Maricopa County (Ariz.) Integrated Health System wants to find a private party to either partner with or buy its 481-bed Maricopa Medical Center and the 12 clinics it runs in metropolitan Phoenix.
Late last month, the health system board asked the Maricopa County Board of Supervisors to issue a request for proposals for a potential partner for the public system. The county board held the first of a series of discussions on the matter last week, and it's expected to issue an RFP before year-end.
Officials said the health system, which has an annual budget of $650 million and treats some 400,000 patients a year, requires $50 million in capital improvements over the next decade, with upgrades particularly needed for the hospital and information systems.
"In order for the county to finance that amount, it would have to turn to the voters, and the reality is that they would likely not support it," said Frank Alvarez, the health system's chief executive officer.
Alvarez added that either a for-profit or not-for-profit partner willing to provide financing for capital improvements and preserve indigent care and medical education is a desired alternative to a bond referendum.
Since January, the hospital management division of Brentwood, Tenn-based Quorum Health Group has been running Maricopa's health system. While it has eliminated much of a $24 million annual deficit and its contract was recently extended from the end of 1997 to July 30, 1998, Quorum is an unlikely buyout candidate.
For the fiscal year ended June 30, the hospital posted operating losses of $12 million on $600 million in revenues.
"This obviously is a larger city than we do business in," said David Speltz, senior vice president of Quorum Health Resources, the company's hospital management wing. "We like to buy hospitals or joint venture in cities with a population of 250,000 or less."
Alvarez said he was unsure as to what kind of party would be interested in a stake in Phoenix's public health system.
"We'll know when we put out the RFPs," he said. He also did not dismiss the possibility of a long-term extension of Quorum's contract if a suitable partner is not found.