Like hospital employees everywhere, Mountain View Hospital staff members care about their jobs.
But Mountain View's employees have a somewhat more personal stake in their job performance: They own the hospital, and its success depends on them.Mountain View, along with five other Utah hospitals, (Brigham City Community Hospital, Lakeview Hospital in Bountiful, Pioneer Valley in West Valley City, Castle View Hospital in Price and Ashley Valley Hospital in Vernal), became part of an employee stock ownership plan organization in 1987 when the Hospital Corporation of America decided to relinquish control of 104 of its hospitals across the United States. At the time, HCA owned 175 hospitals and managed more than 200 others.
"The corporation was too large to give the proper management that was needed and found it difficult to manage the two types of hospitals," said Michael A. Graham, administrator of Mountain View.
HCA decided to divest itself of smaller hospitals that were not geographically centralized in its prime areas of interest, Graham said. "We got a message in May 1987 over the computer telling us a change was being considered and would take place in September," Graham said. More simply, Mountain View was about to get a new boss.
Graham did not need to worry, as it turned out. The new boss was very similar to the old boss. The upper management at HCA split, and part of the group formed a new health care corporation called HealthTrust Inc., which agreed to buy the hospitals HCA was selling through an employee stock ownership plan. The plan, formed by HealthTrust (which is based in Tennessee) with more than 20,000 employees, is one of the largest in the country.
A employee stock plan is used by a company to set up a trust to hold company stock for the benefit of employees. HealthTrust used a leveraged plan to buy the HCA hospitals by borrowing money to purchase the hospitals' stocks from HCA. As the loans used to purchase the hospitals are paid off, company stocks are allocated to employees' retirement accounts.
Employees receive stock allocations annually, according to the number of hours worked and their salary (to be eligible for the plan, employees must work at least 1,000 hours per year). As the value of the stock in the plan increases, the value of each employee's retirement account also increases. In 1988, each employee at Mountain View received a stock contribution of 6.5 percent.
It is estimated that over the next couple of years, that annual contribution will increase to between 15 percent and 20 percent and could reach as high at 25 percent.
When HealthTrust has fully paid off its loans, its employees will own 52.2 percent of the company's stock. The rest will be split between HealthTrust's management, institutional investors and HCA.
"Employees are beginning to see that it is not a scary experience, that day-to-day routines have not changed and that the company is very supportive of us," Graham said. "As the employees see how much more they will realize in retirement benefits, they have become more efficient and more concerned about the company's success. I think as an employee-based hospital, we are more committed to the business which translates into being more caring, more attentive to details and more service-oriented."