Rural healthcare facilities struggle paying Internet bills as FCC rate review holds up subsidies

YKHC consists of a regional hospital in Bethel. Photo Courtesy of YKHC.
YKHC consists of a regional hospital in Bethel. Photo Courtesy of YKHC.

A program that provides millions of dollars in federal subsidies to help pay rural Alaska healthcare facilities’ high internet bills has been on hold for nearly a year. Internet service providers have not been getting paid what they expected as the Federal Communications Commission conducts a rate review. The result for one facility, the Cordova Medical Center, was a shutoff notice due to an unpaid internet bill of nearly $1 million.

Alaska Journal of Commerce reporter Naomi Klouda has been reporting on the delays with the FCC’s Rural Health Care program. She spoke with Alaska Public Media’s Lori Townsend and says the rate review came after the $400 million dollars for rural health care programs across the country ran out.

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KLOUDA: That’s what held up the payment, but it also triggered a rate review because the FCC realized they wanted to understand the rates. How do you justify these costs? What are you charging?

TOWNSEND: Naomi, give us a little perspective on this. A million-dollar internet bill… What’s the range of what these hospitals are paying for service?

KLOUDA: Well, for example, the Cordova Community Medical Center, because of the fees not getting paid by the FCC, Alaska Communication Services was really having revenue problems. One of the issues was in December, ACS laid off 30 workers, which was a fifth of its workforce. So they sent the letter to the Cordova hospital and said, “Hey, somebody’s gotta start paying these fees.” And it cost roughly $1 million — not quite that, it was 800-some thousand dollars. Now each month is an $80,000 bill at the Cordova Medical Center in order to pay for their telemedicine, just that portion. Of that, because of the way that they wanted to make it fair for rural and urban medical facilities to not be paying these outrageous sums, they are subsidized by the FCC. So Cordova’s portion was $1,060 per month, which is pretty reasonable. So you’ve got about $12,000 to 13,000 per year for that clinic to pay. Now the FCC portion of that was whatever was left over, $78,000 per month — that times 12. So that’s how it ended up being almost a million dollars. Imagine a facility that’s much larger and serving more people like the Yukon-Kuskokwim Health Corporation. They would be many, many times that amount.

TOWNSEND: Let’s talk about what’s at risk here. Rural healthcare providers need reliable high-speed internet. They’re doing telemedicine. How much is that a part of rural health medicine now?

KLOUDA: It’s a huge part, and it really does save lives. We’ve heard lots of stories like, we’re talking about Fort Yukon or Brevik or places outside Kotzebue, those cluster villages, the 56 villages outside of Bethel. We’re talking down King Salmon. So, there’s something like 300,000 people, which is almost half of our Alaska population, that benefits from some form of telemedicine.

TOWNSEND: Naomi, you reported some movement on this issue recently. What’s going on? What’s the current situation?

KLOUDA: So, back to when there was the $400 million allotment, this pot of money, that wasn’t enough to stretch across the nation — this was the amount of money that was alloted when the program was created in 1996. Now $400 million is like a joke when it comes to all 50 states sharing that. So, they appealed to the FCC and said, “Hey. This needs to be raised somehow.” And Chairman Pai listened; he’s the head of the FCC. He decided, just last week, to go ahead and propose $571 million which would be the amount if $400 million had kept up with inflation during those 20 years. That would be the exact amount it would be today. So that’s under discussion right now. They’ll be voting on it.

TOWNSEND: And in the meantime, they have said that the bills will be paid. Is that correct?

KLOUDA: Yes. At that point, the FCC spoeksman explained to me just this week that it would be 100% of whatever those invoices are. So going back to ACS, and it’s 70-some thousand dollars per month invoice to the Cordova hospital; that would be repaid to ACS 100%.

Lori Townsend is the news director and senior host for Alaska Public Media. You can send her news tips and program ideas for Talk of Alaska and Alaska Insight at or call 907-550-8452.

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