Boyle column: Mission may be surprised by HCA deal and newfound devotion to the stock market – Asheville Citizen-Times

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I’ll say this for Mission Health — they really know how to surprise folks.

On March 21, Mission announced it had signed a letter of intent to be acquired by HCA Healthcare Inc., the Nashville-based for-profit health care company that operates 177 hospitals and 119 surgery centers in the United States and the United Kingdom.

Mission is a 135-year-old community institution, a not-for-profit entity and the region’s largest employer. Simply put, it’s the most dominating force in local health care.

So yes, people are concerned about losing “our hospital” to a for-profit corporation.

I’m not going to lie. My first thought, as someone who’s worked for a publicly-traded corporation for a couple of decades, was, “Oh boy, this could get ugly.” That’s because, to be brutally honest, corporations are designed to prioritize first and foremost their shareholders, the people who buy their stocks.

More: Answer Man: Does Mission want a ‘closed system?’

Mission Health may be acquired by Hospital Corporation of America

Potential Mission buyer HCA has made money, endured scandals and grown

It’s not like corporations are being mean about this or don’t care about employees or their core business. They can’t make money putting out a bad product or having employees who hate working there.

It’s just the nature of the beast. Shareholders are the investors in the business. They expect a return on investments, and if the corporation doesn’t deliver that consistently, heads are going to roll.

Not literally, though some have suggested big, bad HCA might lop off a few noggins. I’m talking about cutting jobs, as in layoffs and other cost-saving measures.

Look for HCA, like any other public corporation, to wield the ax when times are tough and the stock price drops. That’s just what companies do.

HCA, which last year changed its named to HCA Healthcare, does indeed like to make money. As my colleague Dillon Davis reported last week the company turned a profit of $2.2 billion for 2017 on revenues for the year of $43.6 billion.

HCA has endured a leveraged buyout, and it had to pay the federal government $1.7 billion for Medicare fraud. It’s been privately held and publicly held, which it remains now. 

We’ve heard a lot of concerns from the community about the potential sale, and I know we have a lot of the same worries. With that in mind, Mission President & CEO Ron Paulus, Board Chairman John Ball and Board Member Janice Brumit came by the paper Thursday to talk it over. I’ll say this up front: they get the community’s concern.

Paulus said he’s felt the community’s sense of grieving, and he understands that emotion because of Mission’s 135 year history here and the feeling that local control will be lost. And yes, he’s heard abundantly the surprise at the intent to sell to a for-profit company.

“The reactions that have been universal have been surprise at the choice — I don’t think people saw the particular choice coming,” Paulus said. “You’d have to be a very sophisticated health care wonk to really understand why that was really not that surprising, but it feels surprising. The second is the sense of grieving, and not grieving like, ‘So, I don’t think it’s a good idea.’ It’s the 130 years and all that — the way some people might grieve about a card catalog in a library.” 

I think people are more attached to Mission than they were to card catalogs, but I get what he’s trying to say about nostalgia. 

Brumit also has heard from a lot of people. But once she can explain how the proposed deal would work, including the creation of a new foundation that would be a separate entity that could fund health-related projects in the mountains, while exerting some influence over how the local hospital system is run and structured, they’re more understanding.

Still, I’ve got to say she has more faith in HCA’s ability to resist the ups and downs of the stock market monster than I am. Bear markets scare me more than her.

“I can say from my perspective and from the community’s perspective — and this may be naive — the size and the scope of HCA is so great that I think they can absorb a lot of those kinds of stock losses without impacting our particular region any more than we would be impacted by the forces that are outside of community — like governmental regulations, Medicare, Medicaid cuts that are going to be imposed on us anyway being the small size that we are,” Brumit said. “I don’t think we are going to be impacted by those types of things as (bad as) we would be if we had remained independent.”

Brumit added that, “We really felt that, first and foremost, they are in the health care business. That’s what they’ll tell you and that’s what’s in their mission statement.”

The Mission team also noted that the health system has had to make cuts of about $70 million, year after year, to remain profitable, and it’s profit ranges between 2-4 percent. That’s on revenues approaching $2 billion, so that’s still a lot of money.

I asked the Mission brass if they had concerns that Mission ultimately would fail without some kind of move. Ball, a physician who once ran a large hospital system in Philadelphia, did not mince words.

“It would ultimately fail,” he said. “We would bleed to death over a long period of time. Our projections were we’d have to take out $70 million a year from here to eternity, and at some point, you fail when you do that because you have to take out so much cost, because then you start cutting quality, you cut programs, you cut people. Ultimately, you cannot survive.”

Paulus quickly dialed that back a bit, saying, “Mission Hospital would never go out of business, but it would be very different and people would have to leave the community for many services that are available today.”

But clearly, doing the same thing with no end in sight also was no answer.

“If I look back to what our vision was eight years ago, this is a different vision, but we’re in a different environment, right?” Paulus said. “You can’t hold true to one vision whenever the facts have changed, and you can’t just be recalcitrant and focused on what you thought (would happen).”

Paulus also noted that HCA with its size and buying power, should give Mission more stability, and Mission will work to ensure salaries and benefits remain comparable to what they are today. Mission will also create a fund to help employees who may lose jobs.

Additionally, Mission will be a separate regional entity within HCA, giving it some local control, with a local CEO.

Most importantly, that new foundation, funded by sale proceeds, will not be part of HCA.

As Ball said, one of their priorities now, in addressing the public, is to “make it clear that HCA has nothing to do with the mission or the board of the (new) foundation. In fact, the foundation could not give money to the for-profit entity.”

So yes, that foundation could indeed be “transformative” for the mountains, as Mission’s leaders say.

Keep in mind the deal has to be approved by the state Attorney General’s office, and the Letter of Intent is a first step. 

Overall, a consummated deal could bring more efficiency and stability to Mission, ensuring its survival.

But in the back of my mind, I’m still wary of the big bad bear prowling the stock market.

This is the opinion of John Boyle. Contact him at 828-232-5847 or jboyle@citizentimes.com

 

 

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