A healthcare consumer advocacy group and Triad Hospitals are engaged in a war of words over Triad's attempts to form joint ventures with not-for-profit hospitals.
A recent report by Community Catalyst rebuked Plano, Texas-based Triad for its attempts to purchase not-for-profit hospitals managed by the company's Quorum Health Resources management subsidiary and suggested that Triad pursues policies that limit its hospitals' exposure to uninsured patients.
Triad in turn accused the group of lying and criticized its work as lazy.
Whether the verbal sparring affects Triad's ability to strike deals with not-for-profit hospitals and systems remains to be seen. But at least one joint venture partner of Triad isn't concerned. Sparks Health System, Fort Smith, Ark., and Triad have signed a letter of intent to form a new joint venture that would own Sparks' lone hospital, Sparks Regional Medical Center, and build a replacement for it. Triad will put $150 million into the venture, and Sparks will contribute its hospital, working capital and other assets.
When asked if Sparks officials were having any second thoughts about Triad after reading the report, Jeanne Parham, a senior vice president for Sparks, said, "Absolutely not."
"For 116 years, we've been a community-owned not-for-profit hospital," Parham said. "When we sought a capital partner, we sought a company whose mission, we felt, best matched ours, and that is Triad." Parham said the Sparks trustees and physicians observed Triad's 50-50 joint venture in El Dorado, Ark., with the SHARE Foundation and Triad's three hospitals in northwest Arkansas, so they knew about the company before signing the letter of intent last year. Sparks and Triad expect to sign a definitive agreement by late March and close the deal within 120 days of the signing, Parham said.
The report, published as Community Catalyst's States of Health winter 2004 edition, contends that Triad has an inherent conflict of interest in purchasing hospitals managed by its own subsidiary. Triad has purchased an Oklahoma hospital managed by Quorum and has a pending deal to purchase a North Carolina hospital that Quorum manages. Modern Healthcare examined these and similar deals in a recent special report (Dec. 8, 2003, p. 28).
"Any valid negotiation should be where both parties are at arm's length from each other to have an independent process," said Dawn Touzin, director of Community Catalyst's Community Health Assets Project. "I'm not finding that where Quorum is doing the management."
Denny Shelton, chairman and CEO of Triad, said he was "upset and disappointed" with the report. "It's not research at all," Shelton said in a phone interview. "It's just opinions that have been gathered from a few people that they have talked to."
The report accuses Triad of locating new and replacement hospitals in wealthy neighborhoods that aren't served by public transportation to avoid uninsured patients. Touzin said the company skillfully obscures the impact on access by promoting their projects as spurs to economic development.
Specifically, the report looked at the pending North Carolina deal, in which Triad hopes to acquire a majority stake in a joint venture that would own Good Hope Hospital, Erwin, N.C. Good Hope is managed by Quorum. The report quotes a local businessman who said local Quorum managers told employees that their jobs would be in jeopardy if the joint venture wasn't formed. The businessman also questions whether other potential buyers had a chance to bid on the hospital. The report includes statements by the executive director of the North Carolina Health Access Coalition condemning the Triad-Quorum connection as a conflict of interest.
"There's no conflict here," Triad's Shelton said of the Good Hope deal. "We worked overtime to try to avoid that." Triad officials repeatedly told the Good Hope trustees that they were free to seek other deals that might be better for the community, but there were no other options, Shelton said.
An unfavorable certificate-of-need ruling on the Good Hope replacement hospital has stalled the joint venture, although the partners are appealing the ruling.
The report also describes Triad's opening of MountainView Regional Medical Center in Las Cruces, N.M., in August 2002 and the effects the opening had on Memorial Medical Center. The report quotes Memorial's former chief executive officer, MaryAnn Digman, as saying that Triad located the new hospital in a wealthy area that isn't served by local bus lines as a way to limit the hospital's exposure to uninsured patients. In a phone interview with Modern Healthcare, Digman added that she wasn't saying Triad picked the location because of the lack of bus service, and she noted that the neighborhood is a growing part of town.
Digman also said MountainView sometimes stabilized emergency patients and then sent them on to Memorial during MountainView's first six months of operation. Triad said MountainView transferred 24 uninsured psychiatric patients to Memorial in 2003 because MountainView does not have a psychiatric unit.
Digman said MountainView's opening changed Memorial's payer mix, with more insured patients going to the new hospital, and that shift hurt the public hospital's finances. The financial pressure prompted Memorial's owners, the city of Las Cruces and the county of Dona Ana, to put the hospital up for sale; they have a pending deal to lease it to Province Healthcare Co. for $150 million over 40 years.
Shelton chided Community Catalyst for not interviewing Triad officials, saying he would welcome the chance to speak with them and hear the group's concerns. Of the group's contention that MountainView Regional stabilizes uninsured patients and then sends them to Las Cruces' public hospital, Shelton said, "That is absolutely a lie. It's just untrue."
Community Catalyst's Touzin said members of her staff and local advocates working with her group attended public hearings and other public forums where Triad officials spoke about their projects. "It wasn't done in a vacuum," Touzin said.