Proposed ballot initiative would force city to sell Memorial

For years, people have talked about selling Memorial Health System, a city-owned enterprise that ended 2008 in a sea of red ink.

But the idea of taking Colorado Springs out of the hospital business has never gained much traction.

Until now.

A group of Colorado Springs residents is proposing a ballot initiative that would force the city to put Memorial up for sale each April until it's sold. The minimum bid: $350 million in cash.

There's one caveat: the City Council could decide to accept less.

"It's about to become a liability for the city, so it's a good time to get rid of it," said Bruce Nozolino, who is chairing the petition committee.

"That's why I think we're going to have a lot of support," he said, adding that the committee is trying to put the proposed initiative on the November ballot.

The proposed initiative goes before the city's title-setting board next, City Clerk Kathryn Young said Monday. If it clears that step and petitions are printed, the petition committee has 180 days to collect about 11,470 signatures of registered city voters to place it on the ballot.

Memorial officials declined to answer questions, saying in a statement that it would be premature to comment on specifics "since there is no current approved proposal."

"However, we'd like to re-emphasize that Memorial's mission is to provide highest quality health care. Serving more than 150,000 people each year with nearly 550,000 patient visits, Memorial is focused on providing maximum value to the community," according to the statement.

Memorial, which is comprised of three hospitals on two campuses, is publicly owned, but it doesn't receive any taxpayer money. The self-supporting city enterprise pays for operations through the revenue it generates and cash reserves.

Despite making a profit in operations last year, Memorial wound up losing about $32 million "from a net income perspective," said Michael Scialdone, Memorial's chief financial officer.

"The majority of that came from a devaluation of our investment portfolio, which actually lost about $28 million in total value," he said.

But Memorial, which has projected a profit of $14.6 million in 2009, has started to get back on firm financial footing through various efforts, from increasing its collections to restructuring its debt, he said. It ended the first quarter of this year with a net income of $8 million, he said.

"I don't want to paint too rosy a picture because we still have huge challenges ahead of us, but when you look at the third and fourth quarters of last year, it's nice to start the first quarter and be able to say that from a fiscal standpoint, our operations are sound," he said.

Scialdone questioned whether now was the best time to sell a hospital.

"Overall, like anything else in this economy, I think things are deflated in value," he said.

Under the proposed ballot initiative, the proceeds of the sale would be spent on a backlog of stormwater projects in Colorado Springs, allowing the city to eliminate a fee for drainage improvements, Nozolino said.

Any money left over would be used to reduce property taxes.

"The citizens truly benefit from this," he said.

In addition, "the hospitals shall remain hospitals through 2099," according to the proposal.

"The logic behind that is anybody born today will enjoy that use of the hospital for their lifetime," Nozolino said.

Nozolino said his group hasn't consulted Memorial about the proposed initiative.

In fact, he said he didn't set out to put an initiative dealing with Memorial on the ballot.

"I was rounding up a committee for a pro-gun initiative, and the committee convinced me that there were more pressing things, and that's what evolved into this Memorial hospital sale thing," he said. "I will be back with the pro-gun one. But part of people playing with me, we want to do this one first."

Nozolino, a retired software and systems engineer, said his proposed "pro-gun initiative" would allow people with a government security clearance and basic firearms training to carry a concealed weapon without a permit.

"The government trusts you with millions of dollars worth of information," he said. "They ought to trust you with a Smith & Wesson under your coat."

In 2002, Nozolino was named a suspect in the shooting of John Ciccolella, a prominent divorce attorney. But he was never charged in connection with the shooting.

Ciccolella, who was blinded in one eye, was Nozolino's ex-wife's attorney in what has been described as one of the nastiest divorces in El Paso County history.

The Nozolino marriage was dissolved in 2000, but their disputes are ongoing.
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