New WERC building opens, completing first phase of Petersburg hospital project

The new Wellness, Education, Research, and Communications (WERC) building opened its doors this month, marking the completion of the first major phase of Petersburg Medical Center's hospital replacement project. And according to PMC CEO Phil Hofstetter, the success of this facility has already changed how he's thinking about the rest of the project.

"This is just step one," Hofstetter told the Pilot on a recent tour of the 15,000-square-foot building. He will be the first to say that the slow and uncertain approach to building the new hospital has not been ideal, but, from day one, given the scale of the project, it was clear that a phased approached would be necessary.

"This was a necessary step ... we have limited runway ... we could just sit in that old building until it erodes, or we could try to make something work ... we are just going to have to get chunks of money and build it as we can," said Hofstetter.

The WERC building, funded entirely through a $20 million federal Treasury grant, houses facilities that might seem eclectic at first glance. Visitors walking through the front entrance encounter the offices of PMC's Community Wellness and Prevention department, home to the popular Kinder Skog early education outdoor program. Down the hall there is a community computer lab which includes a quiet booth, ideal for telehealth appointments. And a little deeper into the building on the ground floor is Petersburg's first MRI machine.

Upstairs there are conference rooms available for public use, with reservations already being made by organizations for board meetings.

PMC's administrative offices have moved into a workspace on the second floor.

And down the hall is the Petersburg Public Health Center, which is moved in and fully operational upstairs.

Around the back of the WERC building, the PMC Facilities and Maintenance department is relocating their workshop, alongside a sizeable warehouse space.

There is also a new morgue, a community service provided as a courtesy by PMC, now with an improved design including curtains for dignity and a mechanized lift for safety and accessibility, features missing from the prior morgue.

So far, 20 – 25 employees have moved into the WERC building from the old hospital, which has had an immediately positive effect on the overcrowded and deteriorating main medical facility downtown.

"If you walked around the building, there was stuff everywhere ... wheelchairs, steam tables, they're in hallways," Hofstetter said, describing crowding and insufficient storage in the old facility. "Now we're able to move all that stuff out, move it up here, and it creates more space for patient care, at least in the interim."

Navigating funding

constraints

The building's mix of functions reflects the maneuvering required to secure grant funding in an environment where healthcare infrastructure support has been insufficient. The federal infrastructure grant funding provided for this building specifically prohibited use of the funds for hospital construction, while also requiring that it did include community-based broadband, education, and health monitoring components.

The highspeed internet access in the free public computer lab provides a clean quiet place for community members, from students needing a place to take online exams to patients needing a reliable, accessible place for telehealth appoints.

The State of Alaska's Petersburg Public Health Center has relocated into the building, which Hofstetter describes as "the ultimate health monitoring department."

And the new MRI represents a significant change to health monitoring capacity in Petersburg. Instead of local patients being forced to travel to other cities to attain needed imaging and diagnostic services, now, Hofstetter expects, the facility could even draw in people needing to schedule MRIs from other communities.

A new vision for

Long-Term Care

The successful, under budget, locally beneficial completion of the WERC building has led Hofstetter to reconsider the overall hospital project strategy. Rather than pursuing the next phase as a "shell and core" of the main hospital building - which would require significant and hard-to-secure funding without creating immediate operational benefit - Hofstetter is now advocating for a standalone long term care facility as the next phase.

"We met with the architects and our steering committee team, and we're like, maybe the next phase should be a turnkey long term care standalone building," Hofstetter said.

A dedicated long term care facility could be designed with a much more homelike atmosphere and potentially more beds than the currently cramped, institutional-feeling LTC facility in the old hospital.

Hofstetter has submitted the long term care facility concept to the state as part of Alaska's allocation from the recently established billion-dollar federal rural health fund. While funding remains uncertain, he's optimistic about having positioned Petersburg to take advantage of opportunities as they arise.

Importantly, Hofstetter sees a financial path to completing the full hospital project through the depreciation benefits that the new buildings would provide. Under Medicare's cost-reporting system for critical access hospitals, the new WERC building and a potential standalone LTC would be depreciated over time, with those depreciation costs included in reimbursement calculations.

"Whereas in the old building, you know, we don't get any [depreciation cost reimbursement]. The life of that building is fully gone." Hofstetter said this could potentially boost annual revenues sufficiently to support the financing of the final phase of the project.

"If we are just able to get that long term care building built, we could potentially self-fund through financing the last piece, because the depreciation builds equity where we don't have that right now," he explained.

For now, with the WERC building completed and operational, Petersburg has its first MRI, significantly improved administrative, maintenance, and warehousing facilities, and a small but meaningful increase in community resources.

And, crucially, PMC has an updated model for how to make progress - one building at a time - toward completing Petersburg's most expensive infrastructure project.