Memorial: How we got here, where we're going

On January 10, the City Council voted unanimously to lease Memorial Health System to the University of Colorado Health. Negotiations between the city and University of Colorado Health are ongoing and voters are expected to decide whether to approve or reject the lease in an August election.

University's offer was the unanimous recommendation of a city task force in December.

The vote is the latest step in a years-long discussion over Memorial's fate and what the future of health care across the region should look like.

If you're lost about what's going on and how we got here, here's a rundown of the entire process. This story is organized by topic, so skim through to read what interests you most. If you want to dig deeper, every section includes links to some of the hundreds of stories The Gazette has written.

University of Colorado Health is proposing to bring Memorial into a new partnership between University of Colorado Hospital and Fort Collins-based Poudre Valley Health System formed earlier this year.

UCH is offering the city an up-front $74 million lease payment, a $5.6 million annual payment for 30 years, a $1.12 billion capital commitment over the life of the lease, plus a commitment of $3 million a year toward establishing a branch campus of the University of Colorado School of Medicine at the University of Colorado at Colorado Springs.

Also, UCH is offering a profit-sharing plan in which the city would get a projected $2.5 million a year. UCH says it would investigate other ways to deal with Memorial’s pension liability, including potentially allowing some employees to remain in the state’s Public Employees’ Retirement Association.

UCH Chairman Bruce Schroffel emphasized the historic similarities between his hospital and Memorial in governance and mission, and said that UCH offered the best opportunity to advance medical education in Colorado Springs.

How we got here

Keeping Memorial city-owned and run has been a topic of conversation and controversy on and off for decades, but no previous effort has gotten as far as the current process and actually solicited bids.

Back in 2008, the City Council formed the Sustainable Funding Committee to look at taxes, revenue and cost-cutting options for the city. The committee became concerned that Memorial could become a burden on taxpayers in the future because of a law requiring the city to cover losses at the hospital.

The Sustainable Funding Committee led in turn to the Citizens Commission on Ownership and Governance of Memorial Health System, an initially 11-member panel appointed by council in February and charged with exploring options for the hospital. Several members later resigned.

Throughout the spring and summer of 2010, the commission met with local health care leaders, talked to outside experts and investigated what other cities had done with their hospitals. The commission declined to seek bids for Memorial, arguing that its mission was to recommend a plan for the hospital's future, rather than nailing down the specifics. In November, 2010, the commission voted unanimously to recommend Memorial be turned into an independent nonprofit.

The City Council created a task force to develop the independent nonprofit plan, with the intention of presenting it to voters in April, 2011. That time line was dashed in late January, however, when the state's Public Employees' Retirement Association told Memorial it would cost $246 million for future liabilities if it left the system. That figure would break the back of an independent Memorial before it ever got off the ground, Memorial CEO Dr. Larry McEvoy said.

Nevertheless, the Mayor's task force continued to develop a lease for Memorial while the hospital negotiated with PERA. In its final meeting in April, the outgoing council voted 7-2 to recommend the independent nonprofit plan to the new council. That new council set up its own task force, led by Council President Pro Tem Jan Martin, to continue working on the nonprofit proposal.

Increasing pressure from local business and community leaders, however, led the task force to abandon those plans and instead seek proposals to lease Memorial, while maintaining city ownership.Yet another task force was set up in September, including local health care and business representatives, and created a plan to ask for proposals to lease Memorial from companies already operating large, acute care hospitals in Colorado. The request for proposals went out Oct. 18 and, at the Nov. 14 deadline, the city received six offers, although one of the bidders, Tennessee-based for-profit Community Health Systems, dropped out.

Meanwhile, voters on Nov. 1 overwhelmingly approved a ballot measure stripping the City Council's ability to levy a tax to backstop Memorial without public approval under TABOR.

The bids were made public Dec. 1, Dec. 2, the five remaining bidders presented their proposals to the task force and Dec. 7, the bidders made their pitches to the public.

University of Colorado Hospital led the first round of scoring of the bids which were released Dec. 9, followed by the independent Memorial, Sisters of Charity of Leavenworth Health System, HCA-HealthOne and Centura Health. Only the four City Council members' scores counted, but the scoring was not binding. In the second round, released Dec. 16, University led, followed by HCA-HealthOne, Sisters of Charity of Leavenworth, Memorial and Centura.

Also on Dec. 16, the seven advisory members of the task force voted unanimously to endorse University Hospital's bid (University of Colorado Hospital had not yet finalized its joint operating agreement with Poudre Valley Health System, but was bidding on behalf of the future partnership).

The City  Council members on the task force also voted unanimously to recommend the University of Colorado Hospital bid on Dec. 19.

What's next

Once the city and University of Colorado Health finalize a lease plan, the issue will be put to voters to approve or reject. If voters approve the plan, Memorial would have a new owner, or at least a new lessee, and University would begin running Memorial in September. If voters reject the offer, we're back to square one.

Memorial's shaky financial footing

After losing $32 million in the financial crunch of 2008, Memorial recovered its financial footing in 2009 and 2010 under new CEO Dr. Larry McEvoy.

In the past year, however, Memorial has struggled, losing market share to cross-town rival Penrose-St. Francis Health Services, suffering investment setbacks that led to losses through much of the year and being forced by the ownership discussion to stand by as Penrose-St. Francis added physicians and signed affiliation agreements with smaller hospitals, just as McEvoy had long planned to do.

McEvoy has said the ongoing discussions over Memorial's future has led doctors to look elsewhere as they plan their own futures, leading to the decline in admissions. That view has been seconded by the Memorial task force, whose members have stressed that the city cannot allow the hospital to continue twisting in the wind.

The future of health care

Memorial CEO Dr. Larry McEvoy has laid out a vision of Memorial at the center of an integrated health care system, where primary care doctors and specialists work in a common system with the hospital. The plans for an independent nonprofit Memorial see it at the center of a regional network of affiliated hospitals and clinics across southern Colorado, bringing new patients to Colorado Springs and making it an economic engine for the city.

That vision of an interconnected future is a common theme for health care leaders, who say that both the controversial Patient Protection and Affordable Care Act and independent reform efforts are pushing health care providers to work more closely together to better plan patient care and contain spiraling costs. A long-standing system in Grand Junction has often been held up as a model of what that might look like.