The Most Stable Industry in Alaska
Job security is likely not a concern for those working in the healthcare industry, either as caregivers or tangentially constructing healthcare facilities.
Fierce demand increases healthcare construction
Even during the worst economic times this sector shows continuous and substantial growth.
“It just grows and it’s been growing relentlessly for a very, very long time,” says state labor economist Neal Fried. “It’s still continuing to do that.”
In the past decade, new healthcare facilities have been built in Alaska’s population centers, as well as hub cities for rural areas such as Nome and Bethel. That trend is continuing, with new construction and upgrades to facilities in Soldotna, Anchorage, Palmer, and Southeast Alaska in the works or planning stages through 2020.
Healthcare is Alaska’s largest private sector employer. A decade ago, the Alaska healthcare industry employed 27,800 workers. By 2010, that number had grown to 30,200. By August 2018, 38,500 people were employed by the state’s healthcare organizations.
“That’s pretty serious growth,” Fried says. “No other industry is growing that way. There is no other industry that is growing so consistently over time. It’s kind of amazing that it’s that large and it’s growing that rapidly and it’s still on that trajectory of growth.”
Alaska’s largest non-government employer is Providence Health and Services, which operates the state’s largest hospital, Providence Alaska Medical Center in Anchorage, as well as hospitals in Seward, Kodiak, and Valdez.
But healthcare is more than hospitals, Fried says.
“There’s also clinics,” he says. “Hospitals aren’t really true hospitals anymore. They’re not just a place people go to spend the night. There’s a lot of day stuff going on: a lot of clinics that go on in hospitals, labs, all kinds of other things. So they’ve become more of a hybrid as well. All the doctors’ offices, nursing facilities, and other things, they’re counted in healthcare.”
It also has an impact on the construction side, Fried says. “That’s expensive construction. In some places, like Bethel and Nome, it’s an even bigger player for those economies. Healthcare may be the largest single source of jobs,” he says, noting that the school district is usually the other large employer.
In addition, the hospitals in those hub communities also serve many rural communities in the region.
Before most medical facilities are built, however, they must go through an approval process with the State of Alaska called a Certificate of Need. The process ensures responsible development, “rational health planning, healthcare quality, access to healthcare, and healthcare cost containment,” according to the Alaska Department of Health Care Services.
Mental Health Services Lacking
One area of great need is mental health services. Central Peninsula Hospital in Soldotna added six detox beds in 2017 in response to the opioid epidemic. Although the number seems small, there are only thirty detox beds statewide, concentrated in Anchorage and Fairbanks.
The idea is to give patients a safe place to detox and relieve some of the burden on emergency rooms. The new Soldotna facility is called Care Transitions, which received a $1 million grant in early 2017. Central Peninsula Hospital plans to open an inpatient facility next to Care Transitions, which also will feature a program that teaches patients life skills.
Addiction is often related to mental health issues. There are few treatment facilities around the state for adolescents with mental illness, so most are transferred to facilities in Anchorage, which can move those youth away from friends, family, and other support systems.
“The need for substance abuse and mental health treatment resources is overwhelming and growing,” said Alaska Representative Ivy Spohnholz in a news release announcing the approval of two projects that would add dozens of mental health treatment beds in Palmer and Anchorage. Spohnholz is an Anchorage Democrat and the chairwoman of the House Health and Social Services Committee.
The two facilities, Alaska Regional Hospital in Anchorage and the Mat-Su Regional Medical Center in Palmer, were approved to add twenty-four beds and thirty-six beds, respectively.
“These new resources will help fill a well-documented gap in treatment capacity in the population centers of Anchorage and the Mat-Su Borough,” Spohnholz said. “These sixty new treatment beds will allow many more behavioral health patients to stay closer to home where they often have support structures in place to assist in their long-term recovery efforts.”
Both communities have been hard-hit by the opioid epidemic and do not have the appropriate resources to address it. Mat-Su Regional Medical Center in Palmer has only two beds for mental health patients and increasingly needs to turn away people suffering from mental health and drug abuse issues because of a lack of facilities.
Often, the emergency room has to go on what it calls “psych divert” when it finds out a potentially violent person is being brought to the facility. In those cases, a room may have to be emptied so the mental health patient has a safe place to be evaluated. According to the hospital, it went on “psych divert” only 5 times in 2012. In 2016, it happened 234 times.
The mental health facility in Palmer will be new construction with an estimated cost of $19.3 million, paid for by private funds. Completion is expected to be in 2020.
The twenty-four beds in Anchorage are located in a portion of Alaska Regional Hospital that wasn’t in use. Total cost of the renovation of the 11,125-square-foot facility is estimated at $6.8 million, paid for by the Hospital Corporation of America, which owns the hospital. Those beds were expected to be available this year.
Other Healthcare Construction
Mat-Su officials say its other medical facilities are insufficient for its current needs and have asked for additional expansions. State officials project Mat-Su’s population to grow another 22 percent by 2025. The current hospital, which has forty-nine medical-surgical beds, operates at capacity almost every day, according to a letter sent to Mat-Su residents. It has a total of seventy-four beds and is owned by Community Health Systems.
The hospital received a Certificate of Need to expand its emergency department and behavioral health program. Under the proposal, the hospital will add twelve beds to the eighteen in its current emergency department. Eight of those would be general treatment beds and four would be rooms tailored to patients with mental health concerns.
The expansion will be up to 17,600 square feet in size and cost about $14.5 million. It also would be completed in late 2020, dovetailing with the already approved mental health facility. Part of the facility will go into a third-floor space that was shelled in but left undeveloped when the hospital was built in 2006.
Become an Industry Sponsor
A 40,000-square-foot medical plaza at Mat-Su Regional Medical Center was completed in summer 2018. The new Medical Plaza II is adjacent to the existing medical facility and houses health service providers and services such as oncology, a pharmacy, advanced wound care, and hyperbaric therapy. Wasilla-based general contractor Howdie Inc. built the outpatient facility.
When these projects are complete, they will more than double the current medical capacity in Palmer.
For many patients outside the main population centers, a medical emergency usually means they must travel to Fairbanks or Anchorage for treatment. Such is the case for heart patients on the Kenai Peninsula.
In 2017, Central Peninsula Hospital decided to proceed with plans to install the Peninsula’s first catheterization lab, where cardiac patients can receive angiograms and have pacemakers implanted. Currently, cardiology patients must go to Anchorage for treatment. The lab, as well as an update to its obstetrics department, is expected to be funded by $28.9 million in revenue bonds.
Central Peninsula Hospital is a forty-nine-bed acute care hospital opened in 1971, owned by the Kenai Peninsula Borough and operated by the nonprofit Central Peninsula General Hospital.
“The fastest-growing part of our population for a number of years is people over sixty-five. As we age, we use a heck of a lot more healthcare [services]. So that very powerful demographic force is in play.”
In 2003, the hospital began a multi-phase project to expand and upgrade its facilities, which includes adding the detox beds and obstetrics upgrades. The sixth and final phase includes the catheterization lab and other facilities, adding about 28,700 square feet and renovating another 26,000 square feet, according to the project description. It includes adding three beds to its intensive care facility and expanding the pharmacy.
The new construction replaces an existing wing, which will be joined on three sides by existing buildings. Construction began in summer 2018, with estimated completion in 2020. Total project costs are estimated to be about $32 million.
Further south on the Peninsula, the Homer Medical Center completed a major expansion in 2018. The facilities are owned by the borough and the center is operated in partnership with South Peninsula Hospitals. The project added 5,584 square feet and an additional five examination rooms, a procedure room, phlebotomy draw room, lab, and imaging facilities. It was funded through general obligation bonds in the South Peninsula Hospital Service Area. Steiner Construction was the contractor for the project.
In Anchorage, Walsh Construction worked on a major renovation of the US Air Force Hospital on Joint Base Elmendorf-Richardson. The renovations are over two floors, about 12,000 square feet. The project includes upgrades to two operating rooms, surgical support areas, and a sterile supply facility. An MRI facility will also be renovated to provide better workflow for patients and staff.
“We are proud to provide turn-key construction services to the US Air Force and make a small contribution that will offer enhanced healthcare to those who provide our freedom and their families,” says Matt Clugston, senior project manager for Walsh Construction, of the project that is slated for completion in summer 2019.
SEARHC Serves Southeast
In Southeast Alaska, three groups have said they want to buy or merge with Sitka Community Hospital, which has had financial problems in recent years. Two of the proposals, one from Quorum Health Resources and one from the Sitka Jet Center, were dismissed in a community meeting in August.
That leaves a proposal from the Southeast Alaska Regional Health Consortium (SEARHC), a nonprofit made up of fifteen Southeast Alaska tribes, that operates the Mt. Edgecumbe Hospital and several clinics in the city of 9,000 residents, as well as other facilities throughout Southeast Alaska.
SEARHC’s proposal would allow it to acquire the hospital business for $9 million; lease the hospital facility from the city for $140,000 per year; guarantee employment for the current staff; assume pension liabilities; and allow the city to keep the $900,000 in tobacco monies it currently directs to the hospital.
In 2017, SEARHC merged with Wrangell-based Alaska Island Community Services. Under that agreement, SEARHC assumed the clinic’s property tax obligations and established a local advisory board. It set aside a percentage of surplus funds to local initiates to improve residents’ health and well-being. In late 2018, SEARHC took over operations at Wrangell Medical Center (WMC) while it builds a new healthcare campus adjacent to the Alaska Island Community Services Medical Clinic. The new facility will include a critical access hospital and long-term care facility.
The SEARHC Board is unwavering in its commitment to provide the best healthcare possible for its communities, says Board Chair Kimberley Strong. “By assuming responsibility for WMC and building a new healthcare campus, we are serving all of Wrangell and ensuring access to quality, long-lasting services.”
As communities continue to build and upgrade their medical facilities, Fried says the growth trend is far from over, thanks to demographics.
“One of the reasons we believe healthcare will probably continue to grow, even though it’s very expensive and to some extent puts a burden on the economy, is because of our age structure,” he says. “The fastest-growing part of our population for a number of years is people over sixty-five. As we age, we use a heck of a lot more healthcare [services]. So that very powerful demographic force is in play.”
In This Issue
Industrial Support Services Sirectory
The August issue of Alaska Business features the inaugural Industrial Support Services special section and directory in which we place a spotlight on the organizations that help keep the state’s industries running smoothly. Alaska’s network of support services companies is nearly as vast as the state itself, encompassing an extensive and varied collection of companies.