Who will be running Memorial Health System a year from now?
Ultimately, that decision will be up to voters, but the choices are becoming clear: Denver-based HCA-HealthOne plans to bid on leasing the city-owned hospital. So does University of Colorado Hospital. Centura Health, the statewide network that runs Penrose-St. Francis Health Services, said it wants to be in the mix. Arizona-based Banner Health, which owns or runs several hospitals in northern Colorado, is in, too. And a group led by Memorial’s current board and management plans to bid to turn the hospital into an independent nonprofit.
The Memorial task force leading the leasing effort plans to finalize a request for proposals on Friday and send those RFPs out next week. Bidders will need to indicate their interest by Oct. 24 and submit responses by Nov. 14. The task force will pick a winner by the end of the year and voters are likely to decide whether to lease Memorial or leave it city-owned in 2012.
The task force restricted the bids to companies already operating large, acute-care hospitals in Colorado. In addition to the bidders who say they’re in, that potential pool includes a number of community and federal hospitals around the state, most of whom told The Gazette they are not interested in Memorial.
The plans of three other health systems are still unclear.A spokeswoman for Exempla Healthcare, a faith-based nonprofit which runs three hospitals in the Denver area, said that she didn’t know if it would participate in the RFP. Officials at Community Health Systems, a Tennessee-based for-profit company that manages nine hospitals around the state through its Quorum Health Resources subsidiary, did not return calls for comment. Officials at Denver Health, the public hospital authority that runs Denver’s safety net hospital and public health services, also did not return calls.
That leaves the five declared bidders. Here’s information about who may soon be running your local hospital:
HCA-HealthOne owns six acute-care hospitals around Denver and has long expressed a desire to buy or lease Memorial. HealthOne is 60 percent owned by HCA, a for-profit hospital giant based in Tennessee that owns or manages more than 160 hospitals around the country. HCA is in the process of buying out its nonprofit partner in HealthOne, the Colorado Health Foundation, for $1.45 billion.
Linda Kanamine, HealthOne’s vice-president of public affairs, said that HCA and HealthOne’s scale brings with it the management experience to run Memorial effectively.
“We bring a lot of experience on how to approach constantly improving patient care,” she said.
While HCA is a national company, Kanamine said, HealthOne’s management makes decisions based on what’s best for its Colorado hospitals. HCA’s resources, however, help its hospitals make investments in facilities and equipment, she said.
One additional benefit for Colorado Springs, Kanamine said, is that HCA-HealthOne is a tax-paying company, unlike its nonprofit competitors. She said HealthOne currently accepts and will continue to accept TriCare, a key issue for the Memorial task force.
Banner Health is an Arizona-based nonprofit company that owns or runs 23 hospitals in seven Western states, including four in northern Colorado. Bill Byron, Banner’s senior director of public relations, said his company would bring to Memorial experience working in a lease arrangement and operating in Colorado.
“Banner Health can bring a lot of value from a non-profit focus on excellent patient care as well as some experience and success in some very important areas,” Byron said. “Not only do we have experience and success with lease arrangements, we have experience and success with lease arrangements in Colorado.”
Byron said Banner also has experience successfully integrating other organizations, citing its 2007 merger with Sun City-based Sun Health, a system roughly Memorial’s size, as an example.
Centura Health is Colorado’s largest hospital network, running 13 hospitals across the state, including Penrose-St. Francis Health Services. Centura is a faith-based nonprofit that acts as a management company for Catholic Health Initiatives and Adventist Health System, which own its member hospitals.
The Memorial task force was concerned about allowing Centura to bid because of potential anti-trust issues stemming from it running Colorado Springs’ only other public hospital system. It asked Centura to express its interest and ability to address the antitrust concerns by Tuesday.
In a letter to Michael Anthony, the task force’s attorney, Centura president and CEO Gary Campbell said Centura was indeed interested in Memorial and that “we believe there are a variety of alternatives available to significantly improve health care delivery in Colorado Springs and address the issues of concern relative to Memorial Hospital which would not result in successful claims of anti-trust.”
University of Colorado Hospital is a state-chartered nonprofit hospital authority. Despite its name, it is legally distinct from the University of Colorado Denver School of Medicine, although its doctors are faculty members at the university and the two entities work closely together. UCH is pursuing a joint operating agreement with Fort Collins-based Poudre Valley Health System, which owns two hospitals in northern Colorado, and plans to submit a bid for Memorial on behalf of the partnership, which is still being finalized.
UCH president and CEO Bruce Schroffel said that extending that partnership to Memorial would expand Colorado Springs’ access to the highest level of care in the region.
“We think we’ve got a pretty powerful system that will be able to serve the state and beyond the state,” Schroffel said.
UCH and Poudre Valley would also be a natural fit with Memorial in terms of history and culture, Schroffel said, since all three come from a background of public ownership. And UCH would accelerate plans to base some graduate medical students and residents in Colorado Springs, he said.
Schroffel said UCH would work to allow current employees to stay in the state’s Public Employees’ Retirement Association. Memorial’s potential liability to PERA has been an ongoing issue, with estimates running as high as $250 million if it were to leave the pension plan.
Memorial Health System’s current board, led by chairman Jim Moore, and leadership, led by CEO Dr. Larry McEvoy, are preparing a proposal to turn Memorial into an independent nonprofit company. The independent nonprofit plan was endorsed by the Memorial commission that spent most of 2010 studying options for the hospital, the previous City Council, which endorsed it in its final meeting in April, and the first task force formed by the new City Council.
Moore said turning Memorial into a nonprofit would allow it to pursue an integrated approach to medicine and plans to form regional partnerships across southern Colorado while keeping its decision-making and profits in Colorado Springs.
“I think there are several key elements, the first of which is maintaining a local focus and addressing the health care needs of the community, as opposed to making (Memorial) a complement of a much larger system,” Moore said.
Moore said Memorial’s bid would not be identical to the lease plan worked out by the previous task forces because the current RFP asks for a different set of commitments, but said that Memorial would propose some form of lease payment to the city based on the system’s financial performance.