Here’s what we should do with Memorial hospital

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There’s plenty happening right here on the political front at the moment to keep us distracted. But I noticed something in the Florida governor’s race this week that has relevance to a civic debate in the Springs.

Rick Scott, who’s running as the GOP candidate in the Sunshine State, has been busy defending himself in recent days against allegations that he knew something about massive Medicare fraud at Columbia/HCA. Scott was the CEO of the company — the largest private for-profit health care outfit in the U.S. — when all of this dirty work was going on.

There’s no evidence he had anything to do with it, and Scott, exhibiting what I guess passes in his mind for real leadership skills, blames underlings for the fraud. His board, apparently unsympathetic, fired him. Columbia/HCA ended up paying fines totaling $1.7 billion. Yes, that’s billion with a “b.”

Whether Scott had direct knowledge of the fraud while it was being perpetuated isn’t really the point. But the episode does offer yet another argument against for-profit ownership of hospitals.

The Colorado Springs City Council will soon hear the recommendations of the Memorial Citizens’ Commission on just what to do with Memorial Health System.

Selling to a for-profit hospital company is one of the options that has received some measure of attention from the commission. (A detailed side-by-side comparison of the pros and cons of each of the options can be found on Page 7 in this week’s issue).

There hasn’t been a lot said about this point, but if a for-profit buys the two-hospital system, the city, El Paso County and area school districts stand to rake in a tantalizing $5 million or more a year in property taxes. The system is now exempt from such taxes because it’s a city-owned enterprise.

Whether to sell to a for-profit or a nonprofit has been at the center of the commission’s work.

Beyond new tax revenue, selling to a for-profit could result in a Memorial Health System that is on surer financial footing. It also means taxpayers will not be liable should the hospital fall into some sort of economic distress.

As Business Journal reporter Amy Gillentine reported this spring, any proceeds from such a sale would go to the establishment of a health care foundation that would support the mission of other health care providers in the region.

That’s a good thing, but doesn’t address the wider concern expressed by so many in our health care community: The likelihood that profit generated by the new owner would end up in a hospital it owns in, say, Tennessee.

Ideally, that profit would instead be plowed back into Memorial, enhancing its ability to serve the very people who contribute to its growth, area residents who turn to it for their health care needs.

That’s why the best option for the council to adopt — and for voters to approve — would be to convert Memorial into a stand-alone 501(c)(3).

Taking that approach would mean no legal exposure to taxpayers while retaining local control.

It also would mean profits stay within the system and, while it might not be able to leverage the heft of a national for-profit, Memorial would have the freedom to grow in response to market needs and demand.

In other words, it’ll operate with the good of the community in mind, not shareholders who care most about a return on investment.

Memorial CEO Larry McEvoy points to Poudre Valley Health System in Fort Collins as his ideal model for Memorial.

Before it was converted into an independent nonprofit, Poudre Valley made a few key concessions to Fort Collins. Among them: It can’t stop providing services such as maternal and infant care, which pay less.

In addition, the city created an authority, the Northern Larimer County Health District, which receives $300,000 a year from the hospital, as well as a portion of property taxes.

The district also now provides some additional health services for low-income residents, including dental care through a clinic and a prescription drug benefit. It also collaborates with the hospital.

Our City Council, in establishing the Memorial citizens’ commission, said it hoped to accomplish the following “equally-prioritized” objectives:

Minimize taxpayer financial and legal exposure.

Maximize Memorial’s benefit to the community, including its ability to deliver high-quality care and have a positive economic impact.

Ensure access to excellent health care designed and delivered around community needs.

It’s hard to imagine how a sale to a for-profit allows us to achieve any but perhaps the first of those objectives.

Allen Greenberg is the editor of the Colorado Springs Business Journal. He can be reached at 719-329-5206 or allen.greenberg@csbj.com

One Response to Here’s what we should do with Memorial hospital

  1. Mr. Greenberg:

    Thank you again for your keen incite. Rick Scott is an embarrassment to Florida on a national scale. But your ability to bring real world analogies to El Paso County issues is refreshing. Thank you.

    BY

    Bill Yanger
    October 21, 2010 at 8:12 pm