If your business lost 6 percent of its customers in one year and another 4 percent the next, would you be nervous?
If your market share slid by nearly 7 percent, would you hit the panic button?
Those figures apply to the historic health care market leader in Colorado Springs, city-owned Memorial Health System, and Memorial officials say they give urgency to the idea of shifting control of the $400 million city asset to a nonprofit.
But many pieces must fall into place within weeks to get a measure on the November ballot, among them the lease agreement and political support. Already, forces are mulling the question of whether to support the measure, including the king-making business community. Memorial officials hope politics won't undermine the enterprise, warning that if it's sold to a for-profit, for example, several unprofitable departments would shut down, costing jobs and patient access to certain services.
Memorial's chief strategy officer, Carm Moceri, says doctor groups are gravitating toward Penrose-St. Francis Medical Center, which causes "grave concern" among Memorial's executive staff, trustees and some City Council members.
The hospital already is tardy, Moceri says, in reacting to the changing health care environment that requires sewing up partnerships with doctors and other providers, and locking in affiliations to expand to new territory.
A downward slide
Memorial hasn't required a subsidy in decades, but the City Charter requires the city to pony up a property tax levy to offset any operational deficit. City Attorney Patricia Kelly has said she believes the Charter provision would supersede tax limitation laws that require voter approval of tax hikes, meaning Council could impose a tax increase should Memorial need one.
Memorial never has needed tax help, and its net revenue increased by 1.4 percent from 2009 to 2010, with $550 million in net revenue. But other numbers are troubling.
The system's admissions, including outpatient visits, dropped to 27,980 in 2010 from 29,713 in 2009, a 6 percent decline. If admissions for the first six months stay on pace through December, Memorial will see another drop of 4 percent this year.
Notably, trips to Memorial's emergency room, one of the most expensive places to deliver health care, are rising. Memorial is on track to see 4 percent more ER visits this year as compared to 2009.
When it comes to market share, several years ago Memorial claimed roughly 59 percent; last year, it had only 52.3 percent, according to the Colorado Hospital Association. It's losing patients to Penrose-St. Francis, which saw its market share grow from 38.6 percent in 2009 to 40 percent last year, and to Douglas County, Denver and Pueblo.
"Right now, physicians are making decisions about their long-term viability based on the partners they think are stable," Moceri says, adding that the uncertainty surrounding Memorial is costly.
Sept. 2 is the deadline for certifying measures to the Nov. 1 ballot. A City Council task force is busy writing a 40-year lease agreement that would dictate everything from a nonprofit's yearly payments to the city to the fate of Memorial's current mandate to provide care even to those who can't pay. But some say that even if the lease agreement is completed in time and Council puts it on the ballot, apprehensive voters deserve more time to consider the issue.
"I don't think the city is ready for a ballot issue for November," says task force member and City Councilor Tim Leigh.
Former Councilor and Memorial trustee Randy Purvis says too much of a delay could bring disaster, and the need for a tax subsidy. Yet Purvis admits that two months is precious little time for voters. "It's a very complicated issue," he says. "...Part of the question is who would be on the other side, and how much money would they raise."
He also says Mayor Steve Bach's support "would be nice to have."
Though he has no authority over what's submitted to voters, Bach recently posed questions to the task force that demonstrate skepticism of the lease idea. In a prepared statement, Bach says he feels strongly that additional proposals, not just Memorial's executive team's proposal, "need to be obtained so that comparisons can be made." That would add time to the equation.
A month ago, the Greater Colorado Springs Chamber of Commerce quietly held a meeting of its political action committee to hear a briefing from Memorial CEO Dr. Larry McEvoy. Counterpoint came from former Sen. Andy McElhany, who favors entertaining bids for the hospital.
Chamber CEO Dave Csintyan says the PAC hasn't formed a position, but will if a measure makes the ballot. That position, he says, will be what "we feel represents the best interest of the community." But, he adds, "There's a lot of homework that's got to be done in the next 30 days."
That's why Leigh thinks a ballot measure at a special election around Valentine's Day or next spring is more doable.
"The choice we make could impact generations," he says. "Delaying it a few months isn't putting us out of business." (Leigh says Memorial would pick up the $400,000 cost of a special election.)
For his part, Moceri argues "the need to move is critical now." And if the measure fails?
"If their answer is 'no,' we are not sure strategically how you move the organization forward," he says. "If you can't create affiliations, partnerships and can't grow the organization, we are not sure how this is a long-term viable organization."
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