Archive for Wednesday, February 15, 1995

COLUMBIA MAKES 50-50 OFFER

February 15, 1995

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The LMH board and city commission now have a firm proposal to mull. But any decision is still months off.

Columbia/HCA Healthcare Corp. today proposed a 50-50 joint venture with the city to run Lawrence Memorial Hospital.

Under the proposal outlined at a hospital board meeting, a new company would be formed that would be half owned by the city and half by Columbia, the nation's largest for-profit health care company.

In addition to LMH, the new company would include Columbia's Mt. Oread Medical Arts Centre at Clinton Parkway and Kasold Drive, and Columbia would pay the city an unspecified amount of cash to create an "equitable" partnership. All LMH employees would be retained by the new company.

Columbia would manage the new company and its facilities but would not have a controlling interest in the company or its board.

The new company would be governed by a board partly appointed by the Lawrence City Commission and partly by Columbia.

About 200 spectators crammed into the hospital's auditorium to hear Columbia's proposal, the culmination of nearly a year of rumor, speculation and uncertainty about what the Louisville, Ky., company planned for Lawrence.

In July 1994 Columbia opened Mt. Oread, a doctor's office and occupational health and minor-emergency center.

An adjacent outpatient surgery and diagnostic building will open this spring. Columbia executives said last month that they would build a new 50- to 70-bed hospital in Lawrence unless the company could buy all or part of LMH, which is not-for-profit and owned by the city.

The company's proposal to invest in LMH was delivered today by Kevin Gross, Columbia's Kansas City regional president, and Kevin Hicks, chief executive officer of Columbia's Overland Park Regional Medical Center.

Gross said Columbia no longer wants to purchase LMH. But he said the company needs to acquire beds in Lawrence, one way or another, to compete for managed-care contracts.

"I don't mean that to sound threatening," Gross said. "We have to have a presence in Lawrence."

Columbia's proposal emphasized retention of some local control. Under the plan, four board members would be appointed by the city and four by Columbia. The hospital's chief executive officer would also be a board member, as would the medical chief of staff and an 11th member appointed by the other 10 members.

All of the hospital's trustees are now appointed by city commissioners, and their meetings are subject to the Kansas Open Meetings Act.

Columbia is ready and willing to negotiate details, Hicks said.

"This is not written in stone," he said.

Columbia's proposal emphasized:

  • The financial backing and access to the resources and expertise of a company with $15 billion in annual revenue.
  • An estimated $1.7 million a year in new tax revenue for the city and Douglas County.
  • Expanded health services in Lawrence to minimize the migration of patients to hospitals in Kansas City and Topeka.

But when pressed for details on what new services Columbia would offer Lawrence, Gross and Hicks were vague, suggesting the possibility of new radiation treatment for cancer patients.

The hospital's nine-member board of trustees asked pointed questions about how a partnership with Columbia would benefit the hospital or the community.

"I can see how that's good for Columbia," said board member Robert Johnson. "I'm having a hard time seeing how it's good for LMH."

Gross said the push by insurance companies to control health costs through fixed-fee managed care contracts has increased pressure on all hospitals to position themselves so they can win such contracts.

Ken Martinez, chairman of the hospital board, noted that LMH is already a member of the Jayhawk Alliance, a loose-knit association of area hospitals that includes Olathe Medical Center, Miami County Hospital in Paola, Ransom Memorial Hospital in Ottawa and the Kansas University Medical Center in Kansas City, Kan.

The hospital board has scheduled additional meetings with other area health providers, including the KU Medical Center. Martinez said he hoped the board would be able to make a decision on this and any other proposals by the end of April.

On Saturday the League of Women Voters of Lawrence-Douglas County will sponsor a forum about what should be done with LMH at 10 a.m. at the First United Methodist Church, 946 Vt.

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