Triad as potential affiliate, joint venture

This is the first in a series of articles on proposals by health-care entities Triad, Universal and Sutter to affiliate with Carson-Tahoe Hospital.

Triad, one of three companies seeking to affiliate with Carson-Tahoe Hospital, is a publicly traded for-profit company operating 29 acute care hospitals and 14 ambulatory care centers across 11 states.

It focuses on establishing and maintaining leadership positions in small cities and selected high-growth urban markets in the Southwest and Western United States. This would be its first move into the Nevada market.

"Triad is a large national firm that has no reason to take our market outside of Carson City," said Steve Smith, Carson-Tahoe Hospital's chief executive officer. That means future services such as neurology or a cancer center likely wouldn't be established in Reno or another location rather than Carson City.

It proposes a joint venture with the hospital and would finance and build a new 125-bed facility. No time frame, however, was given for construction.

Triad would control 80 percent of a new hospital and the balance would remain under local control.

Eighty percent of the bills paid by patients, as well as the profits from the hospital, would go to Triad, according to its proposal.

A community board would be appointed by Triad, but the company would make final decisions. Triad and Carson-Tahoe Hospital would retain their own identities. The proposal calls for no cash proceeds to the community, and the Board of Trustees would remain in an advisory capacity only.

"The local advisory board does not have final decision-making authority (under this proposal). That authority would be vested with Triad," noted Richard Moore, a Carson City resident and retired hospital administrator who examined the affiliation proposals.

Carson-Tahoe might also find its authority diluted more if asked to come up with money for capital improvements, such as a neurosurgery or a cancer center. If Carson-Tahoe couldn't come up with its portion of the capital costs, it could end up forfeiting part of its 20-percent interest.

"In real terms, they give us nothing but a new hospital. There's no money into the system, so the city gains nothing," said Tom Keeton, a former Carson City mayoral candidate who has kept a close eye on affiliation talks. "(Triad) takes the risk of putting up the money for a new hospital, but the best we can hope for is 20 percent of their profits from this (new) hospital. And it's possible that 20 percent share could be diluted until it's worthless."

Another concern, according to Keeton, is the community of physicians associated with the hospital.

"The town is small, and physicians have a family relationship with the hospital," Keeton said. With a company in control of the decisions, physicians may start to feel more like employees - a relationship that might not sit well with the

best physicians.

"These three bidders are strictly money-making ventures," Keeton said, "and that is what (affiliation could) lead to."

Carson-Tahoe officials emphasize that the proposal from Triad, as well as those from the other two companies, mark the beginning of negotiations over their terms - not the final result.

Smith said Triad is now buying another health care entity called Quorum, and he believes it might have too many irons in the fire to proceed with a deal for Carson-Tahoe Hospital.