Tuesday, January 22, 2013

Taking stock of Memorial's financial situation

Posted By on Tue, Jan 22, 2013 at 10:02 AM

Memorial Hospital UCH
  • Bryan Oller
  • Election night, UCH mounted a new banner at Memorial Central.

It's been nearly four months since the city handed Memorial Hospital over to its lessee, University of Colorado Health.

Since then, a lot of money has shifted around, and City Attorney Chris Melcher will give an update today during City Council's informal meeting, which follows the formal session.

Bottom line is that the Memorial enterprise has $28.1 million in the bank, and another $259 million being held pending the outcome of the city's lawsuit over Memorial workers' pension benefits. The Public Employees' Retirement Association has alleged the city might owe up to $240 million to assure Memorial's employees receive the retirement benefits they've earned. A trial is set for Oct. 28.

Here's how all the money matters shook out after voters approved the lease in August and the deal was closed Oct. 1, according to a memo from Melcher and city chief financial officer Kara Skinner:

On October 1, 2012, MHS had cash balances totaling $338,442,628 and received payments from UCH totaling $291,900,081. The total sources of funds was $630,322,709. Of that, $259,000,000 was placed in two court-supervised escrow accounts at Well Fargo Bank pending litigation per the PERA dispute settlement agreement, $346,561,396 was used to defease all outstanding bonds and pay in-full the outstanding Compass Note, and $24,761,313 was deposited in the Compass Bank MHS Ongoing Operations account.

Post-closing, $4,496,821 was transferred from the bond defeasance accounts to the MHS Ongoing Operations accounts after securities were purchased and the amount required to defease was reduced. In addition, the MHS Enterprise received from UCH: a $5,000,000 prepayment for the reconciliation of Net Working Capital; $1,800,000 reimbursement for transaction related costs including election, legal and financial advisor costs; and October, November and December lease payments totaling $1,403,028. From October 1, 2012 through December 31, 2012, the MHS Enterprise has received a total of $12,699,849. In addition, the MHS Enterprise has ongoing liabilities/expenses per the terms of the lease and Integration and Affiliation Agreement. From October 1, 2012 through December 31, 2012, the MHS Enterprise paid $9,340,601 in expenses. Those expenses are summarized in the table on the next page:

Screen_shot_2013-01-22_at_9.38.52_AM.png

*UCH reimbursed the enterprise for a total of $1.8M in costs associated with the transaction. The enterprise paid $943,369 in costs before closing and these additional $856,631 costs post- closing.

The MHS Ongoing Operations account beginning balance on October 1, 2012 was $24,761,313. From October 1, 2012 to December 31, 2012, $12,699,849 was received and $9,340,601 was paid — with the balance increasing by $3,359,248 to $28,120,561.

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