OPINION: Another bad hospital move
The Colorado Springs City Council must get a handle on Memorial Health Systems, a city-owned enterprise that consistently embarrasses city leaders. It must rein in this enterprise, and then sell it to the highest bidder.
The hospital system, which has been profitable in the past, has become a money-losing liability. It has become a provider of care for the indigent and uninsured, and it's having increasing trouble getting adequate reimbursements from Medicare and Medicaid.
Ultimately, because the city owns it, the enterprise is a responsibility of the taxpayers.
Five years ago, the hospital system's annual profits exceeded $41 million. By 2007 they were down to $18.5 million, and the first half of 2008 they fell to $715,000. At this juncture, the hospital has lost $5.8 million in 2008.
In this climate of dwindling profits, the hospital has done crazy things. It hired a new CEO, Dr. Larry McEvoy, at an annual salary of $550,000 - $100,000 more than his longtime predecessor made when the hospital was thriving and $340,000 more than our city manager earns. Council members learned about McEvoy's hiring, and his extreme salary, by reading it in The Gazette. Mayor Lionel Rivera called McEvoy's salary "unreasonable," and expressed concern that it would drive up other hospital salaries - at a time of diminishing revenues.
For the CEO of a city-owned enterprise, a wage of $550,000 is more than unreasonable. McEvoy is an accomplished man who's probably worth at least $550,000 a year, but that doesn't mean this money-losing city-owned enterprise should pay that much. If McEvoy can't work for more reasonable pay, then perhaps the hospital should have hired someone who didn't cost so much. Early this year, council members were upset after audits found cost overruns on Memorial's construction projects, and a variety of policy lapses.
And then there was the little matter of a $250,000 donation from the hospital to the U.S. Senior Open golf tournament.
It gets worse. It turns out Memorial has been funding a small group of prominent citizens that's promoting a massive tax hike, which would raise $75 million annually for public safety. The group wants to raise the sales tax in a manner that would reduce the spending capacity of a $10 bill to $9.90 in El Paso County. The group pushing for the tax, Citizens for Effective Government, filed its campaign finance report 10 days late, resulting in a $500 fine levied by the El Paso County Clerk and Recorder's Office.
There's a reason issues committees, such as Citizens for Effective Government, are required to file their finance reports by a specified deadline. It's so the public can ensure that campaigns function lawfully, on the up and up, without receiving inappropriate donations - such as donations from public agencies like Memorial Health Systems.
And sure enough, a review of the late finance report found that Memorial Health Systems - the city sponsored enterprise that's losing money - gave $4,000 to the cause of raising our taxes during the worst financial crisis since the Great Depression. The donation is almost certainly illegal.
The donation was made in December, approved by the former CEO who was earning $100,000 less than today's CEO. Rivera called it "a dumb idea" and "another bad move" by Memorial. He said the tax increase committee should pay it back.
Rivera is absolutely right, and he should insist on repayment. The hospital can't afford to fund political campaigns. Besides, why should an entity connected at the hip to City Hall fund a campaign that's pushing to raise costs for the people the city is supposed to serve? It's an outrageous donation.
Memorial Health Systems doesn't act like a city-owned service. It pays a big-dollar CEO, it funds golf tournaments for the stars and it funds a campaign to raise taxes on all the citizens of El Paso County. It frequently surprises the City Council with its shenanigans, causing the mayor to blush. All this, in a city that's known for conservative fiscal policies and limited government.
Councilman Jerry Heimlicher has wisely, and on several occasions, suggested the city consider selling Memorial. It's time city officials get serious about unloading this enterprise, which wants to function like a fully private corporation. Sell it to the Catholic church, or some for-profit company, and invest the proceeds wisely. But, please, free the citizens of Colorado Springs from this troublesome, money-losing enterprise.
