Waiting for daybreak 

Editor's note: This story was updated at 10:25 a.m. Thursday, Sept. 15, to reflect that lease proceeds would have to go toward health-care purposes only if Memorial was leased by a for-profit entity.

Jan Martin says it's time to let the sunshine in.

"Elected officials want to follow the open meetings law, and I think it's important other members agree to that," says Martin, Colorado Springs City Council president pro tem and leader of its task force on city-owned Memorial Health System. "We need to open it up and follow the open-meeting requirements. It's getting in our way of getting the job done."

Two weeks ago, Mayor Steve Bach and three members of the business-oriented Regional Leadership Forum took seats at the Memorial table and promptly excused themselves from complying with open meeting requirements, such as posting notices of meetings of three or more members and admitting the public to such confabs.

Last week, with Bach and forum member Chris Jenkins absent, Martin assured the other forum members Doug Quimby and Phil Lane they were task force members but wouldn't have to follow the law.

But public discontent hasn't disappeared, and things will be different this Friday, Martin promises, because the task force needs to lay to rest the open-meetings issue and turn to the big issues. Namely, what community values will be reflected in the request for proposals that the task force must draft by the end of September, if it wants to stay on track to have a lessee chosen by Dec. 31.

As those decisions are made, task force members will have to keep in mind a caveat recently reinforced by state Attorney General John Suthers: that there will be no money from Memorial to pave streets, irrigate parks, or perform any other general city functions. Any lease payments by a for-profit entity must go to health care, Suthers wrote in a letter sent last week to city officials.

A question of values

But first, there likely will be discussion of who exactly is on the panel. Martin says she recalls that Councilors Brandy Williams, Tim Leigh and Merv Bennett volunteered to serve during an informal Council meeting a few months ago, though no such appointments appear in minutes of any formal meeting, the traditional avenue. Still, Martin considers them members.

If Martin has her way, the mayor and Leadership Forum reps, along with doctors and other medical professionals, will also be considered members, and all will submit to the Sunshine Law. City Attorney Patricia Kelly has said only those members actually appointed are subject to the Sunshine Law, but that the mayor, the Leadership Forum designees and the six people from the medical community are collaborators not subject to the law. To make the collaborators subject to the law, the Council could simply formally appoint them, she says.

The tumult of recent weeks suggests all this might be easier said than done, but Martin insists it's time for the issue to be settled. The task force, she says, needs to turn to the values-related questions — which might be equally controversial.

"If one of the values is local control," Martin says, "we have to figure out how you put that into the RFP. The more values-based requirements we put in, the harder it will be for an outside organization to meet the requirement."

As consultant Larry Singer explained last week, each requirement will reduce the amount of money the city can expect from a lease payment. Keeping Memorial's charity care at $70 million annually, retaining all services offered today — even those that lose money — or continuing to accept TriCare (military insurance that reimburses at a low rate), will cause the lease payment to drop, Singer said.

Throw into that mix Suthers' recent opinion, and task force members might find Memorial isn't much of a cash cow.

In his Sept. 6 letter to Bach and all nine Councilors, Suthers notes the state Hospital Transfer Act dictates that money from any entity — for-profit or nonprofit — that leases Memorial must go toward a foundation "which reflects the historical charitable purposes of Memorial Hospital."

The letter is an update of Suthers' May 2010 opinion that any proceeds from a sale must be spent on health care. The same is true with a "lease of more than fifty percent of the assets of a non-profit hospital," if that lease is to a for-profit entity, Suthers wrote.

And, he says, Memorial is a nonprofit hospital, giving him the authority to review the lease to assure it is in the public interest. He urges the city to secure his approval of the lease prior to submitting it to voters, "so that the voters will in fact have the final say in the matter."

An eroding asset

But Suthers might not be the final authority.

Former state Sen. Andy McElhany, a legislator when the Transfer Act was adopted in the late 1990s, says the subject of municipally owned hospitals "certainly was not contemplated by the Legislature." Which suggests a legal challenge might lead a court to rule Memorial isn't covered by the act.

Secondly, he says, Suthers doesn't address Colorado Springs' home-rule status. "A lot of state statutes don't apply to home-rule cities," McElhany says.

McElhany, who's promoted selling Memorial in the past, supported state Sen. Bill Cadman's failed attempt last legislative session to amend the Transfer Act to give cities latitude in spending proceeds from a hospital sale, lease or transfer. But now, McElhany says that debate can wait for another day.

"The primary question is what's the best use of Memorial for the community," he says.

How that Memorial might look gets tougher to figure, as the process drags out. Memorial CEO Larry McEvoy told Council this week political uncertainty and the stockmarket combined to put Memorial's net income $24 million below budget so far this year, placing it at risk of violating bond covenants, which could lead to a bondholder management takeover.



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