Memorial's city ownership a recipe for decline, health care leader says

June 30, 2011
photo - Poudre Valley Health System president and CEO Rulon Stacey Photo by PVHS
Poudre Valley Health System president and CEO Rulon Stacey Photo by PVHS 

If Memorial Health System remains a city-owned hospital, it’s on a dead end path to decline — that was the message Rulon Stacey, CEO of Poudre Valley Health System in Fort Collins, gave Thursday to the City Council task force weighing the future of the city-owned hospital.

“In the environment today, hospitals are competitive by nature,” Stacey said. “They cannot be successful with elected boards. No way.”

Poudre Valley has been held up as a potential model for Memorial, since it started its existence as a county-owned hospital which became an independent nonprofit in 1994. The council task force invited Stacey to speak about that transition and how Poudre Valley went from a $100 million organization in 1994 to a $1.1 billion system today.

“You have realistic expectations that you can take that community asset and multiply it many times going forward,” Stacey said of Memorial's potential.

Running every idea through a political process is too slow, too clumsy and too prone to manipulation to allow a publicly owned hospital like Memorial to keep up with independent competitors, Stacey said.

“Nobody else is waiting. Nobody else is waiting one second,” he told the task force. “Do this. Tomorrow would be good.”

The council members on the task force seem to be coalescing around the idea of leasing the assets of Memorial to a new nonprofit, as happened with Poudre Valley, while the city retains ownership and could cancel the lease if Memorial fell short of its obligations.

“I think that (leasing) will answer a lot of the concerns that are going around in the community,” Councilman Merv Bennett said.

Councilman Tim Leigh agreed that leasing might allay fears that the city would lose Memorial and get nothing in return.

“It’s not about the asset, it’s a bridge to trust,” Leigh said. “The argument I’ve heard is that, ‘You’re giving the asset away.’ Here, you’re leasing it and the whole conversation has changed.”

Leigh said city attorney Pat Kelly was studying whether a lease arrangement would require approval by voters, as a sale or spinning off Memorial completely would. He said, however, that the Council should be open about whatever process it comes up with.

"I don't think we want to do any sleight of hand," he said.

Last week, Poudre Valley and University of Colorado Hospital announced they were pursuing setting up a joint operating agreement that would combine the expertise of the state’s top teaching hospital with Poudre Valley’s broad community base in northern Colorado. Stacey said it was premature to speculate whether that new partnership might be interested in expanding to southern Colorado in the future, but he said that an independent Memorial would find a lot of suitors.

“An independent Memorial is very attractive to any integrated health system in the country,” Stacey said. “Memorial is a high-quality organization with superior executive leadership.”

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