Memorial group wary of Denver HCA deal

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Those who oppose turning Memorial Health System into a private entity are keeping an eye on a hospital deal in Denver they say raises red flags about the future of indigent care in Colorado Springs.

HealthOne, a joint venture between private hospital giant Hospital Corporation of America and the nonprofit Colorado Health Foundation, is working on a deal that would allow HCA to buy out the foundation’s 40 percent share for $1.45 billion.

Under the terms of the agreement, a local board would be created to oversee the hospital, but that board would be dissolved after 10 years.

After that, there is no written guarantee that HCA would continue to offer charity care, Medicare or Medicaid.

In addition, there is no guarantee that HCA won’t sell any of the eight HealthOne hospitals down the road.

That’s alarming to some in Colorado Springs because HealthOne has expressed interest in buying, leasing or controlling Memorial Health System.

“They’re going to come in with guns blazing,” said Mary Ellen McNally, chairwoman of Our Memorial Matters, a nonprofit created as an answer to HCA’s marketing push into Colorado Springs.

“This is very concerning to us,” she said. “They (HCA) answer to shareholders nationally. Right now, everyone in Colorado Springs is a shareholder in Memorial. The agreement in Denver gives them free reign, pretty much.”

McNally said HealthOne provides indigent care worth hundreds of millions of dollars each year and that Memorial provides about $90 million of indigent care annually.

She doubts that once HCA is free from the 10-year oversight agreement that it would continue to simply absorb those costs.

“They can do what they want to do,” she said. “And what they want to do isn’t health care. It’s making money.”

HealthOne officials say there is no reason for concern.

“Every single HCA hospital in the U.S. participates in Medicare and Medicaid,” spokeswoman Leslie Horna said. “We don’t see any scenario that would change participation in Medicare/Medicaid. Additionally, it was HCA that created the charity care and discount policies that are in practice at HealthOne.”

As far as concerns about local control, Horna also seeks to put those to rest.

“Our hospitals are managed locally and our patients are cared for by people who live and work in our communities,” she said. “Day-to-day decisions are made locally. We were very conscious about putting covenants in the agreement, not because we think we needed them — they define what we have always done for our patients and communities — but so that everyone who doesn’t know us would feel comfortable.”

HealthOne introduced itself to Colorado Springs through a direct-marketing and robo-call campaign it embarked on last fall.

The effort was designed to persuade voters that the Memorial Citizens’ Commission hadn’t done its job when it recommended Memorial become a stand-alone, nonprofit system.

It also hired Kevin Walker, a local developer, consultant and Housing and Building Association board member to be its representative in the Springs, largely because of Walker’s close ties to the business community.

The attempt to derail the Memorial Commission’s process worked. Nearly a year later, a third group is meeting to discuss Memorial’s future. That group is sending out a request for proposals to lease Memorial that keeps HealthOne in the mix.

The fact that for-profit systems like HCA are still allowed to bid on the opportunity to lease Memorial means voters should pay attention to the Denver agreement, McNally said — because there are questions about whether it keeps its contractual promises to local hospitals.

Those legal obligations are at the center of a 2006 breach-of-contract lawsuit between the Foundation for Seacoast Health and HCA. Both sides have spent millions in the legal battle.

The foundation was unsatisfied with the level of indigent care and wanted to buy back the hospital, but missed its opportunity when HCA failed to notify the foundation about a 1999 hospital transaction and 2006 leverage buyout, both of which should have triggered the right for the foundation to repurchase the hospital.

The foundation claims that HCA “sucked money out of the hospital,” and that it “ignored and decided to finesse the provisions of the asset purchase agreement,” according to testimony from the case.

HCA says any violation was inadvertent.

Former hospital CEO William Schuler testified about difficulties getting HCA to pay for critical equipment and facility upgrades.

“My sense was that things were getting older and getting worse,” he told the judge, according to local media reports.

A ruling in the penalty phase of the trial has yet to be issued, but once it has, it is scheduled to go before the New Hampshire Supreme Court for a final appeal.