Three systems vying to lease Memorial’s assets

Banner Health, Centura Health and University of Colorado hospital all plan to bid to lease Memorial Health System — and they don’t seem too worried about Memorial’s troubled balance sheet.

“That’s a problem that can be turned around,” said Bill Byron, spokesman for the nonprofit Banner. “We still see a lot of potential in Memorial. It doesn’t rise to the level of keeping us away from the RFP.”

Banner operates hospitals in seven states, and is headquartered in Phoenix, Ariz., where it also has a graduate resident program.

Its Colorado holdings are smaller, with hospitals in Loveland, Greeley, Sterling and Brush. However, that presence makes the interest in Memorial only natural, Byron said.

“We are very interested in seeing the RFP (request for proposal),” he said. “We’ll know more then, but the hospital is definitely one we’re interested in.”

A City Council-led task force is crafting the RFP, which will be finalized today. The RFPs will go out Monday, and will be returned by Nov. 14. Council will vote on the task force recommendation in December, and then voters get their say in 2012 — ending a process that’s taken more than two years. The task force decided to send the RFP to hospital systems currently operating in Colorado, but didn’t rule out allowing other systems to partner with Colorado hospitals to bid on leasing Memorial.

Banner also isn’t put off by the lease arrangement. The system is involved in lease agreements at the Northern Colorado Medical Center in Loveland and with its critical access hospital in Brush.

“We have experience that we’ll bring to Memorial,” Byron said. “We know about lease agreements, and we know about bringing organizations into our organization. We really see this as fitting in well with the rest of Banner health. We also know large hospital systems. We definitely have the experience to make this successful.”

Success might be a problem — at least for now. Memorial’s daily census has declined every month this year. Its latest reports show admissions are down 8.4 percent from what it anticipated for the year, and 7.2 percent from last year’s numbers. Only the emergency department and the outpatient clinics are seeing increases.

The lack of overnight patients has affected cash flow — the hospital has lost $7.1 million year-to-date, according to reports. It budgeted to make $17 million by this point. CEO Larry McEvoy said it was a matter of dollars and cents.

“Expenses were a bit higher and revenue was a bit less,” he said. ‘That’s the reason we have this situation. Our investments also took a big hit in the stock market.”

Memorial put in place several cost-savings measures last month, when revenues got low enough that it threatened a management take over by the hospital’s bond holders. It halted construction projects and limited expenditures. Some of those measures, McEvoy said, will take time to show up in the balance numbers.

I think we’re addressing the vital issues,” he said. “We think it’s just going to take time to turn around.”

But the financial woes experienced by the hospital aren’t stopping other hospitals from eyeing Memorial’s strategic location in Southern Colorado.

Centura Health, which already owns Penrose-St. Francis Health Services, is going to bid for the hospital system, as is the University of Colorado hospital.

There were concerns about offering the RFP to Centura, because it owns a hospital in the Springs. But spokeswoman Wendi Dammann said those concerns had been addressed.

“Certainly, we expect to receive an RFP as they go out to the other health care systems,” she said. “And from there, we welcome the opportunity to take a look and respond.”