Memorial Hospital eluding privatization trends

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The number of publicly owned hospitals has decreased 22 percent over the last decade, from 1,444 in 1990 to 1,121 in 2003, according to the Kaiser Family Foundation. Admission to public hospitals has declined 12 percent.
Memorial Hospital is a lone wolf among city and county owned hospitals nationwide that are merging, consolidating and privatizing.
The Robert Wood Johnson Foundation released a report last fall based on a study by the State University in New York. The study also concluded that public hospitals are a dying breed.
Dennis Andrulis, Ph.D., of the Drexel University School of Public Health was quoted in the study: “Public hospitals may become an endangered species. Not only are public hospitals disappearing from inner cities … they are disappearing from the suburbs as well.”
According to the study, “Public hospitals typically serve the most vulnerable populations and those who face major challenges in accessing private health care services.”
Memorial Hospital is in the pack with the rest in serving the typical population. In 2005, the city-owned hospital provided more than $71 million of non-reimbursed care to indigent patients.
However, Dick Eitel, Memorial CEO, said that, while the hospital has its share of uncompensated costs, it’s profitable without subsidies from the city.
Jan Weiland, chairwoman of Memorial’s Board of Trustees, said that senior trustees watch over the finances. “We have a strong financial function … we never go to the City Council for any money.”
Eitel said City Council mandates that Memorial provide care to all members of the community. “We take that mandate seriously,” Weiland said.
In doing so, Memorial has actively engaged with insurers, such as Kaiser Permanente, a health maintenance provider that contracts with the hospital for its subscribers hospital needs.
“Sometimes a hospital can get branded as an indigent hospital, and it becomes a self-fulfilling prophecy,” Eitel said. “Denver Health is starting to become more successful financially – trying to broaden their base. They now have contracts with two insurers; we have hundreds.
“We have 54 to 55 percent of the market now, and we offer high-quality services that attract the entire community, which has driven our success.”
City Council member Larry Small attributed that success to Memorial’s board, its management team and the city.
“Other public hospitals are stuck in the bureaucratic system and subject to political oversight,” Small said. “We’ve turned that over to the hospital; kept it out of the political arena, and they operate just as any other business or private hospital. We do approve their budget, but there is no meddling by elected officials.”
Weiland added that communication between the council and the hospital board has been open. “There is a lot of support from this council,” she said. “They are proud of the profitability, and it works well.”
Small also said the Colorado Springs Children’s Hospital at Memorial Hospital, along with its neonatal unit, is Memorial’s niche in the community, which, he said, has contributed to the hospital’s good fortune.
“I think Memorial is balanced against what Penrose has as their core services, and all the services are covered,” Small said.
To ensure that all those services are accessible to a growing community, Memorial and Penrose-St. Francis are aggressively adding on, remodeling and building new facilities.
Memorial’s piece in the growth involves an expansion of its current campus and a new building at a northeast location.
A seven-story, 380,000-square-foot addition to the main campus on Boulder Street will house the Children’s Hospital, the women’s and maternity services department, the emergency department and physician offices.
With the purchase of 82 acres just northeast of Briargate Parkway and Union Boulevard, Memorial plans to build an 89-bed full-service hospital and a medical office building on the site. The new hospital is scheduled for completion in early 2007.
Memorial has come a long way since its beginnings in 1904 as Colorado Conference Deaconnes Hospital when the Springs was home to just 21,000 residents. In 1911, on land donated by Gen. Palmer, the Colorado Deaconnes Hospital built a new hospital and renamed it Beth-El General. In 1943, the city bought the hospital for $75,000 and renamed it again, after those who lost their lives during World War II.
Today, Memorial Hospital is licensed for 477 beds and employs almost 3,600 people, with a staff of physicians totaling 750 and a crew of 900 volunteers.
Although the two hospitals may appear to be fiery contenders, Eitel said the perception is misconstrued.
“The community needs both of us,” he said. “Memorial has been successful, as has our competition. The competition makes us better and results in better service to the community. Our patient care departments work well with one another.”
The bigger picture presents the challenges, Eitel said. “We operate on small margins relative to the size of our revenue,” he said. “Every penny we earn is reinvested back into our community.”
The net revenue for the last five years was $131 million but leveraged against $243 million in capital expenditures, according to Memorial’s financial department.
“We as a society have said that health care is a right but we don’t pay for that right … and the role we play in this (the system) is to offer the services as efficiently as possible.
“Our first responsibility is to our community.”