CEO: Possible Sitka Community Hospital merger raises ‘complexity’ of hospital’s challenges

The decision to close the OB program, and reduce surgery to half-time, has not received final approval from the hospital board, and Allen himself is not overjoyed about it. “Signing birth certificates is one of the things I like most!” he said, after Wednesday’s Chamber meeting. (KCAW photo/Robert Woolsey)

Sitka Community Hospital is operating in the black for the first time in several years, but its future is far from certain.

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CEO Rob Allen told the Sitka Chamber of Commerce on Wednesday that discussions around a possible merger with the Southeast Alaska Regional Health Consortium have undermined the morale — if not the stability — of Sitka’s local hospital.

When Allen uses the word “chaos,” he doesn’t mean that Sitka Community Hospital is in disarray. Things are actually going pretty well there: The long-term care unit is running at capacity with 14 beds, and Home Health is growing.

Chaos is one of four ways that business managers characterize problems in the so-called Cynefin Framework. You’ve got your simple problems, your complicated problems and your complex problems — all of which can lead to relatively clear answers.

And then there are chaotic problems.

“Cause and effect no longer apply, and the need is to establish stability again,” Allen said. “Opportunities, though, are embedded in the situation. That’s what Sitka Community Hospital felt like when I got here two years ago. It felt very chaotic. There were a lot of unknowns, and issues, and we spent a lot of time in those first few months trying to get back to a stable situation.”

Allen reported that Sitka Community Hospital has $3.8 million in cash in the bank — about 50 days’ worth of operational money. It’s paid back half of its $1.5 million line of credit with the city, and revenues for through the month of March are $242,000 ahead of budget projections. And the 2018 budget is in the black.

This sounds like stability — so why this talk of chaos?

“I have to say at this point that I’m not really sure where we’re going,” Allen said. “The biggest issue that is causing this complexity-bordering-on-the-chaotic is really the SEARHC merger proposal. That’s creating a lot of uncertainty, and making our complex problems kind of chaotic.”

Allen said that hiring has been difficult, with recent news about a possible merger, and staff morale is low. The Sitka Assembly in March invited a merger proposal from SEARHC. At the same time, the assembly asked to see a plan from Sitka Community to remain a standalone health care entity in an increasingly competitive environment.

Although writing the plan has been outsourced to a consultant (Stroudwater Associates), Allen and his administrative team have already begun to craft a plan for survival, and it involves downsizing in some important areas.

“If we’re going to be around, operating as a standalone community hospital, we will have to change,” Allen said. “We did have two big operational changes built into this budget: One was ending labor and delivery at the hospital, and the other — when that happened — going to a half-time surgery schedule.”

Allen told the chamber that complex problems like those faced by the hospital are very subjective, have no right answer, and will likely produce no consensus around a solution.

Allen has been careful not to come down on either side of the merger. He thinks there is strong potential for collaboration with SEARHC in obstetrics, surgery, and behavioral health. But he’s concerned about the different cultures within the organizations. Sitka Community Hospital is very local, with 200 employees. SEARHC is regional, and many times larger.

“Is there a way we can preserve the strengths of both cultures and grow them, or is it just going to be we’re going to be subsumed, and our culture is gone?” Allen asked. “Which often happens in a straight merger. And I think that would be a shame for the community.”

And that’s only one reason why the future of Sitka Community Hospital remains a complex — and chaotic — problem.