SEARHC looking to pay between $25 to $40 million for new Wrangell hospital

Wrangell Medical Center. (Photo courtesy of Wrangell Chamber of Commerce)

Southeast Alaska Regional Health Consortium is continuing forward in acquiring Wrangell’s hospital. The Native nonprofit plans to build and operate a new hospital in the island town within the next three years.

A contract isn’t set in stone between SEARHC and the City of Wrangell. But both parties are eager to strike a deal.

Last month, SEARHC made the offer to build and operate a new hospital. And SEARHC would take over the liability and operation of current Wrangell Medical Center until the new hospital is finished.

Since that announcement, SEARHC scoped out the liabilities of the current hospital. It’s falling apart, a number of electrical, sewage and foundation issues are at the brink of failure. If everything went out all at once, it could cost up to $24 million. But SEARHC’s Vice President Dan Neumeister says that isn’t scaring them off.

“What we anticipate might fail over the next couple of years is fairly small compared to that $20 million,” Neumeister said.

SEARHC says it is looking to pay between $25 to $40 million to build the new hospital, which will connect to the current search clinic in town. It would span 44,500 square feet, and incorporate all the services Wrangell is used to, like emergency, primary and long-term care. The property could also provide more space for other services down the road.

City officials and assembly members support the acquisition, saying it is a life boat for the city-owned hospital that is financially struggling to meet operation costs, let alone paying for a new facility that is desperately needed.

Neumeister believes it’s a win-win situation. Small, city owned hospitals are struggling across the nation. Merging with larger organizations spreads more resources around.

“Small hospitals that are independent, standalone facilities just don’t have the critical mass to sustain either reimbursement challenges or facility needs,” Neumeister said. “So the idea of becoming part of a larger system spreads that risk, and also allows the system to move their monies around to make sure that these small communities are successful and thrive.

The next steps include a formal buy-in from the city, which could happen mid-June from the assembly. Then SEARHC’s board would need to do the same, and then spend three to four months drafting building designs and management plans. SEARHC could take over the current hospital in October of this year. A new hospital could be built by the beginning of 2021.

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