Hospital sale could equal change in care

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Editor’s Note: CSBJ reporter Amy Gillentine will live-blog the town hall meeting tonight. If there are questions you’d like to have asked tonight, post them in the comment section below, and check back here for answers.

Jerry White asked if the commission had explored what happens if the system is sold to a for-profit system.

“If someone purchases the hospital, they are going to want to recoup that purchase cost, and the financial delta there is the difference between what we pay for health care and the health care we’re going to get,” White said. “If it’s sold, then the buyer is going to change that mix.”

Larry Singer, consultant for the commission, agreed, saying that any purchaser is going to want a return, and that the commission will be exploring that issue.

“There’s no such thing as a free lunch,” he said. “There’s a vast misconception that for-profits have a unlimited piggy bank — and that they are going to spend it. They absolutely are not. If anyone invests, they want a return on that investment. They could make up the difference by making the system more efficient, or they might change the patient mix. I’ve heard the doctors here speak passionately about that issue. They might change the payer mix, that’s an option. Or they could sell all the capital, we’ve seen that done. But rest assured, the commission will be very aware of what will happen as they make their decisions.”

Governance as important as ownership

Walter Lawson, a member of the community who has attended every meeting, said the emphasis was more on ownership, or selling Memorial. He asked the commission to focus more on governance. He suggested that the commission look into partnerships and covenants to maintain quality.

“On the governance question, that’s a valid point,” said Larry Singer. “If you ever transfer the hospital, partner would have a strong input on governance. Not unfair to look more closely on ownership. It’s a good reminder.”

Lawson also asked about quality measures, how the commission would weigh measures of the quality of care.

“We need appropriate benchmarks,” Singer said. “Back in the day, the benchmark was purely finance. Today, money does talk, but it’s more and more focues on quality benchmarking as well. The outcome from this would be strong quality benchmark, and it’s exactly right on to focus on that.”

A question was raised about Memorial’s debt. The hospital has a total of $325 million in outstanding bonds. Jay Patel, who is responsible for looking into Memorial’s finances, said the bonds were revenue bonds.

“That means that the bonds must be paid by the hospital,” he said. “There’s no exposure to the citizens of Colorado Springs.”

Singer earns his money — answering most questions

Nearly every question so far has been turned over to the out-of-town consultant, Larry Singer. He’s definitely earning his money tonight.

Singer answered the questions about maintaining service levels, about the Children’s Hospital. And now he’s answering a question from State Rep. Mike Merrifield, whose cancer was first diagnosed at Memorial. Merrifield asked why the commission even existed.

Singer explained that the issue was one many organizations struggled with — and it was time to put the issue to bed once and for all.

“You don’t want another Larry Singer up here in four years,” he said. “We want to settle this.”

Mayor Lionel Rivera said it went farther than that — city council could be forced to levy a tax if Memorial went into the red. In the 1970s, he said, voters took on a tax to service debt.

“There’s no guarantee with health care reform that the scenario won’t be different,” he said. “As a governing body we have to look where we are. It’s so easy to put something on the ballot in this community, that something crazy could end up on the ballot. Maybe the answer is a nonprofit, maybe the answer is a partnership. That would end those crazy ballot initiatives. It’s a valid question – but its never been looked at as thoroughly as it is now.”

Memorial employees explain role, ask for caution

Memorial employees and other health care workers seem to be dominating the questions so far.

Harry Anderson, a local peditrician, asked why there weren’t more health care professionals on the board. He also questioned why meetings weren’t held at night in order to make sure more people can participate. How is concept of children’s hospital being included in decision making process? Two hospitals are considered, because the children’s hospital is a separate entity.

The commission turned the question over to Larry Singer. Overall, both the commission and Singer, sidestepped the question.

“We are looking at what’s best for Memorial as a whole — all the hospitals, all the services,” he said. “The commission won’t forget the children’s hospital or any services.

Gloria Johnson, a nurse for 40 years, told the commission that Memorial had a brand that went beyond El Paso County. She pointed out that many people worked to create that brand, including partnerships like the one with the Denver Children’s Hospital and having the busiest emergency room in the state.

“I do not want to see that brand destroyed,” she said. “And if you sell it, you will lose those partnerships — some of them took 15 years to create. You will lose some of your patients.”

Sally Duncan, a Memorial Health Service worker who focuses on reducing trauma injuries, said that her job isn’t profitable from a business perspective, but is from a community perspective. Her goal is to reduce readmissions, surgeries and other costs. She reminded the commission that the costs of changing Memorial could be higher than just in its bottom line.

Town hall filled nearly to capacity

Nearly every seat is full at the first town hall meeting concerning the future of Memorial Health System.

Commissioners are getting their first sense of how the public feels about the possible sale of Memorial.

After brief presentations by Larry Singer, consultant, and chair Bob Lally — it’s now the public’s turn.

Singer said the group would be hearing from Poudre Valley Health System, a Colorado town that changed their municipal hospital to a hospital district. The next meeting is scheduled for July 7 at 2:30.

Background: Memorial Commission

Commissioners hope to hear the public’s input about Memorial’s role in the region, access to care and impact on the quality of life in the community. The commission will give a presentation about future strategies for Memorial, given the changing landscape of health care, ¬†options being considered and decision-making criteria the commission will use to make recommendations to city council.

The commission is expected to make those recommendations to city council by the end of 2010.

Since February, the Citizens’ Commission on Ownership and Governance of Memorial Health System has been meeting weekly – biweekly this summer – to learn as much as it can about health care in general and Memorial specifically.

The process hasn’t been without its difficulties. Four members have resigned – two due to perceived conflicts of interest, one because of health problems. And former chair Steve Hyde claimed it was taking too much time from his family and job. He also cited negative media reports.

Along the way, the group has hired both its own publicist and its own consultant, all on Memorial’s dime. Lisa Bachman’s PR firm will receive $93,000 for a year’s work, while Chicago health care consultant Larry Signer will receive $285,000 for his work, guiding the commission.

The group has to make the decision: to sell Memorial to a nonprofit, to sell it to a for-profit system, to change the network’s governance or to keep things the way they are.

Even Attorney General John Suthers has gotten in on the Memorial action. He issued an option earlier this summer that said any money from a for-profit sale would have to create a “like charitable cause.” The city’s coffers would not benefit from that kind of a sale. But the city could take proceeds from the sale of Memorial to a for-profit system. Memorial has been valued at $300 million.

Memorial’s finances have also come into question during the commission’s inquiry. While some former Memorial board members question the soundness of the hospital, CFO Mike Scialdone said the system is sound. With lower-than-expected patient levels, the hospital has had to make some staffing changes, he said.

2 Responses to Hospital sale could equal change in care

  1. If Memorial is sold; what is the plan to care for those that rely on these important services?

    M C Pennica
    June 29, 2010 at 5:31 pm

  2. Jay Patel, vice chair, told Duncan that the commission was fully aware of what Memorial provides to the community — and will make sure that those services stay in place no matter which option the commission chooses.

    Amy Gillentine
    June 29, 2010 at 5:37 pm