HealthOne draws on large system as basis of proposal

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Economies of scale – that was the basis of HCA/HealthOne’s presentation before the City Council’s task force this morning.

HCA’s proposal provides a $500 million upfront 40-year lease payment, and lets the city keep about $334 million in the first year. It also provides $1 billion in capital costs, and unlike the nonprofit proposals, an estimated $8 million a year in tax payments. Colorado would earn an additional $80 million in state taxes during the 40 year lease.

“The difference,” said CEO Jeff Dorsey, “is zero upfront from the other proposals, to $334 million (from us).”

Task force questions focused on HCA’s quality of care, which the CEO insisted were higher than national averages. He pointed to the magnet program – a nursing excellence program at Swedish – as an example.

And the group would immediately be able to come in and start saving money for Memorial through things like the purchasing process and leveraging revenue.

But, something has to change at Memorial, Dorsey said.

“It’s clear the status quo will fail,” he said. “And a poor imitation of the status quo will also fail. There are things we can quickly do to turn things around.”

That could mean removing back-office services like accounting and human resources to a national office. It could also mean moving purchasing control from the local office to a national one, and providing national vendors, he said.

And interestingly, HCA’s proposal includes city council approval if the system chooses to sell Memorial. However, if it chooses to sell both Denver and Colorado Springs’ assets, there is no approval required.

“We might want to spin off some of the health care groups,” Dorsey said. “We might want to create a new business with some of the health care systems. We might want to sell everything in Colorado. And we don’t think if sell entire business systems that should require approval of a single city council.”