Rx for Memorial Hospital 

Suppose, out of a clear blue sky, you got a letter from some lawyer in the Midwest informing you that Great Uncle Olaf just kicked the bucket, and -- lucky you! -- you're the sole heir.

Better still, Olaf was one rich dude -- he owned a hospital! Yup, you're the proud owner of Memorial Hospital in Colorado Springs. What are you gonna do?

Easy! Sell that suckah and move to Vegas for a life of careless ease.

For our very own City Council, who has in fact inherited the responsibility for determining Memorial's future, the answer's not so simple. Blasting the city's elected leaders for meddling, and citing disagreements over the council's recent decision to ax insurance benefits for domestic partners of employees, the hospital's director, Mike Schrader, quit last week.

According to Schrader, Mayor Lionel Rivera told him that Council may be re-examining the ground rules under which Memorial operates as a city enterprise. So what's going on here?

Thanks to a voter-approved measure (in 1949), the city owns Memorial Hospital. Under the terms of that acquisition, the City Council appoints the members of a board of trustees, which in turn administers the hospital.

For many years, Memorial received annual city subsidies to cover its operating deficits. The city even paid the interest on the hospital's bond issues. Memorial was seen not as a business, but as a provider of essential services, which the city could and should subsidize.

That changed in the late '70s. Under then-Mayor Bob Isaac, Council formulated a new policy that has guided Memorial's operations up to the present day. Council directed Memorial's trustees to operate the hospital as if it were a private entity, a business in competition with other service providers. The city leaders agreed to leave Memorial alone, and free it from politically inspired service mandates, such as taking over indigent care.

The hospital thrived. Thanks to a tough, extraordinarily competent administration led by its former director Bob Peters, Memorial became the region's leading health-care provider. Thanks to tens of millions in earnings, the hospital embarked on a robust expansion program.

Not surprisingly, there were folks who felt that it made sense to sell the hospital, and use the money for urgent city needs. But Peters, who felt that privatization of the hospital would be disastrous, had already figured out how to bind Memorial to the city. Always a tough negotiator, he somehow left those skills at home when it came time to negotiate health-care contracts for city employees.

Thanks to his generosity, city employees have a health benefits package that's both affordable and comprehensive.

Simple, graceful, brilliant. There are many thousands of city employees. They all vote. In their minds, the words "Sell Memorial" means "I pay more for health insurance." So what council member is going to commit political suicide by advocating a sale?

That was then; this is now. It's a new world. With a couple of exceptions (Margaret Radford, Richard Skorman, maybe Jerry Heimlicher), current council members don't owe their election to city employees. That frees them to do the heretofore unthinkable: get rid of Memorial.

Should they? Whatever else you may say of Rivera & Co., they're not stupid. And they know a little bit about business. And looking at Memorial strictly as a business, it may be that the city ought to get out of the hospital business.


As today's cover story makes abundantly clear, our health-care system is in crisis: too few dollars, too many demands. That doesn't bode well for service providers, who will continue to be squeezed.

Memorial may no longer be a reliable cash machine, able to finance costly expansions and simultaneously absorb ever-increasing write-offs for indigent and uninsured patient care.

The city is itself in dire financial straits, thanks to declining sales tax collections. But if Memorial incurs a deficit, the city is legally obliged to cover it. That's a remote possibility now, but contingent liabilities are always a little scary.

But Council didn't get Memorial from Uncle Olaf. It's more than a business. It is, by voter mandate, a city enterprise. By law, any decision to sell it will be made not by Council, but by a vote of the people. And if past votes are any guide, a substantial majority would vote to keep the hospital. And so what'll Council do?

Like smart politicians since time began, they'll do ... nuthin'.

-- hazlehurst@csindy.com


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