Suthers makes right call on Memorial Health

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The citizens’ commission charged with recommending whether the city of Colorado Springs should sell Memorial Health System can now focus on the mission ahead after having one of its biggest questions resolved this week.

The question: Is the municipally owned facility subject to the Hospital Transfer Act, a Colorado law passed in 1998 that regulates the sale of nonprofit hospitals?

The law was adopted after a flurry of sales of nonprofits to for-profit systems, out of fear that access to care for the indigent would be affected.

It was a critically important question for the commission, because if Memorial was deemed to be a nonprofit, proceeds from its sale to a for-profit company could not be used to dig the city of its sad financial state. They would have to be invested in another nonprofit venture.

For guidance on this pressing legal issue, the commission turned to Colorado Attorney General John Suthers. He visited the commission’s meeting Tuesday.

His answer?

Yes, Memorial is a nonprofit.

As he explained, that means if Memorial were to be sold to another nonprofit organization, rather than a for-profit company, the city could reap the proceeds and would face far fewer restrictions on how it could spend the money. That would, it seems, present a fairly compelling case to sell to a nonprofit, should that be the route the commission settles on.

It also was reassuring to hear Suthers say that if area voters, who have the ultimate say in what happens to Memorial, decide to sell the hospital system to a for-profit, he will review the transaction.

Suthers will make sure:

No officer or director of Memorial Hospital benefits directly or indirectly form the proceeds.

Proceeds of the transaction are equal to the fair market value of the hospital and re-distributed to one or more 501(c)3 organizations. Each of those organizations must remain independent of the hospital and its governing body.

The charitable mission receiving the proceeds “shall reflect the historical charitable purpose of the nonprofit entity proposing the transaction,” according to state law.

There’s already been plenty of interest from possible suitors for the hospital — a half-billion-dollar-a-year-business on two sprawling campuses with a dozen facilities and 4,122 employees — so if a sale is in the offing, finding someone to assume ownership shouldn’t be too difficult — now that the question of who might be the best buyer has been resolved.