The Memorial Hospital seeks new management options
Hospital contract with Quorum Health Resources expires June 30
April 19, 2010
The Moffat County Commission is accepting letters of interest for one city resident seat on The Memorial Hospital board through 2013.
Board member Melton Sullivan submitted a letter of resignation more than a week ago. Sullivan was originally appointed to the board in 2003.
Letters of interest will be accepted through May 3. They can be mailed to:
Moffat County commissioners
Attn: Erin Miller
221 W. Victory Way, Suite 130
Craig, CO, 81625
Letters also can be e-mailed to emiller@moffatcou…, or faxed to 824-9191.
For more information, call 826-3100 or 824-5517.
It was a time of financial desperation for The Memorial Hospital in the late 1980s.
In an effort to turn the hospital around, TMH signed a contract with Quorum Health Resources, a hospital management company based in Brentwood, Tenn.
QHR, now owned by Community Health Systems and one of the largest nonprofit hospital management companies in the U.S., is still a part of operations at TMH today.
The most recent QHR contract was negotiated and signed in 2004, and is slated to expire June 30.
In the next few months, the TMH board will look at options for a new contract to sign in June.
However, that contract is not guaranteed to be with QHR.
Board President Ron Danner, who was appointed by the Moffat County Commission about 10 years ago, said the board is looking at a few other management companies to learn more about what is out there.
He mentioned Brim Healthcare and Banner Health as two other options in the search.
"It's not something we're going down a path of," Danner said. "It's more for understanding what's out there, looking at the options. We're not contemplating a switch, but if we're not doing our due diligence, we're not doing our job."
Danner said it still was early in the negation process, and the board has not decided to stay with QHR, nor has it decided to switch companies.
An affiliation with QHR means several things for TMH.
According to the 2004 contract, TMH pays an annual fee of $220,000, a number adjusted each year to accommodate inflation.
In return for the fee, QHR provides the chief executive officer, George Rohrich, and the chief financial officer, Bryan Chalmers.
The hospital also receives consulting services, education, professional development opportunities and supply discounts.
Rohrich said if the hospital was freestanding, or lacked affiliation with a management company, it still would shop for similar consulting services a la carte, likely costing more.
"A free-standing hospital would have total freedom to comply or not comply," he said. "They'd have freedoms, but not necessarily good ones."
Still, Rohrich said he thinks some factions of the community are against the affiliation.
"I hear it argued a lot, 'Why have a contract like that?'" Rohrich said. "The best way to explain it is it's like an insurance policy. Twenty years ago, when we began this contract, the hospital was in pretty desperate shape. It was almost failing, and it got turned around at that time.
"I think folks know the hospital pays $250,000 per year. And if you weren't spending that money, it'd go straight to our bottom line."
Rohrich and Danner cautioned against generalizing the relationship between TMH and QHR.
"It isn't necessarily a relationship where a large corporation comes in and says, 'Here's how you need to do things,'" Danner said. "The county owns it."
Rohrich hesitated to call QHR's responsibilities "management" when discussing the relationship.
"It's an agreement in which QHR provides administrative services to the hospital," he said. "It does not manage. The board is the ultimate boss. The board hires and fires me. Quorum could, too, if they wanted. But we (Rohrich and Chalmers) are like borrowed employees."
QHR across the nation
QHR has made headlines across the country in the past few years.
In 2003, Hale Hospital, a city-owned hospital in Massachusetts, sued QHR, according to an article in the Boston Business Journal.
The hospital alleged QHR overstated financial statements and did not fully inform the city council of the hospital's financial issues.
QHR paid $2.8 million to the hospital, which was closed.
According to the Nashville Post, the Natchez Regional Medical Center in Mississippi brought a lawsuit against QHR with allegations similar to the Massachusetts case.
Natchez filed for Chapter 9 bankruptcy in February 2009, and cited QHR mismanagement and fraud as the reason behind the financial troubles.
The hospital is asking for $46 million in the pending lawsuit.
Closer to home, the Grand River Hospital District in Rifle also used to be affiliated with QHR.
Bruce Mills, a board member for almost two decades and past board president at Grand River, said QHR also was affiliated with a nearby hospital, which he saw as a conflict of interest.
"When you're sharing the same patient base, that's definitely a conflict of interest," Mills said. "We weren't getting the performance out of Quorum we needed as far as managing the hospital day-to-day. We didn't have any other debt other than our bills, and they recommended the hospital file for bankruptcy."
Instead, the district broke ties with QHR about 10 years ago.
The district hired its own CEO and CFO with the help of administrative consulting from St. Mary's Hospital in Grand Junction.
"We're doing great," Mills said. "We don't need a management company. Because of the people we brought in and St. Mary's, we had things turned around within six months."
Despite losing a few contracts, QHR maintains affiliations with more than 150 hospitals across the country, including hospitals in Meeker and Glenwood Springs.
Rohrich and Danner said a conflict of interest between TMH and QHR was unlikely.
"For Quorum to be successful, the hospital has to be successful," Rohrich said. "If it ever came to that, it's something we'd sit down and talk about. I just can't imagine that happening."
The relationship with Quorum is not incentive-based, Danner said.
"If Quorum were to be receiving part of our revenue, if it were a relationship like that, then there could be (a conflict of interest)," he said. "But there isn't. We don't pay them anything that has to do with incentives."
For Danner, there are "major advantages" to working with a company like QHR.
"What it does for us is it allows us to draw from more of a national resource of consultants that give us help however we're needing help," he said. "Especially during this time, they were enormously helpful during the construction phase and planning of the new hospital.
"And, the community asset is the No. 1 priority of the board."