A few more wrinkles need to be ironed out before voters get the chance to vote on a 40-year lease of city-owned Memorial Health System, including some just created by Mayor Steve Bach.
But the two-year-old process of rethinking hospital ownership cleared a major hurdle Tuesday when Colorado Springs City Council voted unanimously to accept the recommendation of a city task force to lease Memorial to University of Colorado Hospital, which soon will merge with Poudre Valley Health System of Fort Collins. Children's Hospital of Denver also is part of the arrangement and would lease Memorial's Children's Hospital space as part of the deal.
Phil Lane, who represented the business community on the task force, said during Council's informal meeting Monday that University's proposal was "extremely strong" and would pump $5 million to $8 million a year into the city's general fund; $3 million annually for decades into a yet-to-be-built medical-school branch at the University of Colorado at Colorado Springs; and produce an up-front payment of $74 million. In addition, Lane said, the arrangement could result in up to $1.5 billion annually in economic benefit to the region.
"It's something that's going to be good not just for the University of Colorado, but also for our community," said Kyle Hybl, chairman of the Colorado Board of Regents, which oversees University Hospital.
But hold that thought, says Mayor Bach, who has a couple of demands.
First, he wants to be involved in negotiating the lease's details. "Ultimately, I'm statutorily responsible to sign that agreement at the end of the day," Bach says in an interview. "What am I going to do if there are any terms or conditions that I'm not in agreement with? So that's a quandary."
City Attorney Chris Melcher, one of Bach's direct reports, is heading the negotiating team, so it's unclear why Bach is worried. (Councilors Merv Bennett and Brandy Williams are also on the team. No one's mentioned who will act on the city's behalf as a health care expert, though Chicago lawyer and consultant Larry Singer might stay on to do so.)
Another issue for Bach: He thinks the city needs to decide before submitting the issue to voters what specifically to do with University's up-front $74 million payment.
"I am not in favor of putting that in the general fund," he says. "It should be embargoed until we can have a thorough conversation about use of those funds."
Asked about that, Council President Scott Hente says, "You're 10 steps ahead of me."
There's also the question of whether Council will submit a conceptual plan to voters, or one including every detail of the lease. A detailed plan could slow things down. And as University Hospital's president and CEO Bruce Schroffel told reporters Monday, any delay will further erode Memorial's financial condition.
In fact, Memorial board chair Jim Moore told Council the hospital lost $4.7 million in November alone (a total of $9.7 million for 2011 through November), mostly from investments.
Moore said admissions declined 9.6 percent in November and emergency room visits fell by 19 percent. Nationally, hospitalizations have dropped by 6 percent, he said.
Council might move faster by calling a special election, Hente tells the Indy, noting it's long been understood that the lessee would cover the costs of completing the transaction, including an election.