Prescription for Memorial Health: Get on the same page

By ANDREW WINEKE and BILL REED Updated: April 9, 2010 at 12:00 am • Published: April 9, 2010

While the community focuses on who should own Memorial Health System, the hospital’s leader is orchestrating even more fundamental changes.

CEO Dr. Larry McEvoy has a vision for restructuring the  system during the next five to 10 years that would affect the way patients receive care, transform the hospital’s relationship with its 850-physician staff and streamline its costs.

“It’s a fabulous opportunity to build health care that really works for Colorado Springs,” McEvoy said.

The concept is called “integrated care.” At its most basic level, integrated care is about teamwork — getting physicians and the hospital on the same page, using the same procedures, looking at the same patient records and getting paid through the same billing system. Although vaunted institutions such as the Mayo Clinic and the Cleveland Clinic have used this model for decades, it’s now getting attention around the country as a way to cut costs and improve care.

“It’s the right thing to do and it’s better business,” McEvoy said. “There’s waste all over this system by virtue of how it’s fragmented.”

Cooperation and teamwork hardly seem like radical reform, but medicine has traditionally been divided into what McEvoy calls “silos,” where each doctor is responsible for his or her patients and practice, and communication can easily break down between groups of caregivers. Integration sounds like a natural step, but it means upsetting long-established roles and relationships.

After losing $32 million in 2008, Memorial returned to profitability in 2009, but McEvoy has warned that its business model is unsustainable and that big changes are needed for the system to remain self-supporting. If Memorial’s finances falter, Colorado Springs taxpayers could be on the hook.

Persuading doctors that giving up autonomy and control will improve care, however, is not an easy sell.
“I’m not in favor of what they’re looking at,” said Dr. Harry Anderson, a longtime pediatrician. “I don’t trust what’s going on. And I think it’s disastrous for the community, or potentially so. They’re looking at the business model, and that’s not how you deal with people.”

Anderson said many other physicians share his feelings, including a suspicion that the hospital will eventually force them to sign on or get out.

“People who have been very strong at that hospital will say, ‘If I’m not welcome here, fine, there’s another hospital in town,’” he said. “Doctors will vote with their feet.”

The idea has been tried at both hospitals in Colorado Springs. Memorial and Penrose-St. Francis Health Services had physicians groups in the 1980s and ’90s that were eventually spun off.

“Some doctors are really not in favor of marrying up with the hospital because it didn’t work several years ago,” said Dr. David Greenberg, of Pikes Peak Cardiology. “Am I afraid of integration? I don’t think so, as long as we can do it right.”

Across town, Penrose-St. Francis is feeling the same pressures and finding many of the same solutions. The hospital’s management company, Centura Health, started a physicians group last year that has quadrupled in size, and the system is pursuing electronic medical records and setting up task forces on care.

McEvoy is careful to avoid getting too specific, but he’s convinced that physicians will join his effort if they are involved in designing the structure and if the focus remains on improving patient care.

Financial pressures are pushing integration, he said, including “bundling,” where the government or insurer cuts a single check for a service and lets the doctors and hospital divvy it up. There are also plans to reward — or punish — overall outcomes rather than paying procedure by procedure.

So what would an integrated system look like? It’s useful to look at Billings Clinic in Montana, where McEvoy served as an emergency room physician before coming to Memorial in 2007. The modern incarnation of Billings Clinic was formed in 1993, when a large, physician-owned, multispecialty practice merged with one of the city’s two hospitals. The combined organization became a nonprofit with a community board, and the doctors became employees.

“There were different points of view — the hospital culture was very different from the physician culture,” said Dr. Nicholas Wolter, CEO of Billings Clinic. “Ninety-five physicians can be 95 different opinions. We definitely had our bumps.”

Eventually, Wolter said, integration significantly improved care and is helping stem the growth in costs.

But does it make sense to change business models when it’s not clear who will be running the place in a year? The 11-member Citizens Commission on Ownership and Governance of Memorial Health System  is meeting throughout the year to weigh Memorial’s options, including whether the city should sell it.

The commission doesn’t plan to issue a recommendation until December, but the discussion is drawing attention: Steve Hyde, commission chairman,  already received a letter of interest in buying Memorial, from Tennessee-based health giant Community Health Systems (Hyde said he told the company it was very premature to discuss a sale).

McEvoy said integration will work best with an independent, locally owned hospital, but said he believes integrated care will benefit any ownership scenario.

Jeff Goldsmith, president of the Virginia health care consulting firm Health Futures, said tackling integration and ownership at the same time is a daunting challenge.

“It’s awkward,” he said. “They’re completely separate issues, and they raise very different sets of concerns. What Larry McEvoy is trying to do has a very high degree of difficulty.”

Although ownership gets most of the attention, Goldsmith predicted that dealing with the physicians will prove to be more important to Memorial’s future.

“No hospital can survive without the consent and the active collaboration of its doctors,” he said. “So the value of the asset to the city is directly associated to the ability of Larry McEvoy to convene the docs and make them feel a sense of ownership.”

As for hospital CEOs, they sometimes lose their jobs when they embark on integrated care, and the revolt is typically led by disgruntled doctors, said Dr. Jim Reinertsen, a former hospital CEO who is a Wyoming health care consultant and a proponent of integrated care. It’s not an easy transition, he said.

“The word ‘physician’ and the words ‘reports to,’ don’t usually appear in the same sentence,” Reinertsen said. “It’s threatening to doctors and to administration. Administrative leaders and boards have to share real decision-making abilities. On the flip side, the doctors have to accept the responsibility of working on the system of care, not just working in the system of care.”

After planning with his board for more than a year, McEvoy broached the discussion of integrated care with a letter to area physicians in January.

“The physicians’ response goes from ‘Wahoo!,’ to ‘Good idea, but it will never work,’ to ‘This is the stupidest idea I’ve ever heard,’” McEvoy said.

Colorado Springs Health Partners, the city’s largest physicians group, has many features of integrated care. If McEvoy could get CSHP on board, much of the hard work would be done. But CEO Deborah Chandler said CSHP’s physician owners value their independence.

“For us, we wouldn’t be interested in joining a hospital-centric integrated medical system,” Chandler said. “We don’t have a hospital, but we have pretty much everything else. We already have systems in place to coordinate care for our patients.”

McEvoy said he needs a minimum of 300 physicians to make his plan work, with some as employees and others as independent practitioners who use Memorial. It’s too important to wait, he said.

“The reality is health care is not where it needs to be,” McEvoy said. “We have a chance to do something fantastic and something that’s needed. We’re not going to turn our backs on that.”



$542.5 million: Operating revenue last year

$508.2 million: Operating expenses last year

671: Number of licensed beds

4,122: Number of employees

850: Number of physicians on staff

24: Number of physicians directly employed

5,000: Number of births annually

29,713: Number of annual admissions

130,513: Number of emergency visits, the most in the state

SOURCE: Memorial Health System




In January, the Colorado Springs City Council created an 11-member panel charged with investigating the pros and cons of selling the city-owned Memorial Health System or changing its governance structure. The Citizens Commission on Ownership and Governance of Memorial Health System began meeting in February and plans to gather a wide range of expert and community opinions through December, then report back to the council. At that point, the council is expected to decide whether to put the issue of selling Memorial or changing its ownership before voters.



1904: Colorado Conference Deaconess Hospital and Nurses Training School opens
1911: A new hospital, built on land donated by General William Palmer, opens at the site of the current Memorial Hospital Central. Patients from Deaconess are transferred to the new facility and it is renamed Beth-El Hospital
1943: Colorado Springs City Council votes to purchase Beth-El Hospital for $76,500 and renames it Memorial Hospital in honor of the city’s World War II dead
2006: Memorial Hospital becomes Memorial Health System
2007: Memorial Hospital North opens

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