February 27, 2012
Memorial Health System board chair Jim Moore on Monday rebutted charges from Councilman Tim Leigh, who last week questioned several business and real estate decisions made by the city-owned hospital and called for its leadership to be put on leave while the Mayor’s office conducts an investigation.
In a two-page letter sent to City Council members, Moore went through Leigh’s concerns point by point. Leigh, whose wife is a nurse at Memorial, said he hasn’t yet read Moore’s response, but that his concerns have kicked off discussions in the community and that he expects some sort of resolution in the coming days.
“I don’t know what he wrote, don’t really care what he wrote,” Leigh said. “There is robust conversation going on in a variety of venues to address my concerns. I’m pretty satisfied with what’s going on right now.”
Leigh declined to clarify who was involved in those conversations or what might come out of them.
“My intention is not to raise havoc across the landscape, my intention is to raise issues for the citizens’ benefit,” he said. “If they don’t reach a real positive conclusion then I’ll try to take a different tack.”
In his letter, Moore said Leigh was incorrect in saying that Memorial plans to employ all of its physicians, that the real estate deals he complained about pre-dated the current administration and that City Council signed off on one of them, that council has been frequently updated on Memorial’s financial performance, that there is no industry standard for profit margins in emergency rooms, and that there is no plan to offer retention bonuses to current leadership.
The text of Moore's letter:
The Board of Trustees and senior leadership team of Memorial Health System share with City Council the mutual goals to 1) Ensure excellent patient care; and 2) Keep Memorial strong and healthy for a successful transition to University of Colorado Health.
Our focus is helping Memorial through this challenging time. In that context, we are providing City Council with the answers to several questions posed recently.
1. Our “plan to employ all physicians.” Memorial has never planned to employ all physicians. We have emphasized repeatedly that we do not believe in a one-size-fits-all physician model. We offer a spectrum of physician relationship options, ranging from private practice to employment. To underscore this point, we are creating an MSO (medical services offerings) through which private practice physicians could purchase business services from Memorial (e.g. billing) so that they can focus on delivering care in the private practice environment. Today, of the 850+ on our active medical staff, approximately 40 are employed. Most are in private practice, and others provide services to us through Professional Service Agreements.
2. Real-estate Deals. Questions were raised about two real estate deals involving Memorial, both of which occurred at least five years ago and before Memorial’s current CEO or leadership team arrived.
The North Medical Office Building: In 2005, Memorial began working closely with a physician group to establish an ambulatory surgery center in the Briargate area, next to Memorial Hospital North. After Memorial entered into a master lease, the physician group underwent a significant change. This made the proposed arrangement untenable and left Memorial with unoccupied space in the medical office building.Memorial has sought tenants for this space. A couple of opportunities were explored but ultimately proved unsupportable for financial reasons and/or possible conflicts with other strategic partnerships. Memorial is currently exploring a physician partnership that would use the center.
Printers Park Medical Plaza: In 2007, Memorial sold Printers Park Medical Plaza (PPMP) and the
Briargate Medical Campus Building to NV Printers Park MOV (a division of Nexcore Ventas), for $66 million. This decision was approved by the Board and City Council, with the reasoning that Memorial should not be a property owner, and the sale would strengthen Memorial’s bond rating.
3. The Use of “First Assists:” The term “First Assists” refers to surgical first assistants—specially trained registered nurses, physician assistants, nurse practitioners or certified surgical technicians who help surgeons during procedures.
Memorial employs a cadre of first assistants for physicians to use or allows physicians to use their own. The only requirement is that any first assistant meet Memorial’s credentialing standards, which includes successful completion of a national training program in order to ensure patient safety and highest quality health care.
4. MHS Evolving Financial Situation during 2011: Memorial regularly and openly reports on its
financial status. The public record reflects that in the summer of 2011, concerning trends emerged in patient volumes and expenses. Memorial leadership advises City Council of any concerns that might affect future financial conditions without appropriate action, and did so in this case as well. Memorial underwent a rigorous cost-containment plan, which proved to be successful and led to the recent affirmation of its credit rating by S&P.
5. Emergency Department Profit (vs. industry standard): There is no industry standard for
calculating emergency department profitability, according to The Advisory Board, a well-respected, nationally known research and consulting firm in the hospital industry. Some organizations may calculate profit solely based on the ED visit. Others incorporate downstream inpatient or diagnostic services (lab, radiology) revenue.
“It would be difficult/impossible to come up with an overly simplistic figure like ‘EDs have a 19% margin’ without a huge number of qualifiers,” The Advisory Board says.
6. Executive Retention Plan: During major governance changes, any organization in any industry faces serious risks of instability. As a general rule, stability in governance and operational leadership are critical to success in any transfer of ownership or operational responsibility. In accord with its fiduciary responsibility during this time, Memorial’s Board of Trustees is considering options for ensuring that Memorial’s leadership remains stable during this time. No decisions have been made, and any such approach would be in accordance with industry standards.