent unbudgeted purchase of a Bone Densitometer by the hospital. Ms. Mills said they had notified the hospital of the equipment available at their office. She said they had offered joint ventures with SPH and provided the members with copies of correspondence pertaining to this along with information regarding their services. She informed the members she had presented the same information to the BOD on December 16th but has had no reply from any of the BOD members. Ms. Mills said SPH has set a precedent not to compete with local businesses, had returned a bone density machine two years ago, and asked why they now purchased a machine. She felt it was the duty of the BOD of a corporation to hold the CEO accountable for decisions which hurt other businesses in a community. Ms. Mills said she was concerned that meeting minutes had not been posted to the SPH web site for quite some time and has asked several times for a copy of the joint meeting minutes. She invited the members to call if they had any questions and requested a written response, regarding the information she presented this evening, by the end of January.

Ms. Woodworth mentioned at the December meeting the question was asked if the machine currently being used in town proved the same information as the new one at the hospital and physicians had said it did not provide needed detailed reports, such as calcium reports. Ms. Mills said she did not know the exact machine purchased by the hospital and to her knowledge Osteocare has not received any complaints from doctors regarding their reports.

Ms. Dentz mentioned in the second sentence of the first paragraph on page seven where it reads, "Mr. Green added they have a responsible to other SAB members", should read ".....they have a responsibility to other SAB members."

Mr. Franz gave a presentation on the Sublease and Operating Agreement to make the members aware of the history of the SAB, the service area, and the roles and responsibilities of the SAB, the BOD, and Administration. He said it is very important for both boards to understand the Sublease and Operating Agreement because it is the basic charter for how they work together. The current agreement has a duration of five years and has an automatic renewal provision, which would occur on March 30, 2003, if there are no objections by any of the parties involved. He said there is also a provision for termination with a 90 day notice for material breach, or if the BOD can not maintain enough professional staff to provide services, or if the hospital gets into financial difficulties and the two boards can not agree on a way to resolve the difficulties. If the BOD does not carry out its duties the SAB would assume responsibility for the governance of the hospital and if the SAB is dissolved the KPB would assume responsibility. Mr. Franz said the key responsibility of the SAB is to determine the level of services required to support our community and to recommend to the assembly the tax levy that is necessary to support and provide these services. Mr. Green added one of the goals of the SAB this year would be to evaluate the level of services provided and determine what they might want to change.

Mr. Franz then mentioned the BOD duties, which included the following:

To operate the hospital, LTC facility, and other authorized services.

Account for all financial transactions.

Establish policies and procedures that govern the hospital. He added the Medical Staff has a separate set of Bylaws, which must be approved by the BOD.

Determine appointments to the professional staff and address issues regarding suspensions, etc.

Use funds only for operating the hospital and providing prescribed services.

Maintain appropriate accounting records and participate with the auditors.

Conform to Federal and State audit requirements.

Provide monthly financial reports to the SAB.

Prepare and submit the annual budget for the hospital.

Provide reports on separate activities such as the Home Health and Personal Care Attendant programs.

Propose the annual capital budget for SAB approval.

Mr. Franz said as the Administrator he works for the BOD and his relationship with the SAB is to do his best to assist them with information and advice. He added the key to having a successful operation is to have open communication between the two boards and felt they have done very well with this.

Ms. Dentz asked who enforces the Medical Staff Bylaws. Mr. Franz said they report to the BOD and the board makes sure the Bylaws are being followed. An example he gave was at one time they did not have the requirement for professional liability insurance, and feeling this should be required, the BOD worked with the Medical Staff to incorporate this requirement into their Bylaws. He said the BOD also wanted more details from the Medical Staff when presented with recommendations for granting clinical privileges. The doctors evaluate each others ability based on training and experience and the BOD required they add this criteria to their Bylaws.

Ms. Dentz then asked how the BOD was formed. Mr. Franz said it is a self appointed board. When a member leaves they interview interested parties, consider their qualifications, and are then nominated.

Mr. Green thanked Ingrid Avril, of the BOD, for attending this evenings meeting and encouraged the SAB members to attend the BOD meetings.

Ms. Woodworth reported the committee briefly discussed land acquisition but would get into this more after the campus plan is completed and added the Chow property is still available. The capital budget for fiscal year 2004 is underway and managers have submitted their requests. They have started to prioritize by considering safety and quality of care, increased revenue strength of the hospital, and improved efficiency in operations. The committee discussed working within the existing mil rate, what they would do with the tax dollars regarding capital purchases, and allocating towards the construction project. Mr. Button added they would bring it to the next board meeting. Ms. Woodworth mentioned the committee will review it before giving a recommendation to the board.

Ms. Woodworth said they also discussed expansion funding and said Mr. Button had met with Jeff Sinz, at the borough, to talk about other revenue sources that might be available besides bonding. Mr. Button said the meeting went very well and an option from the borough would be for them to actually purchase land for the hospital. He said Mr. Sinz is looking at hiring an underwriter to come in and analyze the hospital’s financial position before going for bonding.

Ms. Woodworth reported the committee discussed developing criteria for a 15 to 20 year plan for building a new hospital. She said she was glad Mr. Sinz had mentioned the land purchase option and if a parcel of land became available, and it meets the criteria, it might be a good idea to purchase it for future use.

Ms. Woodworth asked Mr. Button if the borough has approved the contract for the new computer system. Mr. Button said they have approved the contract.

Ms. Woodworth mentioned it had been requested to change the committee’s meeting date and asked the members to meet before leaving this evening to pick a date.

Governance Committee

Ms. Dentz reported the committee met on December 17th, with all members present, to set up criteria to look at the Sublease and Operating Agreement and changes.

She said they also decided on the SAB pin for one, three, and five years of service, and are also having the recognition plaques for the Norma Turkington Conference Room and the Leroy Gannaway Cafeteria made. Ms. Dentz reminded those who have not gotten their badges to do so any time between 8:00 a.m. and 5:00 p.m. She informed the members arrangements are being made, at Eagle Eye Photo, for the SAB and the BOD members to have their pictures taken, which will then be hung in the lobby.

Ms. Dentz mentioned five SAB member’s terms will expire this fall. She said the Governance Committee would like the members involved to notify them by April 1st whether they do or do not plan to continue to serve. This will then give them time to recruit, if need be, and comply with the required time to respond to the borough.

Ms. Dentz said the committee also met on January 7th and reiterated the items discussed at the December 17th meeting. She said she received phone calls from some members who would like to go over the Sublease and Operating Agreement more thoroughly.

Ms. Dentz said there are currently four volunteers for the hospital’s Foundation Committee. They are Karen Berg-Forrester, Janet Higley, Lorna Olson, and Jackie Dentz. Ms. Dentz said they would like five members and added Ms. Berg-Forrester knows of one other person who is interested. The next meeting will be this Friday at 1:00 p.m.

Ms. Dentz reported they also discussed the education and evaluation of the boards. They thought the criteria used at the Retreat was excellent and requested copies for the board to use for their evaluations. Ms. Jones asked the members to contact the Governance Committee with any comments they may have before their next meeting.

Chairman

Mr. Green requested that if a SAB member is not going to continue as a director, whether elected or appointed, to take the responsibility to find a suitable replacement. He also suggested notifying the Governance Committee if they know of an individual who might be interested in serving as a board member in order to have a list when a seat becomes vacant.

Administrator

Mr. Franz was glad to report that shortly before Christmas they reached a tentative agreement on the labor union contract and they hope to vote soon. Mr. Walpole added he heard they expect to vote the end of January.

Mr. Franz said the small pox vaccination plan is for two hospitals, Elmendorf Hospital and Alaska Regional Hospital, to have ready teams in case of an outbreak. Other hospitals will not be vaccinating staff until there is a confirmed case or outbreak in the state because the potential risk of vaccination out weighs the risk of exposure at this point in time.

Mr. Franz was very pleased to announce the hospital staff donated $10,241.00 to the United Way Campaign.

Mr. Franz said the members should have received a copy of the communication from Dr. Eneboe regarding the Master Plan and there were several valid points, which are being considered. Mr. Green, Mr. Lau, Dr. Eneboe, Dr. Welles, Dr. Smith, and Mr. Franz have met and they have agreed to re-evaluate their positions. Mr. Franz said he has also met with Dr. Eneboe a few times and re-drew some sketches and concepts, which have been submitted to the architects. They expect to have some feedback from the architects next Monday. He said they hope to get the planning process back on track and have a plan that everyone will support. Mr. Franz added if they move ahead with these revisions it will cost an additional amount.

Mr. Franz reported the CPSI computer system contract has been let and the new system should be up and running March 1st .

Mr. Franz said he included some information on the quality initiative being promoted by the American Hospital Association in their packets. This is much like the LTC quality initiative and they will rate the quality of care, which will be published.

Mr. Franz reported Representative Paul Seaton has organized a group of task forces to address certain interest issues such as fisheries, timber, and health care. When an issue comes up before the legislature, which would impact these groups, he will contact his task force representatives who will assemble a group and poll those attending to obtain input from a wider variety of individuals. Mr. Franz said he will share information with the board when it is something that might affect the hospital or the community.

Mr. Franz asked if he might comment on Ms. Mill’s presentation. He said she presented some very valid points. They do have a machine that will assess the hips and spine and what they are faced with is that technology has changed. The machine purchased by SPH is newer and provides

more up to date technology. The primary difference is the instant vertebral assessment, which uses 1% of radiation required for a normal spinal assessment and is a much lower dose of radiation. It is also quicker and less expensive than what Osteocare was able to provide. Mr. Franz said they were providing good peripheral screening services and the hospital did not know they had gone into doing full spinal and hip assessments until after the hospital had made the purchase. Even though there now is some duplication of effort he felt the hospital is providing a higher level of service to the community.

Ms. Berg-Forrester said she had a full test done by Osteocare, at Dr. McCallum’s request prior to her knee surgery and he seemed to be satisfied with the results at that time. She added she did not know where this fell in the time line since the pre-surgery tests were done three months prior to having surgery.

Ms. Woodworth asked when the hospital’s bone densitometer went on line and clarified this was done at the physicians request for better diagnostic capabilities. Mr. Franz said it went on line December 17th and the information they were receiving from some of the doctors was when doing calcium replacement, with calcium supplements, they wanted to be able to monitor the calcium update.

Mr. Welles said what disturbs him is the change of course taken. In a letter on April 20, 2000, from Mr. Franz to Mr. Mills, it stated that after reviewing the medical staff’s level of interest, and the potential demand for this service, he had decided not to offer bone mineral testing at the hospital at this time and the hospital would have no objections to Mr. Mills’ plans to offer these services in the service area. He said if the doctors wanted more in their calcium analyses why not pass this interest on to Osteocare to see if they might be able to meet this requirement. Mr. Franz said the primary reason he did not recommend this is because Mr. Mills had approached SPH with a proposal on doing a joint venture for an imaging center. The center would duplicate the services already provided by the hospital, such as MRI, CAT Scan, outpatient X-ray, mammography, and ultrasound. Mr. Franz said after reviewing his proposal he saw two problems; the projections for the workload from the demographics of the area were very inflated, and by duplicating services it would dilute the patient pool. Mr. Welles felt it would save taxpayer money if some of these services were provided by a private party. Mr. Franz said he agreed with this but Mr. Mills wanted the hospital to contribute a significant portion of the capital, and the operating expenses, and his contribution would be to manage it and his benefit would be to take a large portion of the profits. Mr. Franz said he could not shut down the imaging center at the hospital because they must have coverage for emergency services, as well as inpatient and surgical coverage.

Ms. Berg-Forrester suggested drafting a letter from the board, through the Chairman, informing Ms. Mills that it is impossible for all the members to respond in writing by the end of January. They will, however, respond after consideration of the material provided and discussion at the board’s February meeting. Mr. Green suggested responding by February 15th .

Ms. Avril said the board’s position is to support the hospital’s best interest and the clients it serves.

Current Financial

Mr. Button asked if there were any questions regarding the Financial Report, which was in their packets. Ms. Steciw asked how the action plan was coming along in dealing with the loss from operations. Mr. Franz said they were looking at areas for reducing overtime and cutting back on some variable expenses. Mr. Button added they were working on the operating budget and are looking at a prior five year period of time to establish some predictions for the future.

Secretary’s Report

Ms. Jones asked the members to update their address, phone, and email information before leaving this evening so she may forward this on to the b orough. Mr. Green mentioned their email addresses would only be used to facilitate communication among SAB and BOD members. Ms. Jones said a second list could be made available to the public without their email address. She also reminded the members she would like their mileage reimbursement requests each month so she may forward them on to the borough.

OLD BUSINESS

Mr. Green said there is a tentative meeting set for Monday and the Strategic Planning Committee will be scheduling a meeting soon.

Hospital Retreat Follow-up

Ms. Dentz will be doing a follow-up on board evaluation. Board evaluation will be done by the Governance Committee and individual members will do a self evaluation based on a form provided by the Governance Committee.

Ms. Berg-Forrester asked what the deadline was for this to be back to the Borough. Mr. Franz said they should receive it by early February in order for the Assembly to get it on their calendar before the expiration date of March 30th.

Ms. Woodworth referenced page 8, Items F and G, regarding the SAB being notified of any loses or claims, and asked if Item F changed how they were currently operating. She also asked if there were any law suits or claims the SAB does not know about. Mr. Franz said there are none and added when there is a claim a letter is sent to the Chairman, with a copy to the borough attorney. The Chairman then provides this information to the board and the CEO will then comment on the case. Mr. Green mentioned there is a SAB communication file available for the members to look at in Mr. Franz’s office. Ms. Woodworth asked Mr. Button if the hospital was providing the borough with schedules of insurable assets semi-annually as stated in Item G. Mr. Button said the borough has been requesting this on an annual basis.

Ms. Woodworth felt the committee had covered the material well and did not feel they should drag this out to another meeting. Ms. Dentz said they had addressed the legal description and the length of time allowed for review and/or termination of the agreement.

After some discussion Mr. Green called for a vote to the friendly amendment.

The friendly amendment carried by voice vote with Ms. Woodworth voting nay.

Mr. Green then called for a vote for the motion.

The motion carried by voice vote with Ms. Dentz and Ms. Woodworth voting nay.

Mr. Green reminded the committee to refer to the current agreement and read the wording under Duration. Mr. Franz said language currently in the agreement does not provide fo r a review and only provides for an extension or termination. Mr. Green said the borough attorney’s opinion was that the SAB must include the option of termination, along with review, and he will provide the verbiage used by the attorney to the Governance Committee by Tuesday. They will then provide a presentation at the next meeting.

Strategies/Planning to Sell Bonds

Mr. Green said this item is to give direction to Administration and the SAB to prepare in educating the community on the need for the expansion and the justification for the bond. He would like members of the SAB and the BOD to volunteer to speak at various groups and functions and suggested they start to prepare for this.

There were no comments of the audience.

Ms. Steciw mentioned a letter in the Homer News by a former employee who had been terminated three years ago and asked for some background .

Ms. Woodworth asked for the Finance Committee members to meet briefly to set their next meeting date.

Mr. Welles provided a graph showing concerns he has and suggested doing an American Medical Group Association survey because too many "red flags" are going up to commit the public to long term commitments. He said the Bylaws authorize the SAB to the survey and presented a list of red flags that have come to his attention. He felt it was incumbent on the board to address certain issues and requested adding the survey for discussion on next month’s agenda. Mr. Welles said he would obtain more information such as the cost.

Ms. Berg-Forrester felt they had been productive this evening and suggested doing some in house housekeeping and be unified before going to the public with the bonding issue.

Ms. Woodworth mentioned the board’s job is to deal with a lot of the negative and did not want anyone to leave the room with a negative taste. She said 99% of what she hears regarding the hospital are positive remarks. She said because they are overseeing taxpayers’ money they must deal with the negative but they should not forget all the positive things and that the bad is minimal compared to the good.

Ms. Dentz felt the list presented by Mr. Welles was very negative and did not provide complete stories. She said SPH is a very good hospital and would like to see a more positive attitude.

Ms. Jones agreed with Ms. Dentz to a certain extent, respects Mr. Welles, and felt with working on housekeeping these issues could be resolved amongst themselves. She reminded everyone to provide their phone and address updates. On a happy note she said she wanted to thank Mr. Walpole for the being a great Santa at the hospital’s Christmas party.

Mr. Kennelty thanked Mr. Franz for doing a good job with the hospital and said he sees nothing but good positive things for the hospital.

Mr. Green said it is great to have positive approaches to problems. They should accept input as raw material to deal with, try to make the board function better, and be supportive of the administration and its attempts to make a better hospital.

Ms. Avril thanked them for letting her join them this evening.

BOD Finance Committee Meeting,     01/21/03 12:00 p.m.,     Conference Room 1

Regular BOD Meeting,     01/22/03 6:00 p.m.,     SPH Conference Rooms

SAB Finance Committee Meeting,     02/03/03 12:00 p.m.,     Conference Room 1

Regular SAB Meeting,     02/06/03 6:00 p.m.,    SPH Conference Rooms

The meeting adjourned at 9:25 p.m.