Billions Offered for Colorado Springs Hospital

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Colorado’s biggest hospital companies are bidding for the lease to run Memorial Hospital in Colorado Springs. CPR Health Reporter Eric Whitney says billions of dollars are at stake. Here's a transcript of Whitney's report:

CPR Health Reporter Eric Whitney: Colorado’s busiest emergency room isn’t in Denver, it’s Memorial hospital in Colorado Springs. Last year 132,000 people came through Memorial’s emergency room. It’s the state’s busiest. And, with 671 beds, Memorial is the second biggest hospital overall in Colorado. Its owner, the City of Colorado Springs, just put Memorial up for lease.

Colorado Springs Mayor Pro Tem Jan Martin: We’ll open this up now for questions from the task force members…

Reporter: Mayor Pro Tem Jan Martin convened a special task force Friday to hear from the five companies bidding to run Memorial. The city is leasing it mostly because there’s consensus that it’s becoming increasingly hard for it to compete as a standalone hospital. It needs a strategic partner to survive in the rapidly changing health care marketplace. The lease offer attracted Colorado’s biggest hospital players.

Joe Sowell, chief development officer, HealthOne: The value of the HealthOne proposal is about $2.3 billion.

Reporter: Joe Sowell is chief development officer for HealthOne, which runs seven hospitals in metro Denver. It’s the only for-profit company bidding for Memorial. HealthOne is a subsidiary of HCA, the biggest hospital company in the country.

Sowell: One of the benefits of our size and scale is that it gives us the ability to pilot a lot of different models across the country.

Reporter: There’s a lot of uncertainty about the future of hospitals in America’s rapidly changing health care system. HealthOne executives say leasing Memorial to them is a good bet because they can call on parent company HCA’s experience in finding what works, and what strategies to abandon.
Mayor Pro Tem Jan Martin says the city of course wants Memorial to remain viable, but that financial success isn’t the only consideration.

Martin: We would like to maintain as much local control as possible. We want to be sure that as many services as possible remain in Colorado Springs. We’re particularly interested in keeping profits and jobs here.

Reporter: None of the out of-town bidders for Memorial promised that all decisions about the hospital would be made locally if they got the lease. Nor would they guarantee that all profits would stay local, or that they wouldn’t lay off local staff. Instead, they offered local influence in decision making. They promised to invest a lot in local operations, and said leasing to a successful bigger company would mean job creation down the line.
Those are the out-of-town bidders. Memorial’s board of trustees argues that the city should keep it local by making make the hospital a standalone non-profit, and then could partner with another hospital or health system to remain competitive. Jim Moore is Memorial’s board chair.

Jim Moore, chairman of Memorial Hospital board of trustees: Financially, our proposal is the only one that guarantees 100 percent local control and decision making. This means that our community and no one else’s will benefit from 100 percent investment and reinvestment of our future revenue stream.

Reporter: Memorial’s board isn’t the only bidder arguing that the city shouldn’t lease it to an outside entity. The hospital’s primary competitor in Colorado Springs, Penrose-St. Francis, says the city should make Memorial independent, and then partner with Penrose in a cooperative arrangement that preserves some competition. Margaret Sabin, CEO of Penrose, urged leaders not to be seduced by a big money lease offer. She said bidders would earn that money back by setting higher prices at Memorial

Sabin: Where do you think that this $500 million payday is going to come from?

Reporter: Sabin said that if Memorial is leased to an outside company, her hospital would be forced into a “medical arms race” that would drive health care costs up across the city.
The cooperative partnership Penrose is offering instead sounds similar to the cooperation among health care providers in Grand Junction. That arrangement has won national recognition for delivering high quality health care for relatively low prices. The company that runs the big hospital in Grand Junction, Sisters of Charity of Leavenworth, is also bidding for Memorial.
Task force member Carolyn Flynn voiced concern about leasing to Sisters, a Catholic health organization.

Flynn: Can you speak a little bit to specifically women’s health or end of life issues, please?

Reporter: That means sterilization and family planning services that Catholic hospitals don’t provide because of religious objections, and policies about when terminal patients are allowed to die. Sisters of Leavenworth CEO Mike Slubowski said he doesn’t see any conflicts with current end of life policies at Memorial. As for family planning…

Mike Slubowski, CEO, Sisters of Leavenworth Catholic Health System: I think people make a bigger issue out of the fact that, yes, there is one set of services that we can’t provide, but in the broader scheme of things there are many alternatives available for women in the greater community of Colorado.

Reporter: Also bidding for Memorial is University of Colorado Hospital. It emphasized the high quality ratings it and its partners have won, and says an affiliation with Memorial would give southern Coloradans access to clinical trials and research.
Ultimately the city’s choice for leasing the hospital will go before Colorado Springs voters, probably in the fall of 2012.

[Photo: Memorial Health System]