Pikes Peak Regional Hospital beats recession

The hospital and adjacent medical building generate an $18 million annual payroll.

The hospital and adjacent medical building generate an $18 million annual payroll.

WOODLAND PARK — While much of Teller County still shakes off the effects of the worst economic downturn since the Great Depression, the area’s health care industry, anchored by the Pikes Peak Regional Hospital, has proven thus far to be recession-proof.

The 15-bed hospital opened its doors in October 2007, a year before the economy went into a free fall. The hospital, however, as well as Woodland Park’s health care industry in general, saw growth, indicating a market for a spectrum of care.

In September 2010, Tennessee-based IASIS Healthcare acquired Brim Holdings, Inc., which operated Wadley Regional Medical Center in Texarkana, Texas, and the Pikes Peak Regional Hospital. The deal was a cash-for-stock transaction valued at about $95 million.

Curt Grina, president of the Pikes Peak Regional Medical Center Association, said that 501(c)3 was, in large part, responsible for the hospital’s inception and construction, and that the hospital and adjoining medical building have “fulfilled all expectations.”“This industry is very resistant to recession,” Grina said. “The hospital is the No. 1 economic interest in Teller County. It’s beyond mining and gaming.”

Gauging the impact

Grina said he doesn’t consider the number of employees when weighing economic impact, but rather quality of jobs and payroll.

“In terms of employees, it goes mining, gaming and the [Woodland Park Re-2] school district,” Grina said. “But we’re not just interested in numbers; we’re interested in impact.

“Mining’s payroll is mostly outside Woodland Park. Those are lower-paying jobs involving skilled or unskilled labor. The gaming labor market is mostly a liability. They don’t make much money, they consume services and they’re transient as hell. The turnover rate is huge and, for the most part, they don’t contribute to the community. If you get a job as a pharmacist at the hospital, you’re planning to stay there. You become a citizen.”

The hospital alone, according to CEO Terry Buckner, employs about 140 people and has a $6.5 million payroll out of a $23 million budget. Adding the adjacent, unaffiliated medical campus, that payroll increases to $18 million, he said. Buckner added that patient volume has increased 14 percent this year and revenue is up 12 percent.

According to Eric Riggle, the hospital’s director of marketing and public relations, some of that increase is due to more marketing, as well as Kaiser Permanente recently allowing customers, including school district employees, to use the hospital and its facilities.

Grina said the association was instrumental in negotiating the insurance agreement between the hospital, the school district and Kaiser Permanente.

“The school system has 320 people on health insurance,” Grina said. “Kaiser didn’t have a presence in Teller County and refused to do business with the hospital. That meant $2 million a year was going down the pass. The association stepped in, not with the intention of working on it, but of fixing it. We did.”

A loyal following

According to Grina, the association’s mission is to “enhance the prosperity and quality of life” in the county by developing health care facilities, services and programs. He said regional loyalty is key to long-term success and, like many industries in Teller County, fostering loyalty has been difficult.

“Several companies have come into the county with just a presence. It’s usually in the form of a family practice physician or two or three. Nothing else,” Grina said. “They have their physicians refer business to their company in Colorado Springs and Pueblo.

“It’s an annoyance. We’ve spent the time building an infrastructure and we expected people to buy local, as long as they’re getting the same quality of care. We’re not asking anyone to compromise quality. … It’s draining the county of millions of dollars in business. It’s getting sucked out and it’s not coming back.” 

Grina said the association is combating that by developing a Teller County Health Guide, a directory that will convey the importance of regional loyalty.

“You get provider loyalty if you have customer loyalty,” he said. “In another market, these docs are just another competitor, but it’s different in a rural environment.” Buckner said competition isn’t necessarily a negative, however.

“It makes us a little sharper, I think. Not every doctor in town is affiliated with us, and that’s all right,” Buckner said. “We’re still pretty young and getting the word out that we’re here sounds simple. But we’re just outside of town. Most people in Woodland Park live below us. We do a great job capturing the people to the west of us. We had a health fair last October and had a great turnout. But I can’t tell you how many people came up to me and said, ‘Thanks for having this. This is my first time in your building.’ ”

A model model

The business concept is unique, according to Grina. The association owns the land and the structures, and IASIS Healthcare leases the hospital’s space.

Buckner said PPRH is designated as a critical care hospital, certified under Medicare conditions and structured differently from acute-care hospitals. One distinction is that PPRH has fewer than 25 beds, Riggle said. The model also meansa Medicare reimbursement different  from those at traditional metropolitan facilities.

“For every [Medicare] patient, we get the cost of what it took to take care of them plus 1 percentage point,” he said. “We won’t make the bottom line seeing a lot of Medicare patients, but we won’t lose money on them either.”

Because of its rural setting, the hospital subleases space to specialists, from allergists to eye doctors. Some, according to Riggle, spend a half-day there while others pay for space four days a week.

“With a population of 7,200, it’s tough to support some of these full-time specialists,” Buckner explained. “We’ve kind of grown it naturally. We’re not subsidizing any of the specialists who come up.

“It’s a neat economic model,” he added. “They come up as much as they can to stay busy. After about a year they figure out how many days a week they need to be here.”

Buckner said the hospital is in talks to sublease to specialty practices including urology and gynecology, while Grina added that there have been additional discussions regarding hiring full-time optometry and dermatology specialists.

Strong and growing

Grina said a skilled nursing center is expected to break ground this summer. In addition, the hospital has a unique high-altitude sleep clinic and would like to incorporate other high-altitude medicine and research into its portfolio.

That might include pharmaceutical testing, and Buckner said there have been discussions regarding specialized sports and employment physicals.

“Pulmonary function testing has merit with cycling up here,” Buckner said of athletes from elsewhere. “We’ve talked about pre-employment physicals. We know of employers who will hire people from the Springs and after one day, they have to quit. You’ll have a young man come into the emergency room clutching his chest thinking he’s having a heart attack.”

Being the first of its kind in the region, the hospital can chart its own course with little fear of like-sized competition.

“We’re not going anywhere,” Grina said. “We will continue to grow our market share, but also the market size. Plus, there’s a huge barrier of entry. If someone came in and said they wanted to build a hospital down the street, that’s a real bad business decision.  

“People will need health care services and that will drive the process,” he added. “In Woodland Park, in five years, I see the hospital being twice the size in customer volume with more specialty services.”

Grina said he’d like to see PPRH become a hospital to which people would travel for specialized treatment.

“I’d like to see specialty treatments here seen like orthopedics in Vail,” he said. “I’d like to see a niche here.”

Riggle said, however, there is such a thing as too specialized.

“Colorado Springs hospitals have a lot to offer,” he said. “We need to offer general services. … But we will look at all opportunities to serve the needs of our patients, whether that be specialty or primary care.” nCSBJ