The Colorado Springs City Council agreed Wednesday to hold a special election Aug. 28 to decide the future of Memorial Health System, according to The Gazette. The election would be by mail-in ballot, and the date is not binding if Council later decides to change it.

Council must still decide on exact wording for a ballot question, but voters will essentially be asked whether the city should lease Memorial to University of Colorado Health, a system that includes University of Colorado Hospital and Poudre Valley Health System.

For the past several months lawyers for the city and UCH have been negotiating the terms of such a lease. Those negotiations are expected to conclude soon. Check out our previous post, A Date for the History Books?

The Council continued to meet Wednesday in executive session to discuss the separation agreement between the former Board and former CEO Dr. Larry McEvoy. That meeting was underway at the time this blog post was published. It was unclear if any action was planned afterward.

Dr. Martin Luther King Jr. gave his "I Have a Dream Speech" on Aug. 28, 1963. The date may go down in local history, too, as a new start for Memorial

On Aug. 28,1963, Dr. Martin Luther King Jr. gave his “I Have a Dream” speech.

On Aug. 28, 2012, the City of Colorado Springs could make some important history of its own.

That’s the anticipated date for a special election in which Colorado Springs citizens will decide the future of Memorial Health System. City Council is scheduled to vote on setting the election at a special meeting next Wednesday, according to the Council’s agenda.

The ballot measure, if approved, would cede control of Memorial to University of Colorado Health, a system that includes University of Colorado Hospital and Fort Collins-based Poudre Valley Health System. It would be Memorial’s first change in governance since becoming city-owned nearly 70 years ago, and it would align Memorial with two of the highest ranked health systems in the nation.

The city and UCH have been negotiating terms for a lease for several months now, and that process is expected to conclude soon. City Council would ultimately approve ballot language, but the next biggest step would be the vote itself.

There will no doubt be a countdown to Aug. 28 by many folks at Memorial, who have been affected by more than two years of uncertainty, politics, and public debate. The UCH transition is fully supported by Memorial.

We will continue to focus our attention on the basics (safety, quality, and financial stewardship) to ensure that the organization is strong and healthy for when this anticipated transition takes place.

When it comes to reading material, a credit report may not be as scintillating as a New York Times bestseller. Yet buried within the figures and financial lingo is a story. It may be a story of success or failure, confidence or fear.

Moody’s Investment Service recently released its report on Memorial, which came with a bit of a mixed message. The organization affirmed Memorial’s stellar bond rating (a good thing) while revising its outlook for Memorial from stable to negative (not so good).

So what is Memorial’s story?

We are an organization that is well-run and financially strong, Moody’s says, but we’ve been battered by politics and the ongoing uncertainty around our ownership. If Memorial were a person, she might be someone who has been smart with her money (a strong savings account, manageable debt, and conservative in her expenditures), but who may be facing troubles on the job or insecurity about her future.

From a practical standpoint, this assessment is a good news story. Memorial has maintained its great bond rating (akin to a personal credit report), and Moody’s believes that the expected transition to University of Colorado Health could alleviate its concerns and result in its outlook being restored to “stable” or better.

Yet the report also reveals the toll that a tumultous couple of years full of politics and uncertainty played, especially in 2011 when Memorial hit a 9-year financial low. From the report:

The manner with which the transition of the hospital’s governing structure is being achieved is a significant credit weakness … We believe this extended period of uncertainty has lead to the disruption of longstanding physician referral patterns and was a significant driver of the poor operational performance achieved in 2011. Furthermore, there have been cases of public acrimony between city council and the hospital, which we believe further undermines community confidence, and adds to an already uncertain and difficult operating environment. 

The takeaway here is that Memorial is in a strong position financially, but we are at a pivotal moment where this could change for better or worse depending on what happens in the next several months. If the UCH transition takes place, Moody’s suggests that Memorial’s outlook will improve, noting the following as one of our strengths:

…if approved by voter referendum in August, the (UCH) agreement would end a protracted period of uncertainty for the hospital, and help the organization return to stability.

I guess that means you could classify our story in the genre of suspense.

You may have assumed the Future of Health Care blog was dead after no new posts in more than two months. Two months, after all, is ancient history online.

The fact is, this is a quiet time for Memorial. The City of Colorado Springs is negotiating a lease with University of Colorado Health to operate Memorial, pending a municipal vote. Those negotiations are held in private, so there is virtually no news to report on their progress.

Meanwhile, as these negotiations take place, the conversations about the future of health care at Memorial are either unknown or temporarily on hold.

This is standard for a negotiation of this nature, but when you put it all together, you have a case of radio silence.

So what now? There is no shortage of compelling conversation topics on the future of health care at Memorial and elsewhere. The Supreme Court is weighing the constitutionality of the Affordable Care Act. The University of Colorado Health continues to define itself, even as it negotiates to bring Memorial into the fold. And, of course, the need to drive quality and improve value doesn’t go away.

As we go through this transition period, you may not always see daily or weekly posts from The Future of Health Care, but we remain committed to bringing you interesting content on how to drive highest quality health care.

Memorial Health System is holding two free events this week to help community members understand their health risks and how to deal with them.

Heart Attack Her Style

On Thursday, long-time emergency physician Dr. Marilyn Gifford, medical director of Memorial’s emergency department, will speak about the risks of heart attacks in women. Heart attacks are the No. 1 killer of women. That’s in part because symptoms are more subtle than in men. Gifford, who sees frequent heart attacks in the state’s busiest emergency room, will provide advice on how you can avoid such a visit.

When: Thursday, Feb. 23, 7:30-9 p.m.

Where: Colorado Springs Fine Arts Center, 30 W. Dale St., Colorado Springs

Community Health Fair

On Saturday, community members can receive an assortment of free health services. These include cholesterol screenings, blood-pressure checks, pediatric dental screenings, a cooking demonstration, and a fitness assessment. There will be a bike-helmet giveaway for first arrivals.

When: Saturday, Feb. 25, noon to 3 p.m.

Where: Hillside Community Center, 925 S. Institute.

Every once in awhile I stumble across a comment on a news story or blog post that’s more interesting or insightful than the original story that prompted it. That was the case when I read Silvia Smith’s comment today on our blog post about City Councilman Tim Leigh’s criticism of Memorial.

First, some background. Leigh distributed a strongly worded email about Memorial on Sunday in a PR move that landed him at the top of the front page in today’s Gazette. You can read his full email and our board chairman’s response in yesterday’s post, Response to Tim Leigh. In short, Leigh listed a number of rumors from unnamed sources, and he called for CEO Larry McEvoy and CSO Carm Moceri to be placed on leave so these rumors could be “investigated.” Board Chair Jim Moore re-affirmed the board’s support of our leadership team and refuted the claims.

Silvia points out that Rulon Stacey, an all-star CEO at Poudre Valley Health System who was recently named CEO of University of Colorado Health, went through some dark times of his own as PVHS made the controversial transition from a public to private system. Her stay-the-course message is something all of us, as a community, should consider:

The headlines in the Gazette this morning should surprise no one. The first time I heard Rulon Stacey (President and CEO of PVHS and now CEO of UCH joint-venture), he was addressing the Memorial Citizens Commission. After his presentation, he queried the Commission regarding the process of governance change for MHS. Upon learning the final decision would rest on a community vote, he had a moment of unbridled transparency and blurted out “you’re screwed”. The vote is a conversation for another day. What he said next reveals what we know about the pattern of change. As you all remember, Rulon Stacey navigated his organization through a change in ownership and governance and this day he relayed his experience of that process. It included being vilified by physicians, having to shoulder employee distrust with attrition at 25%, transitioning through high turnover in the executive ranks, and withstanding constant community derision. Sound familiar? One day he was driving with his 10 year old daughter when the radio station aired a segment falsely accusing Mr. Stacey of a myriad of things ~ Tim Leigh style. Dollars to donuts they wanted him fired.

What impressed me most was this man’s resilience and patience during extreme opposition. He didn’t quit and neither did the Board that advocated and supported him and their mission. Instead they modeled the behaviors they wanted the organization to live by. They also understood the forces shaping the trend to align physicians and organizational interests in order to be successful. I read about that same quality and pattern in MHS’s administration and Board!

Today, PVHS stands as a beacon on a hill, as a Baldrige award-winning regional health system that provides some of the most cost-effective care in all of Colorado. Employee and physician satisfaction is consistently high and Rulon Stacey is a sought-after speaker and leader. I think we’re all smart enough, save one, to connect the dots.

Thank you, Silvia, for sharing your thoughts.

City Councilor Tim Leigh has sent out an email blast that lambasts Memorial and calls for ousting CEO Larry McEvoy and CSO Carm Moceri. You can read Leigh’s full email below, if you haven’t seen it.

Here is Memorial’s response, from Board Chair Jim Moore:

From:  James P. Moore, Board Chair, Memorial Health System

—————

The Board of Trustees is disappointed that Mr. Leigh has chosen to air anonymous rumors and innuendo in such a public way, without any attempt to substantiate the claims or understand the matters in context.

The facts tell a different story, and we will be addressing Mr. Leigh’s email with City Council directly, and in the honest manner to which we have always committed.

In his email, Mr. Leigh suggests that Memorial has not been honest with Council, questions our decision-making, and calls for ousting our CEO Larry McEvoy and CSO Carm Moceri. He has not discussed these matters with us.

The Board of Trustees fully supports McEvoy, Moceri and the rest of Memorial’s senior leadership team. Further, we stand beside the staff and physicians at Memorial, who remain focused on patient care.  We are as committed as ever to keeping our organization as healthy as possible during this time of transition.

Leigh’s email:

Who doesn’t love a good story? A love story, a horror story, West Side Story, The Story of Bonnie & Clyde, biography, history or fiction; and some stories are more interesting than others, for example, the story at Memorial Hospital.

THE BACKSTORY

• The City Council has oversight responsibility for the City’s Memorial Health System enterprise [City Code 13.1.104].

• The Mayor has the power to investigate and examine or inquire into the affairs or operations of any department, division, agency or office of municipal operations and enterprises [City Code 1.2.310].

• The Council has the authority to create boards and commissions, appoint and remove members of boards and commissions, and alter the powers and responsibilities of existing boards and commissions [Charter 9-10 and City Code 1.2.901].

• The Council may increase, reduce or change any or all of the powers, duties and procedures of any board or commission existing at the time of this charter or created by ordinance thereafter. [City Charter paragraph 9-10 (b)].

• The Mayor shall have the power to designate committees necessary for the proper consideration of executive or administrative problems [City Code 1.2.307]. The Mayor has the power to investigate and examine or inquire into the affairs or operations of any department, division, agency or office of municipal operations and enterprises [City Code 1.2.310].

As a city councilman, (who by code and charter is in a supervisory position at MHS), I believe it could be a dereliction of my duty if I didn’t make some stories public, (which if the stories are true), could be examples of egregious action by the current leadership of MHS that need immediate investigation.

THE STORY

Over the past 12 months, I have been approached by dozens of physicians who didn’t buy-into MHS Leader’s plan to employ all physicians and thereby grow the hospital. These physicians represent the broad spectrum of health care – general practitioners; cardiologist, radiologist, pulmonologists, anesthesiologists, oncologists, orthopedic surgeons, gastroenterologists. They all recount the same basic story – they can’t negotiate with the administration because they will not “get with the program” and they don’t dare “go public” for fear of reprisal.

• I’ve been told in 2007/2008, MHS invested $3,000,000 to finish 30,000 square feet at 4110 Briargate Parkway (a Medical Office Building owned HCP Briargate MOB, LLC., a private, for-profit interest) in a deal to operate a surgery center. The deal fell apart and MHS has been paying $750,000 per year in rent since – for space that’s still empty!

o At 10%, the capitalized value of a $750,000 lease payment equals $7,500,000 of debt

 Does that debt impact the negotiation with any Lessee?

 Are there other of these obligations we don’t know about?

o I’ve been told there have been at least 2 attempts by private practitioners to sub-lease the vacant Briargate space (alleviating the $750,000 cost) that have failed

• I’ve been told that there was a similar situation at the Printer’s Park Medical Plaza which failed and ultimately forced MHS to sell to NV Printers Park MOB, LLC (another 3rd party, for-profit entity) because of deteriorating financial metrics, and in that process MHS had to sign a very (Landlord favored), long-term lease to guaranty the transaction.

• I’ve been told there’s a program at MHS designed to restrict “First Assist” positions. First Assist’s are typically highly trained Nurse Practitioners and Physician Assistants who are the surgeon’s immediate assistant. I’ve been told MHS’s program is not part of a nationally recognized protocol. I’ve been told the program was emplaced because MHS’s operational process is to employ “their” First Assist folks so MHS (not the surgeon) could collect the billing for them and to create a barrier for physicians to bring their own First Assist to surgery.

• Last fall at Council, the CEO told us the financial situation at MHS was so dire that it would be subject to bond default and 3rd party management by December. Then, after the City Council decided to look at competitive Lessee bids, we were told MHS Leadership “had a plan” and the system was so healthy “no 3rd party proposal was necessary”.

• At Council, we’ve been told we have 189 days cash-on-hand. While that sounds good; without context, it has no bearing. A good question might be, “What would our day’s cash-on-hand be if we’d taken advantage of missed business and operational opportunities?” Would we be negotiating as a take-over, merging as superior or growing our system organically?

• At Council, we’ve been told by the current leadership that our emergency department earns about 4% profit from operations and that any new Lessee would likely reduce the size and scope of services because it is an “underperformer”. But, I’ve also been told the typical emergency department should earn around 19% and that likely, instead of reduction, we should expect expansion in services and size. Which is it?

• At Council, we’ve been told we need to consider an exit-payment plan for the current leadership and if we don’t some may quit “leaving-us hanging”. I don’t do well with threats. I say adios and good riddance – don’t let the door hit you on the way out! Look – you can’t buy loyalty, and employees are either inside the tent or not. Given the circumstances presented, why would we support golden parachutes?

MHS is a very desirable take-over prospect because experts see what we (Councilors) don’t, because we’re not experts. We can merely ask questions and hope for answers. Since answers are not typically forthcoming, and realizing there are many sides to every story, and realizing we have no process inside the current system to investigate stories for validity or invalidity, my 3-legged call is for 1) an immediate, arms-length investigation initiated by the Mayor’s office; 2) the immediate coincidental administrative leave of the CEO and his Chief Strategy officer; and 3) the promotion of the CFO to Interim CEO.

Since MHS is currently negotiating with UCH in good faith, we would be remiss if we didn’t share this information so as to ensure no derailment of the current process.

Correction: This blog originally stated that the law firm assisting the city is based in Missouri. The lead attorney is from Missouri, but the firm is based in Houston.

City Councilors Merv Bennett and Brandy Williams say their goal is to ask voters in August to approve making Memorial part of the University of Colorado Health system, according to the Colorado Springs Independent.

City Attorney Chris Melcher, who has hired a Missouri-based law firm to negotiate a lease with UCH, said he expects negotations to be completed in 120 days, the Indy said. The city’s negotiating team is composed of Melcher and a team of lawyers from the firm, St. Louis-based Fullbright & Jaworski. Bennett and Williams are not part of the team, but they are liaisons between the team and City Council.

The cost of the firm ($395 per hour) and a special election would be paid by UCH.

To read more, including other firms that applied, check out this Indy blog post by Pam Zubeck.

The long-negotiated partnership between University of Colorado Hospital and Poudre Valley Health System appears to be complete, and PVHS CEO Rulon Stacey will lead the new system as its CEO. Read more about Stacey here.

Called University of Colorado Health, the new system began announcing its new logo and website via social media on Tuesday.

The University of Colorado Health may ultimately operate Memorial, if negotiations with the city of Colorado Springs are successful and voters ultimately approve the deal.

University of Colorado Hospital and Poudre Valley submitted a joint bid to operate Memorial through a Request for Proposals process late last year. Even though University of Colorado Health was not yet official at that time, the two organizations stated in the proposal that their intent was for the new system to eventually operate Memorial.

The organizations committed to a new branch medical school campus, financial contributions to the city, and substantial investments in Memorial’s future. The plan was unanimously supported by the City Council and has been called “amazing” by Mayor Steve Bach.

Bruce Schroffel, CEO of University of Colorado Hospital, will be president and chairman of the board of the new organization. You can find his bio here.

In addition to Stacey and Schroffel, the 11-member board includes a number of established business and community leaders with expertise in a variety of fields. Among them is Richard Monfort, owner of the Colorado Rockies. You can read bios on all of the board members here.

To “like” the new organization’s Facebook page, click here.

You can check out the new website at http://universityofcoloradohealth.org.

In a press release issued earlier this week, Mayor Steve Bach outlined what he considers to be most important in the city’s negotiations with University of Colorado Hospital and Poudre Valley Health System over the future of Memorial. Here’s what his communications staff put out:

Mayor Bach weighs in on Memorial Health System negotiations

Colorado Springs Mayor Steve Bach has sent Colorado Springs City Council a letter sharing his thoughts on the future potential operating lease of Memorial Health Systems (MHS). Last August, Mayor Bach suggested to City Council that they conduct an RFP (Request for Proposal) process in order to explore all options for consideration. The Memorial Health Systems Task Force was formed and through a thorough RFP process, a wide variety of bids were submitted and examined. The Council, having accepted and approved the recommendation of the Memorial Health Systems Task Force, now enters into exclusive negotiations with the University of Colorado Health System, on such a lease.

Mayor Bach is now asking City Council to consider the following as the negotiations proceed:

· Solicitation and consideration of the Mayor’s advice in the negotiations, and incorporation of identified key terms and conditions in the final agreement.

· Use of qualified, outside legal counsel to assist Chris Melcher, City Attorney and the City’s negotiator on the Lease, in the negotiations. MHS should advance all City negotiation costs and be reimbursed by the Lessee.

· A time limit for negotiations of 6 months or less, and a submission of the final lease to the voters in a timely manner thereafter. MHS should advance any City pre-election public information expenses and election costs and be reimbursed by the Lessee.

· A concrete solution on all PERA issues, including any City obligations, with a specific monetary guarantee from the Lessee to address and resolve any City liabilities.

· A Council affirmation in advance of Lease execution, and a commitment in the Lease, that all financial payments from Lessee, including upfront payments, annual lease payments, and surplus revenue sharing payments, are all transferred directly into a segregated account at the City or an escrow account under the City’s ownership and control, and not into the General Fund.

· Memorial management and board members should not participate in the actual negotiations, but should provide timely information and suggestions to the City Attorney when requested.

· The ballot initiative should include language establishing a Colorado Springs Healthcare Foundation with a stated mission, governance structure, and policy guidelines to be determined by the Mayor and Council jointly.

· Enhance local control, input, and management of MHS during the Lease to the maximum extent possible.

· A commitment on the disposition and use of the monies currently held by MHS in their cash and operating accounts.

· A commitment to develop a Level 1 Trauma Center at MHS.

· A commitment to maintain Tricare, Medicare and indigent care.

· A commitment that the Lessee will pursue a Branch Campus Medical School at UCCS, with a written timeline, stated deadlines for progress, and a firm guarantee for at least $3 million per year towards such effort.

· A commitment to continue the Sexual Assault Nurse Evaluators (SANE) program.

· A financial guarantee, and proof of sufficient financial resources, commensurate with the financial commitments of the Lessee over the full term of the Lease.

· Stated and measurable performance outcomes that ensure the community is receiving the appropriate level of care and performance from MHS, with clear reporting obligations, performance guarantees, and penalty provisions as appropriate.

· Clear and well structured termination provisions in the event the Lessee is unable to satisfy the obligations of the Lease, even after notice and a cure period.

· Clear and firm financial guarantees from Lessee on the additional funds that would be provided to the City if (1) the PERA issues are resolved for less than the stated amount necessary in the RFP process, and (2) an appropriate share of future MHS surplus revenues or profits based on improved operations.