Releases plans to address community needs, confirms contribution to the pool 

By Marcia Kuszmaul

Homer Independent News

In July, South Peninsula Hospital (SPH) will open an urgent care clinic as an alternative to emergency room and primary care visits. The clinic will be open 12 hours a day, six days a week for treatment of non-life-threatening illnesses and injuries at 4201 Bartlett Street, co-located with SPH Family Care, one block down from the hospital. 


In addition, a full-time ear, nose and throat (ENT) doctor will join the speciality clinic in May. New providers in neurology, pediatrics, radiology, dermatology, reconstructive plastic surgery and orthopedic surgery have been added recently.


The hospital also is creating a prompt pay discount, testing ways to improve patient registration and scheduling, and launching a new website.


SPH Chief Executive Officer Ryan Smith detailed these developments and longer-range plans at a Homer Chamber of Commerce luncheon April 27. 


In addition, during the meeting, Derotha Ferraro, SPH director of public relations, confirmed a pending $20,000 contribution to the Kachemak Swim Club toward operation of the Kate Kuhns Aquatic Center pool at Homer High School. If the Swim Club can establish an operating agreement with the Kenai Peninsula Borough, which would maintain ownership and be responsible for maintenance, SPH would contribute $10,000 this year and next.


“It gives them some breathing room to figure out services and secure other donors,” Ferraro said. “There are other donors that will, I feel confident, happily support the pool once it’s out of the government’s hands and once the nonprofit is proving that capacity to do it.”


Plan for the future


The SPH plan Smith reviewed was born out of a 2024 $38.5 million service area bond measure that failed resoundingly (62% No, 38% Yes) out of 3719 votes.


“It failed by a bigger margin, I think, than any of us thought it was going to,” Smith said.


Afterwards, SPH hired a research group to learn why the community had rejected the bond.

“There wasn’t generally a lot of fondness for property purchases that were so much more than the appraised or assessed values,” Smith said. “But what we learned was that there was a lot of support for providing new services . . . (and) to improve the infrastructure of the building.”

SPH CEO Ryan Smith reviews community feedback at a Homer Chamber of Commerce meeting, April 27. SPH is presenting its strategic plan to organizations and at public meetings throughout its service area. (Photo by Marcia Kuszmaul/Homer Independent Press)


In response, SPH Board of Directors and leadership developed a four-point plan to improve the critical infrastructure of the hospital and provide for growth, and “we’ll go after whatever means are available to us to help do that,” Smith said.


The essential plan is:

1. Year 1 – Update critical infrastructure. SPH worked with U.S. Senator Lisa Murkowski, R-Alaska, to secure $5 million in discretionary federal funds to replace and relocate the aging generator plant, which failed in 2024, causing a 90-minute power outage, and replace nearly 70 other mechanical systems that are outdated.

2. Year 2 – Maximize SPH’s existing space and complete its remodel of the 11,000-square-foot lower level to relocate and expand the pharmacy and infusion clinic. The hospital’s Plant Replacement and Expansion Fund (PREF) and loans will finance this $7 million project.

3. As available –  Grow the hospital campus as services expand with acquisition of nearby buildings or land. Expansion will be funded by the PREF fund and operating revenues.

4. Year 3 – Consolidate outpatient clinics in a new medical office building. This would be a $15 to $20 million project funded through general obligation bonds, which require voter approval.  

Smith said that SPH hears a lot about the challenges and confusion of operating multiple clinics independently.  “Hopefully we’ll be able to find some space in the Medical District that we can consolidate these clinics into a medical office building (for) one-stop shopping.”

The Homer Hospital and Health Center is shown when it opened 70 years ago in 1956. The Homer Public Utility District (predecessor of the City of Homer) supported the hospital. When Homer incorporated in 1964, the city assumed financial responsibility until 1970 when the South Peninsula Hospital Service Area was established by a vote of 735 to 470. (Photo provided by South Peninsula Hospital)

SPH is going into this plan from a solid financial base, Smith said.  Over the past 10 years, the hospital has reduced its long-term debt from $18 million to $4 million while increasing cash reserves to $38 million. Revenue grew from $70 million to more than $160 million, primarily from outpatient services.


Smith identified an aging and growing population, the potential loss of Medicaid revenue and housing needs for healthcare workers as challenges SPH faces.


Medicaid revenue loss


Smith estimates that 200 to 400 able-bodied adults ages 19 to 64 in the SPH service area are likely to lose Medicaid coverage due to new requirements in the One Big Beautiful Bill Act. He said the bill, signed into law on July 4, 2025, implements nearly $1 trillion in cuts and new restrictions.  

SPH CEO Ryan Smith details the changes to Medicaid for able-bodied adults ages 19 to 64 with the July 4, 2025, passage of the One Big Beautiful Bill act at an April 27 meeting of the Homer Chamber of Commerce. (Photo by Marcia Kuszmaul/Homer Independent Press)


Given the expected reduction in  Medicaid reimbursement for rural hospitals, the Rural Health Transformation Program was created in the same legislation to establish a $50 billion national fund to support rural health. Alaska’s share, second only to Texas, is $272 million a year for each of the next five years. 


Entities from across the state, including SPH, have submitted 1,800 “letters of interest” for consideration for awards. Smith said everyone should be notified in mid-May whether they will be invited to go through a further application process.


Relocation and expansion of the pharmacy and infusion center, a long-term care lift system,  a surgical robot, and collaborative projects on the peninsula and statewide are included on the long wish list submitted by SPH to the new federal fund.


Leased housing


From the audience, Karin Marks, chair of the Economic Development Advisory Commission, pointed to the hospital housing being built off the Sterling Highway and asked whether SPH would give up residential leases it holds for employee housing to increase availability for others.


SPH now leases 36 properties throughout Homer, worth about $600,000 per year, Smith said. The hospital housing, which is scheduled for move-in by June, consists of 25 one-, two- and three-bedroom units. The project is a public-private partnership – Kenai Peninsula Borough owns the land and SPH will lease the rentals for 10 years, in an agreement made with contractor Bill Hand of Two Hands Construction. 


“That, in theory, would allow us to give up 25 units in town,” Smith said. “But . . . we continue to lease more properties every day, so the net result might be giving back 15 or 20, but I would not promise you that.”


Smith’s presentation, “Supporting the Future Needs of the Community,” is available here. SPH welcomes feedback on the strategic plan.