Memorial can't continue providing top-level service without city support, CEO says
Memorial Health System can’t survive with shrinking reimbursements from federal and state health care programs, rising costs and no financial support from the city, Memorial CEO Larry McEvoy told a citizen’s commission Tuesday.
Reimbursements for health care provided through the federal Medicare program for senior citizens, the state-funded Medicaid program for the poor and the Tricare program for active and retired military personnel and their families are declining and in many cases are less than the cost of providing that care, McEvoy said. He made the comments during the commission’s three-hour meeting, much of which was spent on a detailed overview of the 671-bed, two-hospital system.
McEvoy outlined the hospital system’s 106-year history, including its sale to the city in 1949 for $76,500; its governance through a board of trustees appointed by the Colorado Springs City Council and status as one of the few publicly owned hospital systems that receives no current tax support; and that Memorial’s gap between revenue and expenses had been narrowing before cost-cutting reversed the trend last year, which is similar to national trends.
The commission’s 11 members asked dozens of questions ranging from the broad — why Memorial serves patients who live outside the city (the answer is city residents get sick or injured outside the city and that patients from outside the city are a lucrative market) — to the specific — why does competitor Penrose-St. Francis Health Services provide less uncompensated care (the answer is Memorial has a bigger market share and has fewer privately insured patients).
Questions from commission members also included why hospitals divert emergency room patients; how the hospital handles care for thousands of local veterans; why the hospital system lost money refinancing bonds it issued in 2000; what obligation the city has to pay off Memorial’s debts; who decides what measures the CEO is evaluated against; and the extent of any collaboration with Penrose-St. Francis and other health care providers.
The council appointed the commission to recommend ways to minimize taxpayer financial and legal exposure to Memorial, maximize the system’s economic and health care benefits to the city, and improve access to health care to the community, commission Chairman Steve Hyde said. The panel will determine the process of how it meets those goals, which could lead to a change in Memorial’s ownership or governance, at its next meeting on either March 16 or 23.
Hyde said in an interview after the meeting that he believes the “most obvious options” for Memorial’s ownership are to maintain city ownership, sell the hospital, spin off the hospital as an independent entity, or pursue a joint venture with another entity such as a management firm.
“As soon as possible, we have to come up with the practical options we are looking at, the problems we are trying to solve; the options for solving them; the strengths, weakness, opportunities and threats of those options, develop a criteria for our recommendation and apply our best judgment to the preferred option that would be the basis for our recommendation to the council,” which is scheduled for sometime late in the year, Hyde said during the interview.
Hyde, a health care consultant and author who advocated selling Memorial in a 1990 Gazette opinion contribution, closed the meeting by declaring he has an “open mind and no preconceived opinions” about the commission’s recommendation.
“I have my own philosophical underpinnings and economic beliefs based on evidence and not faith. What I was saying in that piece was that a sale is something the council should look at and the voters should decide. Ironically, now I am asked to chair a commission that is doing just that,” he said.
—
Contact the writer at 636-0234.
