Who is telling Allina to Mortgage the Future of Patient Care?

By Mathew Keller

and

Jordan Ash

Allina is quickly racking up the amount of debt it carries, increasing its total obligation over the past ten years by 60 percent to $880 million. The magic question, however, is why Allina needs $880 million of debt. Why, if it is willing to spend such amounts on expansion and executive pay, is it so unwilling to invest in the healthcare of its nurses?­ As with all things big business, just follow the money.

Money which, in this case, leads directly to Piper Jaffray.  As you recall, Piper

Jaffray has had a huge hand in increasing Allina’s debt obligations, underwriting in conjunction with other banks $1.6 billion dollars in loans to the healthcare company since 1993. By virtue of this debt, Piper, along with several other Wall Street investment banks, has profited over $16 million dollars in origination fees alone. That’s not including the money they received as part of a $250 million bond offering just last year.

Taken by itself, the relationship between Allina and Piper Jaffray seems like a typical business relationship. But it can’t be coincidental that Piper has also been a major player on Allina’s Board of Directors since Allina’s early days of dealing in debt. In fact, in 1993 there were three Piper Jaffray executives on Allina’s Board, including Addison Piper himself. There has been at least one Piper Jaffray executive or investment banker with ties to Piper Jaffray on Allina’s Board at all times since then. Is that smart? Well, you wouldn’t put American Express in a position to have influence over your spending decisions, would you? Most folks would view that as a conflict of interest.

Allina is spending money like crazy too, including a 10 year, $108 million investment in a Salt Lake City data analytics company, Health Catalyst; $27 million to buy a St. Paul building; millions more to pay off the lease to remove McDonalds from Abbott; tens of millions to acquire Regina Medical Center in Hastings; millions more to acquire Crossroads clinics in Carver County. The list goes on.

Can Allina show how any of this money has improved patient care? Not how shiny new buildings have improved patients’ perceptions of care, but how the debt serviced by the Wall Street executives on Allina’s Board of Directors has actually improved the underlying quality of care itself?

One wonders if the Wall Street financiers on Allina’s Board of Directors have counseled Allina to take on more debt in order to shift $10 million in healthcare costs to nurses. Allina CEO Penny Wheeler has revealed to the media that the nurses’ seven-day strike cost twice that much or $20 million. Will they tell Allina to sign the loan papers to cover a much longer strike that could cost $100 million or more?

It’s time for Allina to stand up for itself and start thinking like a healthcare system, not an investment bank. Invest in the healthcare of your workers, Allina; not in the quality of art lining the walls of Piper Jaffray. At this point, it’s just bad business.