State Raises Concerns Over Costs As Anchorage Hospitals Vie For More ER Beds

Entrance to Anchorage's Providence Hospital emergency room. (Photo by Josh Edge, APRN - Anchorage)
Entrance to Anchorage’s Providence Hospital emergency room. (Photo by Josh Edge, APRN – Anchorage)

State Health Commissioner Valerie Davidson is granting Providence Hospital in Anchorage permission to build eight new emergency room beds. The decision also denies Alaska Regional’s plan to build the first freestanding emergency rooms in the state. The commissioner hopes the decision will help discourage inappropriate use of an expensive healthcare option.

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Providence Hospital had hoped to build 14 new emergency rooms at its Anchorage facility, designed mostly for pediatric patients. Commissioner Davidson agreed to about half that number.

Jared Kosin is executive director of the state office of rate review. He says allowing eight new emergency rooms in Anchorage will meet the current need, but not exceed it.

“There’s obviously a need. We can’t move forward with nothing. And Providence shows with its trend numbers and data that they have need for eight additional rooms right off the bat.”

In Alaska, hospitals need approval from the state to build big new projects. The idea is to prevent hospitals from building too many facilities and then passing the cost onto consumers. Kosin’s office concluded Anchorage could support 13 new emergency rooms between now and 2022 but then recommended Davidson approve only 10 new rooms for Providence.

The state’s health department is working hard to reduce emergency room visits, and the costs that go along with them. And Kosin says the commissioner decided adding any extra capacity would work against that goal.

“Emergency room visits are expensive. A lot of the cases that present can be handled in a less expensive, appropriate setting like an urgent care clinic or a primary care office. So the idea that we want to anticipate growth for emergency room services… we’d rather try our efforts at reform and try to curb that growth.”

Alaska Regional Hospital wanted to build two freestanding emergency rooms in South Anchorage and Eagle River. The hospital argued all of the city’s emergency rooms are currently concentrated in a two-mile area and it made sense to expand access to other parts of the city.

But freestanding ERs have been criticized for driving up health care costs by increasing inappropriate emergency room use. And Kosin says that was a big factor in the decision.

“Does it make sense to have a freestanding entity create access to emergency room services? And for the emergency services that do walk through the door- they may not be equipped to meet that demand. So does it make sense to create this access point? And I think… it really doesn’t.”

Alaska Regional CEO Julie Taylor is disappointed with the state’s action. She thinks the health department focused too much on markets where freestanding emergency rooms aren’t successful, instead of paying attention to areas where they work well. Taylor says during the public comment period, the hospital had a lot of support from community members in outlying areas of Anchorage.

“Eagle River in particular was very vocal and especially when you look at the distance involved between their community and ours and the Glen Highway, the challenges that come with that when there are accidents and weather hazards, it really is a safety issue for patients and to have access in their own community I think is very important.”

The hospitals have 30 days to appeal the decision and both Regional and Providence are considering that option. Although Providence Alaska Chief Executive Dr. Dick Mandsager says he is generally happy with the state’s action. He says it’s too early to say how the hospital will revise its expansion plan to account for adding eight new rooms instead of 14.

“The principal that we are going to have a pediatric emergency care area, we’re all committed to that. Will that be all eight? Will it be six of the eight? I think that remains to be seen as we work it out with the architects and the program leaders together.”

Providence says it will take about a year and a half to open its new emergency rooms.