Columbia/HCA Healthcare Corp. is turning over ownership of 250-bed Rose Medical Center, Denver, to Columbia-HealthOne, a joint venture the for-profit company has with a local charity.
But that charity-a graduate medical education and research organization-could find its tax-exempt status in jeopardy because of a recent Internal Revenue Service ruling that prohibits 50-50 joint ventures between for-profits and not-for-profits (March 9, p. 3).
HealthOne, the not-for-profit joint venture partner, is still awaiting final determination of its tax status by the IRS. "We haven't had anybody tell us we don't have it or we do have it," said Mary Anstine, HealthOne's president and chief executive officer.
In the meantime, HealthOne is operating as a not-for-profit under the tax status of the former HealthOne hospital system, which formed the joint venture with Columbia in 1995.
Officials said the IRS ruling was unrelated to Columbia's decision about Rose.
Once ownership of Rose is transferred-the transaction is expected to be complete soon-the Columbia-HealthOne joint venture will own five acute-care hospitals in Denver. Previously, Rose had only been leased to the joint venture.
Transferring ownership of the hospital was a way to quell rumors that Columbia would one day put the hospital on the block.
"We hope it puts to rest all of that," said Maureen Tarrant, vice president of strategic and administrative services for Columbia-HealthOne.
Giving ownership to the joint venture means that Columbia and HealthOne will share equally in decisions about the hospital's future.
News about Columbia's decision on Rose also came after a group of doctors on staff there started working with a rival system at a new outpatient hospital in the city.
The new hospital, Precedent Health Center, opened last week. Published accounts have said Columbia is mounting a campaign against the new hospital by negotiating special managed-care rates after a company agreed not to do business with Precedent.
Columbia spokesman Jeff Prescott said the decision on Rose had nothing to do with Precedent.