It's a far cry from Patten's first year as chief executive officer and administrator of the community hospital, when they lost $1.5 million on a budget of just more than $9 million, Patten said. This year the hospital expects a profit of $250,000 to $300,000, audited, he said.

"We are looking at a plan to evolve the hospital into a community health care center. A health care center is more outpatient in focus and offers a broader menu of services than a traditional hospital, (including) mental health, behavioral health, dental," Patten said. "The community health care center really focuses on underinsured and noninsured, on people who have less ability to pay. The community health center tries to provide care in outpatient, before they get sick and have to go to the emergency room.

"A federal program we are trying to tie into that would offer some financial benefits," he said. "If you are a designated 330 clinic (under Section 330 of Medicare legislation) you can get a grant for up to $650,000 a year, to cover the cost of providing care to noninsured or underinsured. It used to be self-pay (by the patients) or bad debt."

It's all part of the strategy being pursued by the hospital, owned by the city of Sitka, to assure long-term viability, Patten said. "We are working with the two private clinics to make sure they agree with and want to be part of this new community health care center. The city has retained a consultant who is helping us work through this process," he said.

The goal now is to implement the health care center within three years, he said.

Sitka, once known as "the Paris of the Pacific," has a history grounded in Russian heritage from the old fur trade days, and is Alaska's fifth-largest city. It is famous for its sport fishing, and its economy is centered on timber, fishing and tourism. Sitka is home to the famous Sitka Summer Music Festival and the Alaska Fine Arts Camp, plus logging championship competition and an annual salmon derby. There are also several local museums and galleries, accenting the rich cultural history of the area.

While many small communities yearn for any level of professional health care, Sitka is blessed with a 27-bed community hospital and the federally owned 78-bed Mount Edgecumbe Hospital, run by the Southeast Alaska Regional Health Consortium. There are also two private medical clinics. One has two family practice doctors and a specialist in internal medicine. The other has one internist, one family practice doctor and one general surgeon.

Major services offered at the Sitka Community Hospital range from licensed home health care and long-term care to radiology, physical therapy and outpatient services. Most patients considered to be in acute condition are sent on to Virginia Mason Hospital in Seattle, via a medically staffed jet stationed in Juneau, he said.

"It's a nice mix," Patten said of the various health care options in the community. "Choice is a good thing, and competition keeps you on your toes. On the other hand, we have a duplication of equipment."

Mount Edgecumbe Hospital, initially designed to serve Alaska Natives, is providing care for non-Natives, thereby competing with the community hospital, he said. "That has had a negative effect on us. Any volume that we lose goes right off the bottom line." Birthing of some 120 babies delivered annually in Sitka is not quite evenly split between the two, with Mount Edgecumbe, with a specialist in obstetrics on hand, handling about 65 of the infants, he said.

It is also "a significant oversupply" of medical resources, he said. "If I averaged one more Medicare patient a day, that would add about $1 million of revenue to my organization," he said.

Bob Young, acting director of Mount Edgecumbe Hospital, agreed that choice was good. Non-Natives seeking the hospital's services must have a referral, he said. Mount Edgecumbe does refer patients to Sitka Community Hospital at times, including during instances of equipment failure, he said.

The two major challenges facing the hospital administrators are getting qualified staff and the cost of housing, Patten said.

While Sitka is a beautiful place to live, it is very isolated, he said. "You can only get here by ferry or plane, and it has 14 miles of roads. It's very common for people to get rock fever. We don't have Wal-Mart. You have to really like the outdoors to live in Sitka."

The other challenge is the cost of housing, which is astronomical, he said. "I saw a house, three-bedroom, 1-3/4 bath, 1,700 square feet, on a tiny lot, for $275,000."

Despite those challenges, Sitka Community Hospital has about 130 employees and grosses a little more than $10 million in business annually, Patten said. The community hospital averages 350-400 inpatient admissions a year, plus about 2,000 visits to the emergency room and 15,000 to 16,000 outpatient visits. Use of long-term care beds runs between 3,500 and 4,000 days per year, he said.

The hospital was accredited in July 2001 as a critical access hospital.