Separation Anxiety

Doctors thought banding together might give them more power at Rose Medical Center. Instead, they wound up owning their own hospital.

It was an exquisitely uncomfortable moment, and one that would mark a turning point.

Dr. Ted Cooper, a Denver obstetrician, was preparing to be installed that day as chief of the medical staff at Denver's Rose Medical Center. Cooper, who had practiced at Rose nearly twenty years, was well-liked and respected by his colleagues. In many ways, his new position was the culmination of this soft-spoken doctor's long, highly successful medical career.

Then came the phone call from Dr. Jeff Mishell, another longtime physician at Rose and the former vice president of medical affairs at the hospital. Mishell was excited; the news he conveyed dropped like a bombshell. "Ted," he said, in a gravelly voice, "we're going to buy a hospital."

So began one of the stranger chapters in the convoluted history of health-care competition in Denver--and it's not over yet. The action revolves around a group of a hundred doctors, Precedent Health Partners, most of whom, like Mishell and Cooper, had been affiliated with Rose Medical Center for years. Since that moment over a year ago when they decided to buy a hospital, the Precedent doctors have been rattling the local medical scene.

As the doctors' deal has progressed from concept to completion, Rose has been badly shaken. The hospital's once tightly knit medical staff of about 400 active physicians has been split by controversy; professional relationships developed over decades have been seriously strained. Passionate feelings of loyalty and betrayal among doctors, nurses and other Rose staffers have surfaced and collided. Rose's future has even been called into question.

In many ways, Precedent's story is about how physicians are responding to dramatic changes in health care. This is a time of great turbulence and anxiety for doctors; enormous and important shifts are taking place in how physicians are organized, how they are paid for their services and the business relationships in which they participate.

But the significance of Precedent's story doesn't stop there. It also highlights what can happen to a hospital when it changes ownership, as Rose Medical Center did in 1995. It focuses attention on how Columbia/HCA Healthcare Corporation, the giant for-profit hospital chain that bought Rose, has done business in Denver, one of its most important markets in the U.S. And how a group of doctors has told Columbia that it's not the boss and they're not going to take it anymore.

The symbol of the doctors' defiance is Denver's newest hospital, Precedent Health Center, a sixty-bed facility that opened last week at 1650 Fillmore Street.

Although it's small by hospital standards, Precedent is a dramatic challenge to Columbia/HCA's prominence in central Denver. To the east, less than two miles away, sits Columbia's Rose Medical Center, the hospital where most of the Precedent physicians have practiced--until now. To the west, less than a mile away, looms Columbia's Presbyterian-St. Luke's Medical Center, the crown jewel of the for-profit hospital company's local holdings.

When the Precedent doctors first got together in 1996, starting a hospital wasn't part of the plan. Their goal was to gain more clout in the health-care market by combining into a larger organization, as many doctors in California have done. With strength in numbers, the doctors believed they would have more say in negotiations with insurance companies and more control over their medical destinies.

"We felt if we were going to maintain our independence as practitioners, we were going to need to come up with a different way of practicing," says Cooper, now chief of the medical staff at Precedent. "I don't think any of us envisioned from day one owning a hospital."

That changed when a former health-care executive turned real estate agent offered to sell a former Catholic hospital in central Denver to the Precedent doctors--on the cheap. Rick Abrams, now chairman of Precedent's board, remembers going over to the old Mercy Medical Center with Jeff Mishell on a cold, wintry evening in early 1997 to take a look around. The two doctors "sneaked through a side entrance," Abrams says, and were discovered by a security guard who ended up walking them through the dark, dusty, silent rooms. Their first reaction was to dismiss the place as too big and too much of a mess. Then, characteristically, the entrepreneurial Mishell said, "Wait, let's think about this," Abrams recalls.

The more the doctors thought about it, the more opportunities they began to see before them. All along they'd wanted to add extra, lucrative services such as laboratory and radiology to their group venture--to help cushion potential financial losses from managed care and to provide extra income. Under federal laws, individual doctors can't refer patients to such ventures if they have an interest in them, but groups of doctors can. The old Mercy campus would allow the Precedent doctors to centralize a host of extra services in a one-stop-shopping setting, close to many of their existing practices, the doctors realized. And from there, it was only another short step to realizing that Precedent could use the hospital setup for day surgery and short-stay patients as well, giving the doctors still more control.

The doctors wouldn't have considered opening a new hospital if they'd been happy with what was going on at Rose under Columbia/HCA's stewardship, Cooper admits. But because they weren't, they were willing to take the chance.

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