HCA-HealthOne, a for-profit medical company, is trying to convince Memorial Health System officials to rethink plans to turn the hospital in to a nonprofit and instead sell it to them.
Memorial CEO Larry McEvoy rejected HCA’s overtures.
In a written statement, McEvoy said the best names in health care – the Mayo Clinic, the Cleveland Clinic, Poudre Valley Health System – are community nonprofits.
“As a nonprofit, Memorial will not only survive, but thrive, providing even better patient care than we can today, and serving Colorado Springs for generations to come,” he said.
Weeks after the Memorial Commission made its final recommendation to city council to turn the system into a nonprofit, independent hospital, HCA CEO Jeff Dorsey asked to re-open the discussion about Memorial’s future. The Memorial Citizens Commission met for nine months and recently made its final proposal to the Colorado Springs City Council to allow Memorial to become an independent nonprofit organization, the option favored by Memorial administrators.
In emails to the city council, McEvoy appeared unimpressed by the pitch.
“I am firmly committed to the value of community-based, nonprofit health care as recommended by the process…” he said.
The meeting was held at the behest of Kevin Walker, one of the driving forces behind the strong-mayor initiative, who now is a consultant for HCA through his new business, Walker Strategies, LLC.
Walker told council member Jan Martin that HCA would “take an active role as the process goes forward.”
McEvoy told council members that Walker and Dorsey felt the process by the Memorial Commission “lacked diligence and access for all comers to the table.”
Dorsey expressed Health One’s interest in acquiring or affiliating with Memorial and proposed a new group or commission to re-initiate the process.
McEvoy said “several” for profit groups were interested in acquiring Memorial and “they continue to search for ways to make a sale possible.”
“One of the key themes that keeps popping up here, from both within the council and from the community opposition, is the idea of diligence,” he wrote in the email. “…I would urge you to look closely at the dialogue between the commission and Dave Burik over the summer. Mr. Burik is a leader in merger-and-acquisition work at Navigant Consulting.”
A Memorial sale could be worth as much as $400 million, but that money – minus the cost of settling bonds and pension plans – would have to be used in a similar manner to Memorial – a foundation, for example, like the Colorado Trust.
The City Council and Memorial’s Board of Trustees plan to discuss the HCA meeting at their next meeting, scheduled at 3 p.m Thursday in the Pine Creek Conference Room at Memorial North.
Statement by Larry McEvoy, Memorial CEO:
“Memorial’s mission is to provide the highest-quality health care to the community of Colorado Springs.
“The Citizens’ Commission, an independent group of volunteers, recommended converting Memorial from a city enterprise to a community nonprofit. We strongly support this recommendation and believe it will ensure our long-term viability while preserving our commitment to providing the highest-quality patient care.
“In the spirit of being transparent, I met yesterday with the CEO of HCA-HealthONE, LLC, and Kevin Walker. The meeting was at their request, and they wanted to discuss the possibility of selling Memorial to the for-profit corporation. But like the Citizens’ Commission, Memorial believes that an outside, for-profit health care system is not the best option for Colorado Springs.
“Around the country, the best names in health care – the Mayo Clinic, the Cleveland Clinic, Poudre Valley Health System, to name a few – are community nonprofits.
“The Citizens’ Commission held 50 public meetings, spoke to approximately 75 local and national health care experts, and spent hundreds of hours studying Memorial’s ownership structure. The group evaluated eight ownership options against a dozen criteria.
“We disagree with the notion that this process might, in some way, be incomplete or less than transparent. The commission heard an extensive presentation from David Burik, a leading expert in hospital transactions, about the pros and cons of selling Memorial to a for-profit corporation. But the commission determined that a community nonprofit model is the best option for Memorial and for the future of Colorado Springs.
“As a nonprofit, Memorial will not only survive but thrive, providing even better patient care than we can today and serving Colorado Springs for generations to come.”
To see past CSBJ coverage about Memorial, click here.