Juneau manager seeks $7.4 million more for Bartlett hospital's finished budget year

Juneau City Manager Katie Koester is asking the Assembly on Monday to approve another $7.4 million in spending authority for Bartlett Regional Hospital for the budget year that ended in June.

That's on top of $12 million the Assembly approved in July. Together, the two requests would add $19.4 million to the city-owned hospital's spending authority for fiscal 2026. Both draw on hospital funds.

In July, the city said the hospital had added Bartlett Family Medicine, Bartlett Glacier Peds, and orthopedic and general surgery clinics during the year, none of them in its budget. Chief Financial Officer Angela Davis told the hospital board's finance committee in June that the $12 million came from annualizing results through May and adding a buffer. The new request says only that the money covers "additional expenses in FY2026."

Bartlett finished the year with $169.5 million in expenses against a $153.7 million budget, according to unaudited figures presented to the hospital board's finance committee in July. Operating revenue of $158.3 million matched the budget. The hospital lost about $8.8 million, instead of the $6.6 million gain it had budgeted.

Davis's report on those results said a federal Rural Health Demonstration program, which she calculated was worth $7 million to the hospital, had not been renewed, with legislation pending in the U.S. House.

As part of the audit of that year, which is still being completed, it was determined that Bartlett did not meet its debt service coverage covenant, according to draft minutes of the finance committee's Oct. 20 meeting. The hospital carries about $28.2 million in bonds.

The covenant requires the hospital to bring in a consultant, the minutes say. Administrators sent the city and the auditors an engagement letter with the consulting firm Stroudwater and an improvement plan as a potential cure. The effect on the financial statements is expected to be a disclosure only, according to the minutes.

The same minutes say the hospital's customary $3 million deferred maintenance appropriation "is unlikely this year given the cash position."

Bartlett's August report put its rolling 13-month average loss at $716,000 a month. In September, it reported $767,000 in net income.

When the Assembly approved the $12 million in July, Mayor Beth Weldon asked whether clinic revenue would prevent the need for more money later. CEO Joe Wanner said converting the clinics to rural health clinics was expected to make them financially sustainable, according to the minutes.

The hospital's board approved that request beforehand, its minutes saying the money "will come from revenues generated by expanded services of the hospital, not from CBJ funds." The new request doesn't say whether the board has reviewed it, and the agenda for the board's meeting Tuesday doesn't list it.

If the Assembly introduces the ordinance Monday, it would get a public hearing Nov. 16. The city requires the hospital's audit items to be finalized by Nov. 15, according to the finance committee minutes.