If Memorial Health System becomes an independent nonprofit, its administrators say it will become stronger because it will not be working alone.
That’s because the hospital will have the opportunity to affiliate with smaller, rural hospitals in southern Colorado and on the western slope, thereby creating networks that will serve more patients and boost bottom lines.
Those types of affiliations are growing more common as hospitals seek greater strength through numbers. However, Colorado law prohibits such partnerships for government-owned groups, said Memorial COO Carm Moceri, who also noted that city rules prohibit hospital expansion outside city limits.
That’s disturbing to Memorial’s administrators, who are watching patient volumes decline at an alarming rate.
Moceri is convinced there’s only one way to bolster market share and bottom line — through affiliations, partnerships and integration.
Financial reports show Memorial is still profitable, but analysts say those numbers won’t remain healthy unless Memorial makes a move to expand — and soon.
“We want the freedom to create joint ventures with other hospitals and clinics, without the red tape that come from being owned by the city,” said Moceri. “We’ve done some joint ventures, but with the law written the way it is, it takes so long, and is so cumbersome. We want to be able to move quickly.”
Another reason they want to move quickly is Memorial’s main competition, Penrose-St. Francis Health Services, is already creating affiliations. The hospital recently announced a partnership with a hospital in Alamosa, as well as an affiliation with two cardiology groups closer to home.
“Centura is reaching out as part of our strategic plan,” said Bob Wallace, service line director for outreach at Centura Health “We know that much of health reform is still to be figured out, but we want to be prepared by making the system strong financially.”
He said the intent of the plan is to market Centura as a single entity, including its partnerships with independent, rural hospital systems. Centura also seeks to create systems of care, such as trauma, orthopedics and oncology, he said.
“But the biggest thing that involves moving outside our service area is moving care ‘upstream,’” he said. “We are creating partnerships in these towns, making sure that they can be treated in their town, without traveling here. Then when local doctors can’t take care of them, they’ll come to one of the Centura hospitals.”
It’s a plan that makes sense to Moceri, who worked at hospital systems in Chicago and St. Louis that were doing the same thing. Health care is changing so quickly, that affiliations and partnerships are the way to remain competitive.
“In Chicago, I worked at a $1.4 billion hospital that was too small to compete,” he said. “So it merged with a $4 billion hospital. In Colorado Springs, we don’t need a $5 billion system, but the bigger we are means the more volume of patients come in, the more competitive we can be.”
Both hospital systems are looking outside the Springs for their growth because they’ve grown as much as they can within the boundaries of the Springs, he said.
Both built hospitals on the north end of town, and now are looking to the south.
With the uncertainty of health care reform, hospitals around the country are moving to integrate services and create partnerships. Reform means doctors and hospitals won’t get paid on a per-patient, per-visit basis any longer, payments will be bundled and shared between doctors, specialists and hospitals.
Memorial needs the freedom to do what other hospitals already are — move outside the city limits for partnerships, Moceri said.
Poudre Valley Health System, a Fort Collins-based hospital system that has gained national attention for its quality of care and the way it does business, has clinics in Nevada and Wyoming — and recently announced an affiliation with University Hospital in Denver.
After becoming an independent system in 1994, the hospital grew its assets and its care. Recently, its board spent 24 months studying what to do next. Should it sell to a larger system? Should it affiliate with another nonprofit system?
“We knew we’d done well so far,” said CEO Rulon Stacey. “But we wanted to make sure we stayed profitable, stayed with high-quality care.”
The system looked at selling to HealthOne in Denver, and although Stacey praised its staff, but decided against it.
“The partnership with University Hospital makes sense,” he said. “It gives us access to their doctors and their patients access to ours. We created a network of 1,600 doctors — and those doctors can now talk to each other, provide continuity of care.”
One day, the network could also provide its own health insurance, allowing patients to see doctors and driving down premium costs.
“Health insurance companies are buying clinics and hospitals are starting to provide health insurance,” he said. “This sort of integration is the future.”
Stacey recently told a Memorial task force that Memorial cannot maintain its status quo.
“That’s the way to killing the hospital,” he said. “You can sell it, or you can become a nonprofit, but you cannot stay the way you are.”
For Moceri, time is running out.
“Poudre Valley had 20-plus years to figure it out,” he said. “We don’t have that kind of time — with reform, with competition — we need to move”