One year ago, a plan was in motion to re-establish Memorial Health System as a nonprofit organization, transferring the governance to a nonprofit board and the operational oversight to a CEO with limited nonprofit management experience.
The master plan derailed once officials discovered a $250 million PERA liability that had been grossly underestimated. Furthermore, the silent majority made it clear that other options — such as maintaining the hospital as is, or maximizing our return on investment by selling this long-term community asset — be seriously discussed and considered as viable alternatives.
In an effort to regain its momentum, the hospital administration devised a strategy to sever the hospital's ties with the city one step at a time, while at the same time eliminating the status-quo option. At the hospital leaders' request, Colorado Springs City Council placed a question on the ballot asking whether citizens wanted to remove themselves from having to cover any future operating losses the hospital might incur. As expected, most people supported elimination of a potential tax liability. By approving the November ballot issue, we removed Memorial Health System's safety net.
Unfortunately for the nonprofit advocates, and fortunately for everyone else, the citizens demanded that other management options and other organizations be considered. It was finally agreed upon to pursue proposals from various organizations to lease Memorial Health System.
A year ago I submitted the first ideas for the approach currently being pursued ("Different idea for Memorial," Your Turn, Dec. 2, 2010). Two months later, the Gazette reported: "Former Fountain Mayor Ken Barela is proposing a different scenario: Having the city continue to own the hospital ... but license a firm to run the hospital."
As we wait for the decision on the winning proposal, some are concerned that the selection process is not being managed with integrity and that the nonprofit option has been pre-selected by the powers that be. The task force might have avoided these allegations had it (a) not considered using Memorial employees to participate in the selection process; (b) established selection criteria prior to receiving the proposals; and (c) not allowed Memorial to use public resources to essentially advocate for its proposal. City Council should have considered using the city purchasing department, which undoubtedly already has acceptable solicitation procedures in place.
Regardless, I still believe that the task force members are high-integrity professionals and will assess the proposals objectively and fairly. Even if I am wrong about these people, which I do not believe to be the case, after reading HealthONE's publicly published proposal, how can the selection committee not be enthusiastic and take these other options seriously?
For example, HealthONE would make a $500 million advance lease payment. That, plus Memorial's cash and investments on hand (approximately $332 million), would allow the hospital to pay off its bonds ($306 million) and PERA liability (approximately $191 million), leaving approximately $325 million to fund a trust dedicated to the health care of Colorado Springs' citizens.
HealthONE is committed to investing more than $1 billion in capital improvements, and would be paying approximately $400 million in taxes over the term of the lease (property and sales tax). HealthONE has also agreed to a local board, board-approved quality indicators, and indigent care equal to what is already being provided.
Yet HealthONE is but one example. It is critical that all proposals be fairly assessed.
Once the selection process is complete, the citizens of Colorado Springs will make the final decision on the committee's recommended proposal via special election. I recommend that voters make their final decision on the following criteria:
• Will the proposed approach provide us with a health care system that has the financial capability to withstand the political winds of change, ever-changing trends and economic challenges?
• Will the proposed approach provide us with world-class health care?
• And most importantly, will the proposed approach ensure us that our most vulnerable citizens (uninsured, underinsured, disabled) have access to the same care that everyone else has the good fortune of receiving?
Ken Barela, a former mayor of Fountain and also previously a health care executive, currently is a nonprofit development consultant.