University Proposal: A Closer Look
University of Colorado Hospital’s proposal to operate Memorial is on its way to City Council after a unanimous recommendation by a city task force on Monday. If approved by Council, it will then go to Colorado Springs voters sometime in 2012.
We’ve attempted to highlight some of the key aspects of the proposal based on your interests and questions. You can read the proposal in its entirety at springsgov.com/memorial.
The summaries are based on the proposal and recent public presentations by UCH officials. If City Council accepts the recommendation of the task force, a lease would be negotiated prior to the election, and some conditions could change.
Governance
The proposal calls for a not-yet-formed nonprofit, known as the University of Colorado Health System, to operate Memorial. This new system is being created out of a joint operating agreement between the University of Colorado Hospital and Poudre Valley Health System, which is in the final stages of negotations. In the unlikely event the new organization is not formed, Memorial would be operated by the University of Colorado Hospital.
Under this new health system, Memorial would maintain its own corporate identity and have a local board, but major financial and strategic decisions would be subject to the larger system’s approval.
The proposal recommends an 11-member local board with at least seven of them coming from El Paso County. The board would appoint the CEO, handle credentialing, and manage other operational tasks, but major financial and strategic decisions would be subject to system approval.
Memorial would not have designated seats on the system board, as University and Poudre Valley do.
Pediatrics
University plans to sub-lease space at Memorial to Children’s Hospital Colorado, which intends to “operate pediatric services in a separately licensed and accredited Children’s Hospital within Memorial.”
Financials
The University would pay the city $74 million up front, according to the proposal. Additionally, it has pledged to spend at least $28 million a year in capital on average (the amount of depreciation); $3 million a year for a new medical school; and $5.6 million a year for 30 years in annual payments. The university would also allow the city to participate in a profit-sharing agreement.
Jobs
The University has agreed to protect employees’ jobs for at least six months post-transaction at a minimum: “We recognize that the draft lease agreement is designed to protect employees through the first six months of inclusion in the University of Colorado Health System. But we expect not only to retain the qualified talent currently in place well beyond the six months, but to add staffing and employment and career advancement opportunities.”
At the same time, the proposal acknowledges that there will likely be some degree of centralization to achieve economies of scale. Under staffing plans, it says:
“System-wide efficiencies in shared services such as quality and patient safety, supply chain management, revenue cycle, managed care contracting, human resource management, legal services and information systems will be developed and deployed throughout the system as appropriate.”
Charity Care
The University’s proposal says the respondents “firmly commit to maintaining the historic charitable purposes” of Memorial, but it does not outline specifics.
“Given the current uncertainties of health insurance reform it is difficult to determine what the next 40 years will bring. Any fundamental changes that might result to Memorial’s current charity care policies would be undertaken only with the input of the local board and the community stakeholders.”
The proposal acknowledges the importance of charity care, and it touts the charitable care provided by University and PVHS, noting that its contributions come even though they are not so-called safety net hospitals.
PERA
The proposal says: “UCH is committed to developing alternatives which may be more attractive to employees, the City, and/or UCH than simply paying off the unfunded pension liability. These alternatives might include creative solutions utilizing benefits of the University of Colorado or UCH public authority which would otherwise not be available.”
UCH noted in its public presentations that the most likely scenerio is that it would pay the PERA liability and transition employees into a defined-contribution plan.
Related posts:
I’s still having difficulty understanding why an ‘almost but not yet formalized’ heath sytem was unaminously voted for to take over Memo. Until they are sitting at the closing table, I won’t be putting all my ducks into one basket. Also, local control and “financial and strategic decision making” happens in Denver or where? So what 7 El Paso members, what happens to Larry? It doesn’t really souund like the local control, I was thinking of in my mind….