Kenai Peninsula hospitals report rising uncompensated care and tighter operating margins

Central Peninsula General Hospital and South Peninsula Hospital presented quarterly financial reports to the Kenai Peninsula Borough Assembly on May 5, warning that higher write-offs, growing bad debt and labor costs are pressuring hospital finances across the peninsula.

Central Peninsula General Hospital CEO Angela Hennigan said the hospital has charged about $585 million in gross patient charges year‑to‑date for FY26 but written off roughly $380 million, leaving net patient revenue near $204 million — nearly unchanged from the prior year. The hospital is carrying an operating loss of about $5.4 million year-to-date compared with a prior-year operating gain and projects uncompensated care to finish the year near $28 million (about $21 million year-to-date now). Hennigan attributed the increase largely to bad debt tied to patients losing marketplace subsidies and to Medicaid enrollment churn.

“Part of it is Medicare, Medicaid, and commercial payers, but we’ve also seen a really large increase in our uncompensated care,” Hennigan said, noting the hospital’s concern about state re‑determination processes and a predicted spike when new reenrollment rules take effect. She said roughly 70 percent of operating expenses are salaries and contract labor, driving a year‑over‑year increase in costs.

Hennigan also reported cash-and-cash-equivalents and days of cash on hand at about 87 days (inflated by a temporary $4 million Noridian settlement payment the hospital is holding until it is returned). She described staffing additions and recruiting for specialty services, including new surgeons and dermatology capability, and outlined community programs and a “parents and babies” fair with mammography access.

South Peninsula Hospital CEO Ryan Smith reported similar pressures but said his hospital remains on track for positive net income this year. South Peninsula’s gross patient revenue year-to-date was about $221 million (roughly a 12 percent increase year-on-year) with an expected annualized total near $300 million. Smith said charity care and bad debt for the hospital amount to roughly $6 million a year (up from $5 million last year) and that an EPIC electronic health record conversion left approximately $30 million in gross receivables (about $15 million net) that they expect to convert into cash in the coming months.

Smith described infrastructure projects (generator replacements paid in part with congressional discretionary funds), plans to relocate infusion and pharmacy services into underused space, and a proposed urgent-care opening to provide 12‑hour service six days a week to reduce unnecessary ER visits.

Assembly members questioned both CEOs on Medicaid enrollment trends, write-off timing and the potential operational impacts if uncompensated care continues to rise. Hennigan said the hospital is exploring embedding a Medicaid assistance liaison to help patients through reenrollment and that the ACA marketplace subsidy changes have already resulted in hundreds of local residents dropping marketplace coverage.

Both CEOs emphasized a need to monitor payer mix and policy changes at the state and federal levels and to pursue grants and other funding streams to support capital projects and ongoing operations.

The presentations gave assembly members more context for FY2027 budget deliberations, particularly about social and health-care trends that affect borough residents’ finances and county-level fiscal planning.