Former MetroWest CEO warns of pitfalls
How Columbia/HCA partnership failed
Lawrence Kaplan, MD, says he fully believes in the power of integrated health systems. As president and CEO of MetroWest Medical Center with locations in Framingham and Natick, MA, he began to create his own integrated system and then looked to make a deal with an existing system to get more access to capital and to gain more patients and contracts. What he got, in the end, was a series of regrets for the way the process was handled. He also got the word "former" in front of his title.
Kaplan resigned from MetroWest in July 1997, a little more than a year after the hospital signed a deal with Columbia/HCA, and is now doing volunteer work as he waits out the restrictive clause in his contract. He offers some advice he wishes someone had given him:
Make sure your vision matches that of the system you're dealing with. In Kaplan's case, he says Columbia's idea of integration was different from his. Columbia's incentives plan hinged on each hospital making money, while Kaplan envisioned the units working as a whole for the good of the system.
Also, make sure the guarantees you want are spelled out clearly in the contract. Kaplan says MetroWest was supposed to be the "jewel in the crown" of Columbia's network of New England hospitals, but no specifics concerning the amount of investments in the hospital were put in the contract. Now, Columbia is selling MetroWest.
If you're going with a national network, think about what that means for you locally. Before the deal, MetroWest produced its own community newsletter. Afterward, the hospital had to pay for Columbia's national newsletter, which didn't have the local flavor Kaplan liked. Also, since MetroWest was the only Columbia facility in Massachusetts, he didn't think the national advertising campaign was worth the money.
Think about the administrative structure. After the deal, Kaplan became an employee of Columbia instead of MetroWest. The three top executives under him - the chief operating officer, the chief financial officer, and the chief nursing officer - also became Columbia employees. That meant those executives suddenly had dual reporting relationships. "I lost control of my facility," he says.
Consider your market. "Massachusetts is a difficult place to make a profit. It's highly regulated, has a high cost of living, a high HMO penetration, and is unionized. I doubt any for-profit organization can run an acute-care facility and get the return on investment Columbia wanted. It's not just Columbia; I don't think anyone can do it."
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