HealthOne: A big player gearing up to get even bigger

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HealthOne, the largest hospital system in Denver, hasn’t been shy about expressing its interest in purchasing Memorial Health System.

Though it hasn’t made a bid to buy Memorial yet, the company has spent tens of thousands on a campaign to stop the City Council from placing a measure on the ballot that would turn Memorial into a free-standing, independent nonprofit.

So what would Colorado Springs be getting if the Denver giant decided it wanted to expand into the Springs by buying Memorial?

For starters, it would get a company whose parent, HCA Holdings, is based in Nashville, Tenn.

HealthOne, created in 1995, operates seven hospitals in Colorado, all in the Denver metro area, and employs nearly 9,000 doctors, nurses and others who treat 800,000 patients a year.

It is, in other words, a large company.

“HealthOne is so huge, it’s hard to have just one experience with them,” said DeDe DePercin, executive director of the Colorado Consumer Health Initiative, a consumer advocacy group. “It’s hard to generalize. Even nationally, they’re just huge. What you hear is that they’re just big.”

For some, big equates to bad. But that’s not necessarily the case.

HealthOne, for the most part, does a good job in treating patients in Colorado. And its parent is about to go public (again), which means access to capital that a nonprofit can’t often match. Of course, it also means pressure from Wall Street to keep profits high, which often can come at the expense of services offered.

Quality of care

Under state law, the Colorado Hospital Association is responsible for tracking hospital performance measurements based on a number of factors including mortality and patient safety.

“In most cases, we do better than Memorial,” said Linda Kanamine, a spokeswoman for HealthOne. “I’ve seen what the top administrators at Memorial have to say (about HealthOne), and they are insulting the nearly 9,000 employees and 800,000 patients who choose these hospitals.”

Memorial has raised concerns about patient care and access to care under HealthOne.

But the record doesn’t support its position.

HealthOne’s largest facility, Presbyterian-St. Luke’s, posted figures worse than the state average for death rates resulting from heart-bypass surgery and hip replacements, according to CHA figures. But those were the only two measurements for which the hospital ranked below the state average.

Moreover, Presbyterian performs close to the state average or better in all other patient outcomes and safety measures, as do HealthOne’s other hospitals.

To be sure, fewer patients died from hip replacement or heart-bypass surgeries at Memorial than at Presbyterian, according to the CHA. In fact, Memorial performed better than Presbyterian on every standard measured by the hospital association.

But while Memorial can criticize certain outcomes, HealthOne’s overall record doesn’t appear problematic.

HealthOne’s nurse-patient ratio — another important measure in the industry — is five-to-one, Kanamine said.

Memorial said ratios aren’t that easy to calculate  because they vary widely from day to day and from department to department. Some specialty units have two patients for every nurse, while other units have five for every nurse.

HCA Holdings

The date for HCA’s IPO isn’t set yet, but it’s likely to take place sometime in the next few months. It will mark the third IPO for HCA, which has switched from being a public company to a private one on two separate occasions.

In preparing for the public offering sometime later this year, it turned over $2.1 billion to its private equity investors.

That money had to come from somewhere, said Larry Singer, a nationally recognized health care consultant who worked with the Memorial Citizens’ Commission to make its recommendation to City Council.

That recommendation called for turning Memorial into a community nonprofit, and Singer makes the case for anyone opposed to selling Memorial to a for-profit.

“It came from money made from patients,” he said of the money. “That’s what HCA is in the business to do — make money from patient services. Memorial, on the other hand, makes money in order to serve patients. There’s a distinct difference.”

That difference means that money from HCA’s 160 hospitals — scattered around the nation — flow to the parent, he said.

Of course, some of that money also is directed back to patient care, but Singer’s larger point is that profits trump patients at for-profit hospitals.

Singer also is concerned about HCA’s legal woes.

Several years ago, when it was known as HCA-Columbia, the company settled a federal lawsuit that remains the largest Medicare fraud case in the nation’s history.

“That says something about the culture of the corporation,” Singer said. “Now, they may have gotten their act together since then, but it signals a problem with the corporation.”

Kanamine, not surprisingly, takes issue with Singer’s concerns.

“All that trouble happened before HealthOne was even created,” she said. “We are a Colorado company first of all. HCA is our partner, and it’s been a very successful partnership. We’re proud of it.”

Actually, HealthOne was established in the mid-1990s. HCA settled the federal suits in 2000 and 2002, and pled guilty to 14 felonies. It paid more than $2 billion to state and federal governments as part of the settlements.

In any case, the IPO is sure to give the company enough money to buy more hospitals or expand existing ones.

HealthOne in the Springs

Few people realize it, but HealthOne’s presence is already felt in Colorado Springs.

The company’s Colorado Health Foundation gave out 19 grants totaling $6.3 million in Colorado Springs last year.

Those dollars help pay for wellness checks, health education and screenings. The organization also routinely sends physicians — pediatricians, most often — to the Springs for consultations and to assist with patients.

“We serve the entire Rocky Mountain region,” Kanamine said. “In a very real sense, we touch a lot of patients. It bothers me that people don’t realize what goes on here, how the entire state benefits.”

It’s not surprising to find HCA has detractors, she said.

“When you have a company this large, you’ll find people who love us — and people who hate us.”

What HealthOne ultimately hopes it that the more people who know it, the more they will like it.

HealthOne at a glance

CEO: Jeffrey Dorsey

Headquarters: Denver

Parent headquarters: Nashville, Tenn.

Number of employees: 9,000

Licensed beds: 2,259

Admissions in 2009: 77,000

Outpatient visits in 2009: 393,698

Charity care, unpaid medical care and discounts to the uninsured in 2009: $415.92 million

State and federal taxes paid in 2009: $95.72 million

Source: HealthOne