Petersburg Medical Center details replacement-campus plan and funding strategy as Alaska prepares to obligate RHTP funds

Petersburg Medical Center leaders told a joint workshop of the Petersburg Borough Assembly and the hospital board that a phased replacement of the hospital campus is necessary to address aging infrastructure, improve patient safety and keep care local, and that the hospital is preparing to pursue state and federal grant opportunities including funds from the new Rural Health Transformation Program.

Phil Hopster, CEO of Petersburg Medical Center, said the hospital's strategic priorities include financial stability, community engagement and workforce wellness as the organization expands services such as MRI, telehealth and behavioral health. "We're going live with our MRI in Petersburg here shortly, hopefully, if the state approves it," Hopster said while reviewing operations and service-line growth.

The hospital's architect described the existing facility as in "managed decay," noting systems so old they require improvised repairs and pointing to structural and life-safety vulnerabilities. Roy Rountree, the project architect, said the long-term care wing is nearly 60 years old, rooms are too small to safely handle some patient lifts, and prolonged power outages currently leave parts of the facility without heat. "When things break, if you can't fix them, you just route around them," Rountree said, warning that failure of aging systems could force partial or full closure of services.

Arcadis, the owners' representative for the replacement project, reported construction progress on an initial "work building" and described using a construction-manager/general-contractor delivery method at 65% design to run design and site work in parallel. Justin Wetzel of Arcadis said that approach led to value engineering that returned more than $1.5 million in additional scope (paving, retaining wall, enhanced FF&E, AV/UPS upgrades) at no added cost to the owner.

Jason, PMC's chief financial officer, explained why building a new facility has a direct financial effect for a Medicare-designated critical access hospital: reimbursements to critical access hospitals are largely cost-based, and the depreciation expense on a new facility increases the reimbursable cost base over time. "For Medicare, we are reimbursed on costs," Jason said, summarizing the cost-report mechanics and arguing that grant-funded capital projects can help long-term viability by increasing cost-based reimbursements.

Speakers emphasized the practical need to phase the work. The architect outlined a scenario in which long-term care is delivered as an early phase (so it can operate as a standalone unit) while the main hospital building is planned as a later phase. That configuration aims to preserve shared staffing efficiency (including "swing beds") and co-locate outpatient clinics and imaging to reduce impacts on acute care workflows.

The meeting also focused on how to finance the campus amid a new federal funding stream. Katie Bryson, PMC's strategy and grants manager, reviewed the Rural Health Transformation Program (RHTP), noting Alaska received "over $272,000,000" in the first-year allocation and that states must obligate funds by October 2026. Bryson said RHTP is a one-time, rapid-obligation federal program intended to catalyze rural health transformation; states will allocate awards to projects that demonstrate readiness, impact and sustainability. "The RHTP funding is not intended to be an ongoing federal program," Bryson said.

Bryson cautioned that the CMS rules published so far restrict direct construction or land acquisition (renovation is allowed), and that the state is expected to contract a grants administrator to process many awards quickly. She also said the state does not plan to pay indirect costs for subgrantees, which providers must factor into proposals. PMC is translating earlier requests-for-input into letters of inquiry and an open project form so community partners can propose ideas once the state's portal opens.

Assembly members asked whether borough services such as EMS and emergency-management planning might be eligible for RHTP grants; Bryson said EMS had been discussed at statewide convenings and could fit into demonstration or innovation grants but that the state's final guidance will determine priorities. Borough staff noted the local emergency plan is out of date and references defunct entities, urging that the plan be updated as part of future planning.

The workshop ended with an offer of legislative and delegation-level advocacy from the assembly and an agreement to exchange staff lists and materials on housing and other community needs. Presenters said next steps include continuing design development, refining pricing with the contractor, preparing letters of inquiry for RHTP and maintaining communication between the hospital and borough.

The hospital and borough did not take formal votes at the workshop; the meeting focused on technical updates, timelines and grant-readiness planning.