The power point presentation of Hospital Corporation of America last week did little to disabuse a small-town audience of the notion that it was looking down the maw of an acquisition-hungry beast.
If executives of the hospital management giant, the only for-profit among Indian River Medical Center’s four prospective partners, felt awkward wooing a hospital built largely on charitable giving, there was little sign of it. Unblinkingly, they pushed their numbers – almost as if they were presenting to Wall Street analysts – through a head-spinning first half of Thursday’s two hour-plus session.
At one point, presenters paused to play a video, complete with surging soundtrack, of the role one HCA hospital played in treating victims of the recent Las Vegas mass shooting. As jarring as the subject was, the effort felt forced, and – to use an expression HCA leaders themselves used at one point – a “cram-down” of corporate marketing.
By contrast, when the next day the Cleveland Clinic similarly used a video to underscore its humanity – random people moving through a hospital with captions like “Just got diagnosed with cancer” or “19-year-old son on life support” – it too was an obvious marketing ploy, but it was hard to hold back tears.
Then suddenly, as HCA’s question-and-answer period began and the overheads went blank, the parade of suits speaking corporate- and healthcare-ese morphed into approachable people, answering questions one-on-one in plain English, with empathy and a markedly humbler self-regard.
It was as if HCA, all dressed up, took a look in the mirror and asked its would-be partner: Do these stats make my assets look big?
Well, yes, of course they do. HCA’s assets are enormous. The largest hospital chain in America, HCA has 164 hospitals, plus seven in the U.K., with a total capacity of 443,000 beds. It is the second largest provider of behavioral healthcare in the United States.
When it wants to analyze the process of, say, getting a patient doubled over in pain at the emergency department door tucked into an in-patient bed for a three-day (and multi-thousand dollar) stay, it can crunch its system-wide data from the mobile phones of thousands of nurses and doctors.
From cancer research to purchasing power, HCA’s imposing mass ironically conferred significance as well as insignificance to Vero’s stand-alone community nonprofit hospital.
“We think our mission fits with yours,” Chuck Hall, HCA’s national group president, said rather unconvincingly. “How do we execute on this mission of clinical excellence? It always starts with the data.”
Does it? It’s unclear how many “patient first”-focused audience members would have agreed apart from the one data point sewn into the deep pockets of those large assets: HCA’s capital outlay last year for its hospitals was $2.8 billion.
If nothing else, the presentation gave context to the search for a partner by making the local decision-makers consider the issues, outlook and priorities of such a major player in the morass that is modern healthcare. From the research at its institutions to career opportunities, everything the presenters talked about was of breath-taking scope.
Step through the door of an HCA facility to have your baby or pass a kidney stone, and your visit, unique though it may feel, will be one of 27 million this year.
Indian River taxpayers grumble over care for the indigent; at present, patients at IRMC who can’t pay may be covered by the Indian River County Hospital District contribution – about $6 million a year – and the hospital kicks in another $6 million.
HCA? It’s like one giant societal safety net – that still makes a profit, and still pays taxes – with its hospitals providing $2.8 billion in uncompensated care a year.
IRMC’s total net revenue last year was an estimated $280 million. HCA’s net revenue: $33 billion.
IRMC has 1,300 employees, plus 300 more if you count employed physicians’ offices. HCA has 240,000 – 100,000 more than the entire population of this county.
Hall, who spoke to IRMC board members and Hospital District trustees Thursday, oversees 81 hospitals in 12 states, just under half the chain’s total.
Yet Thursday, he felt like a neighbor, with a soft southern drawl no doubt nourished by his weekly commute to HCA headquarters in Nashville, but born of his home base of Tallahassee; Hall has a B.S. and MBA from Florida State.
Another understated presence, this time with a Texas accent, was Jane Englebright. Chief nursing executive and a senior vice president, she leads a team of 80,000 nurses – three times the population of the city of Vero Beach.
Just as each executive advocating for HCA added his or her own inflection to the presentation, individual doctors at the giant chain draw individual patients to its hospitals.
While the two nearby HCA hospitals just south of us, Lawnwood Regional Medical Center and St. Lucie Medical Center, have generated mixed reviews in past years, it’s an open secret that one particularly well-regarded Georgetown University-trained orthopedic surgeon, Dr. Mark Powers, has replaced the joints of many affluent Vero residents – including some closely connected to IRMC – at HCA’s hospital in Port St. Lucie.
That out-migration, as it is called, has been a major concern for IRMC – a worry that surfaced during the meeting. Were those HCA hospitals to suddenly become corporate brethren in an IRMC takeover, how would HCA divvy up the patient pot?
“That’s the elephant in the room,” said one board member. “You’re making a commitment here to us, but I still am on some level naïve about how those two hospitals would work together with us in close proximity to a net positive advantage.”
“It’s not that close,” insisted Hall, before going on to say he hoped to draw patients to IRMC’s heart and cancer centers from Raulerson Hospital in Okeechobee and from its recent acquisition, Highlands Regional in Sebring.
HCA is not only the largest by far of the groups looking to take over IRMC. It is also the youngest. Formed in 1968 by the father and brother of former U.S. Senator Bill Frist, the Nashville-based company was frequently in the news for its mergers and spin-offs, including its sale to Columbia in 1994, with Rick Scott, founder of Columbia and now governor of Florida, becoming chairman and CEO.
Three years later, in 1997, federal agents made it known they were investigating the company for Medicaid and Medicare fraud. Less than four months later, Scott resigned as CEO. According to Politifact, executives of the publicly traded company said if Scott had stayed, “the entire chain would have been in jeopardy.”
As Scott pleaded to fight the charges, the board instead decided to settle in 2000, paying $840 million in criminal fines, civil damages and penalties.
HCA hospitals made headlines again five years ago when the New York Times wrote about medically unnecessary heart procedures. A whistleblowing nurse at Lawnwood Regional Medical Center was mentioned in the second paragraph, describing a letter he had written to HCA’s chief ethics officer.
The Times cited a confidential HCA review that showed 1,200 heart catheterizations at Lawnwood were done on patients without significant heart disease. In all 10 hospitals were involved in the HCA investigation, most in Florida. The day HCA told investors in a conference call that the U.S. Attorney’s office in Miami was looking into it, HCA’s stock dropped four points.
One of HCA’s most vocal local supporters was appointed by Gov. Scott two years ago to fill a vacancy on the Indian River Hospital District board: Dr. Val Zudans, an ophthalmologist, was subsequently defeated when he sought election to a full term as a trustee, but he now is a Vero Beach City Council member. Earlier this year, Scott appointed Zudans’ wife, Tracey, to fill another vacancy on the Hospital District Board.
Val Zudans recently wrote an opinion-piece in the daily paper urging IRMC to partner with HCA, claiming that if the for-profit HCA were picked, county residents would be relieved of the $14 million tax burden levied by the Hospital District to pay for indigent care.
But unless the Hospital District were to be disbanded altogether, that figure is way off. Of the total projected District tax revenue next year of around $13 million, only $6.3 million is destined for the hospital. The Hospital District presumably would continue to tax homeowners to subsidize indigent health care provided through the numerous other organizations it supports.
Further, in the event a non-profit takes over IRMC, the amount the Hospital District will contribute for indigent care in the future will have to be negotiated with the new partner.
How that may play out – particularly if a partner desirous of continuing to lease the hospital buildings owned by the District refuses to operate under the state Government in the Sunshine laws – injects an additional layer of complexity and uncertainty into the negotiations ahead.
From a purely financial standpoint, many believe it is way too early in this process to draw conclusions as to whether it would be more advantageous to choose a for-profit – or a non-profit – as IRMC’s new partner.
