Commission votes for stand-alone, nonprofit status for Memorial

Filed under: Daily News | Tags:

Memorial Health System is now one step closer to independence. The citizens’ commission charged with determining its future voted unanimously to recommend the system become a stand-alone, nonprofit system.

From the outset, it was clear this model – preferred by Memorial’s executives – was the favorite. During discussion, not a single member of the commission expressed reservations about the model.

“What’s not to love?” asked Peggy James, a commission member. “This hospital was built to be the hometown hospital. Hometown people work there; hometown people use it. This keeps it hometown.”

Chairman Bob Lally said they brought in other hospitals as examples. First, an in-state 501(c)3, Poudre Valley Hospital, and then they invited the Reno, Nev., nonprofit hospital to see if there was a difference.

“We did not know what Memorial was going to present,” Lally said. “At the end of their presentation, we had three perspectives about the nonprofit model. What resonates with me is ‘local, local, local.’ This resonates with me, loud and clear.”

For the hospital’s part, Chief Operating Officer Carm Moceri was satisfied with the decision, but noted it was only a “first step.”

“I’m very excited,” Moceri said. “This is consistent with what we think will be the best thing for the community. We’re looking forward to the discussion with city council, and we hope they will support what was eight months of hard work by this commisison.”

The commission spent nearly two hours discussing the models, with the for-profit model coming in for the most discussion – and the most criticism. Commission member Jay Patel ran the numbers, and said it made no financial sense to sell the system. Once the debt was paid, and the state retirement plan was settled, Patel estimated that the foundation would only have about $20 million a year to work with — that’s assuming a 10 percent return on its investments.

The commission was charged by the city council to help decide the future of the municipal hospital system. Its job was to find a solution to minimize taxpayers’ financial and legal exposure, maximize Memorial’s benefit to the community, and ensure access to health care.

Getting to this point wasn’t easy. The commission members - three of them resigned at some point in the process, including then-chairman Steve Hyde – met at least once a week for more than eight months. They hired a public relations firm for $100,000 and a nationally known health care consultant for $285,000. They also held two town hall meetings and conducted regular meetings all over the city in an effort to engage as many people as possible.

At its Oct. 20 meeting, the commission voted to take one of its options off the table: keeping the system under city council’s control.

“After extremely thorough discussions and thoughtful deliberations, the commission concluded that maintaining the status quo will not meet these (the city’s) three objectives in this rapidly changing and sometimes hostile environment of health care reform,” Lally said. “Quite simply, change is more than an option; it’s a necessity.”

Its meeting Nov. 10 will be used to draft a presentation to city council for its Nov. 22 meeting.

And then, the commission’s work will be done, though the city’s will have just begun.

The city council will not vote on the proposal Nov. 22; instead, Mayor Lionel Rivera has indicated that it could be January before council votes.

That leaves scant time for negotiations with Memorial’s executives in order to write ballot language. Voters have the final say, and the deadline for ballot initiatives for the April municipal election is Jan. 29.

Memorial Health System made its wishes clear two months ago when CEO Larry McEvoy presented his plan for the future: create a stand-alone 501(c)3. That option gives Memorial the flexibility to expand regionally, something that is impossible while under city council control. McEvoy believes the option will allow the hospital system to begin creating partnerships with doctors under an integrated health care system. Integrated care – including electronic health records and bundled payments between doctors, specialists and hospitals – is the way care will be delivered in the future, McEvoy said.

Becoming a stand-alone nonprofit will also allow Memorial to become more competitive. Although the hospital now has about 57 percent of the market share, all of its decisions are made under state law. The open meetings/open records policy means Memorial’s competitors are aware of all the decisions the hospital might make.