A group of doctors on staff at a Columbia/HCA Healthcare Corp. hospital in Denver is working with a rival system to open an outpatient facility in the city.
The physician group, Precedent Health Management, plans to buy the former Mercy Medical Center and turn it into a short-stay and ambulatory-care center. Centura Health, a chief local competitor to Columbia, holds the mortgage on the property and will give the doctors "credit enhancements" to make financing the $30 million project easier.
Only time will tell what the increased competition for outpatient business will do to 192-bed Columbia Rose Medical Center, where many of Precedent's 95 physicians are on staff.
"It certainly could end up in the closure of Rose," said Ralph Pollock, a Denver healthcare consultant.
The proposed deal will give Centura a minority interest in both the real estate and operation of the new center, but not in the physician group, said Lois Conyers, senior vice president and Centura's chief financial officer.
The deal makes good business sense for Centura because it plugs a hole in its delivery network in central Denver.
"It actually had nothing to do with Columbia," said Gary Susnara, chief executive officer and president of Centura. "It had everything to do with doctors whose vision was so aligned with us that we couldn't pass it up."
Working with Centura will be a boon to the Precedent doctors because it will help them attract much needed business from managed-care plans.
Centura, which operates 17 hospitals in Colorado and Kansas, is a joint venture of Catholic Health Initiatives' Mountain Region and Denver-based PorterCare Adventist Health System.
The physicians formed Precedent last year after past failures to organize doctors in the Denver area, said Jeffrey Mishell, M.D., the group's president and CEO. Mishell also is a former vice president of medical affairs at Rose.
Precedent isn't a reaction to Columbia, and doctors in the group plan to continue working at Rose, he said. The new outpatient center has been a longtime goal of the group.
Any outpatient business the doctors steer away from Rose won't sound the death knell for the hospital, Mishell said.
"If the business we take away from them closes them down, it'll be only because Columbia wants to close them down," Mishell said.
Pollock, the consultant, estimates Precedent doctors may account for about 30% of Rose's business.
Columbia wasn't a suitor when the doctors moved forward on plans to buy Mercy, Mishell said.
Mark Brenzel, chief operating officer of Denver-based Columbia-HealthOne, said the joint venture had no interest in buying Mercy. That's because it already has hospitals in downtown Denver, including Rose. Columbia's whole Colorado network has five hospitals.
Yet the move by Precedent isn't one Columbia applauds.
"For us, it's certainly not a good thing," Brenzel said. "It puts us in a strange relationship with that group of doctors."
Rose doesn't plan to strip Precedent doctors of their privileges at the hospital, Brenzel said.
The deal to buy Mercy is expected to close next month, Centura's Conyers said. After some extensive renovations, the facility is expected to be opened next year. A name for the center hasn't been chosen.
Part of one of the founding systems of CHI, Mercy ceased its inpatient services in 1995 and was sold to a group of investors last year. Since 1995, portions of the 281,180-square-foot building have been leased for medical and administrative services. That will continue when the new outpatient center opens.
Mishell said the center will be more patient-friendly than Rose for outpatient procedures. At Rose, he said, parking is a problem and navigating through outpatient services can be difficult because the hospital is geared toward inpatients.