PHOENIX-Maricopa County, Ariz., has renewed a management contract with a subsidiary of Brentwood, Tenn.-based Quorum Health Group rather than turn Phoenix's public health system over to a private operator.
County officials said they decided to stick with Quorum, which has managed the system of 12 clinics, four health plans and a 491-bed hospital since 1997. Six private parties had submitted informal proposals to take over Maricopa Integrated Health System.
Bidders in addition to the Quorum subsidiary included Phoenix-based Arizona Physicians IPA and Mercy Healthcare Arizona, Nashville-based Columbia/HCA Healthcare Corp., Santa Barbara, Calif.-based Tenet Healthcare Corp., and King of Prussia, Pa.-based Universal Health Services.
Maricopa County Administrator David Smith said officials determined that aligning with a not-for-profit operator made the most strategic sense for preserving charity care. That four of the five suitors that had hospital management experience were for-profits made such a transaction unlikely, he said.
"Quorum made the system profitable, so it was an easy decision for us to stay with them," Smith added.
Before retaining Quorum, Maricopa County planned to lease the system for 30 years to a Phoenix-based not-for-profit firm called Healthcare Providers. However, the county canceled the deal in late 1996 because officials were troubled by mounting financial and legal difficulties surrounding the deal (Dec. 23, 1996, p. 4).
The Maricopa system posted net income of $14.5 million for the fiscal year ended June 30, although its hospital lost $7.8 million, Smith said.
Smith did not rule out the possibility of soliciting more proposals from not-for-profits or forming a private not-for-profit corporation to take over the system.
He added that a committee composed of officials of the county, the system and Quorum, as well as the hospital's medical staff, would weigh the options.
"We have a short deal and could terminate it early," he said, noting that Quorum's renewed pact expires in mid-2001.
Quorum officials were not available for comment at deadline.