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University of Colorado Hospital offers partnership, model for Memorial

January 6, 2012
photo - A new 12-story tower is being built to expand University of Colorado Hospital at the Anschutz Medical Campus in Aurora.  Photo by ANDREW WINEKE, THE GAZETTE
A new 12-story tower is being built to expand University of Colorado Hospital at the Anschutz Medical Campus in Aurora. Photo by ANDREW WINEKE, THE GAZETTE 

Over the past decade, a city of gleaming steel towers, bustling with 17,800 workers and bristling with construction cranes, has grown on a square mile that was once the Fitzsimons Army Medical Garrison and is now the Anschutz Medical Campus.

And the work continues. Last week, University of Colorado Hospital topped out the steel frame for what will become a new, 12-story, 714,000-square foot tower, right next to its existing, 787,000-square foot inpatient building, which is itself only 5 years old. Just down the road, Children’s Hospital Colorado is working on a 10-story, 350,000-square foot addition of its own. And a few blocks further east, the Veterans Administration is laying the groundwork for an $800 million medical center.

Along with the construction — several smaller projects are also under way — the hospitals and university have added thousands of jobs as they grow.

When Colorado Springs leaders talk about the impact that could come from leasing city-owned Memorial Health System to University of Colorado Hospital and building a branch medical campus at the University of Colorado at Colorado Springs, Anschutz is the vision they have in mind.

“The potential is limitless, but it’s going to take a while,” said Phil Lane, chairman of the Regional Leadership Forum and a member of the city task force that voted unanimously in December to recommend the University of Colorado Hospital lease. “We’re going to have to crawl before we walk before we run.”

On Monday, City Council will begin discussions on whether to lease Memorial to the University of Colorado Hospital for the next 40 years. If council agrees with the plan, the city’s voters will have the final say on the lease offer later this year.

Before that, it seems like a good idea to learn more about who and what the University of Colorado Hospital is. For starters, the University of Colorado Hospital has been part of the University of Colorado since 1991 — it’s what’s formally called a body corporate political subdivision, basically a nonprofit company chartered by the state. The hospital’s doctors are faculty members at the University of Colorado and the organizations work closely together, but the hospital receives no direct state funding.

To make it even more confusing, University of Colorado Hospital is forming a joint venture with Poudre Valley Health System of Fort Collins, tentatively called the University of Colorado Health System. If the joint venture is completed in time, it will be UCHS that leases Memorial. If not, University of Colorado Hospital will take on the lease by itself.

Those details will be worked out in the coming months. For now, let’s look at Colorado Springs prospective partner a little closer.

When the former Fitzsimons Army Medical Center was closed in 1999, plans were already well under way to transform the one-square-mile facility into a medical and education hub for the region. The first buildings at the new campus opened in 2000, and University of Colorado Hospital and Children’s were both moved in by 2007.

“There have been a few of us who have been around to watch this whole thing literally come up out of the ground,” said Jeff Thompson, University Hospital’s director of government relations, who had an office in the old Fitzsimons hospital while the rest of the complex was constructed.

Relocating an entire hospital — six miles from the old site near downtown Denver — was nearly unprecedented, Thompson said, and no one knew what the reception would be from residents and patients.

“We weren’t sure how many of our existing patients would follow us here,” Thompson said.

The concern was unfounded: The new facility has proven to be a magnet. The hospital’s emergency room was built for 35,000 visits a year and now sees more than 65,000 — the new tower will house a bigger emergency room — and every bed in the hospital is full on most days.

“We have occupancy rates better than most hotels,” said Angela Lieurance, University Hospital’s vice president of development and marketing.

The University of Colorado estimates the combined economic impact of the campus, research centers and the two hospitals to be about $4.6 billion.

The impact on the city of Aurora is huge, but a little harder to gauge, said Dick Hinson, senior vice president at the Aurora Economic Development Council.

“You see a ripple effect throughout the community through hotels, restaurants, things like that,” he said.

Along with the hotel and retail developments, the Fitzsimons golf course is being redeveloped into a privately owned bioscience park that has already attracted several dozen companies.

Aurora Mayor Steve Hogan said the economic downturn has likely depressed the campus’ indirect impact on the city, but he expects to see more Anschutz workers buying homes in Aurora and the pace of redevelopment around the campus to pick up steam in the coming years.

“I think we’ll get a better view of that as the economy improves,” he said.

Dr. Greg Stiegmann has watched the evolution of University of Colorado Hospital for decades.

A gastrointestinal surgeon and the hospital’s vice president of clinical affairs, Stiegmann came to the University of Colorado Hospital as an intern in 1975 and joined the University of Colorado faculty in 1983.

“This place back then was completely different,” Stiegmann said. “It was owned by the university and subject to all the state regulations you could imagine.”

In the early 1990s, the university pondered the hospital’s future, thinking about many of the same questions Colorado Springs has been asking about Memorial, and decided to spin it off as an independent entity. Along the same lines, the School of Medicine now receives less than 2 percent of its funding by the state. Those changes forced University Hospital leaders and doctors to change their thinking and made building a hospital that was competitive with private institutions a necessity, Stiegmann said.

“We’ve got to survive on our own, basically,” he said. “Although our paychecks come from the university, there’s no money there to pay us unless we bring it in.”

That can mean providing ordinary hospital care, specialty care or bringing in research dollars.

As the only academic medical center in the region, University Hospital provides some services that aren’t available anywhere else, Lieurance said.

“We have specialists, subspecialists and sub-subspecialists,” she said. “If you see someone for cancer here, you will see someone who focuses on just that one type of cancer.”

That’s a boon to patients, but it’s also an economic driver for the hospital and for Aurora. Fourteen percent of University Hospital’s patients come from outside the greater Denver metropolitan area (including Boulder and Douglas counties) and 3 percent of its patients come from out of state. At Children’s Hospital Colorado, which would also play a major role in the Memorial lease, the numbers are 30 percent from outside the Denver area and 15 percent from out of state.

As a community hospital, University’s potential partner Poudre Valley Health System may be a better model for Memorial. It also has a well-developed regional reach, with 10 percent of its patients coming from parts of Colorado outside its primary service areas in Larimer and Weld counties and another 9 percent coming from outside the state.

Memorial currently brings about 8 percent of its patients in from outside El Paso and Teller counties and less than 1 percent from out of state. If broadening Memorial’s reach across southern Colorado, building a medical school and adding University’s imprimatur can improve those numbers, it would be a major economic boost for the region, said Fred Crowley, senior economist with the Southern Colorado Economic Forum.

“Certainly people from surrounding counties will now have an option for going to Denver or going to Colorado Springs,” he said. “There is a real opportunity.”

Stiegmann also sees research and drug and clinical trials coming south if the lease is approved. University of Colorado physicians and staff are currently running about 1,200 trials and receive about $333 million in sponsored research. Those doctors will be eager for new populations to reach out to, he said. In return, the patients will get access to cutting-edge treatments that may be years away from the open market.

“I think it’s almost inevitable that a number of our clinical trials are going to be transported to Memorial if this deal is completed,” he said. “I think that will spread — I don’t want to say virally, but it will.”

Working with athletes at the Olympic Training Center and soldiers from Fort Carson are also obvious targets for doctors and research projects, Stiegmann said.

“These are natural fits and those are unique strengths to the Springs,” he said. “The one thing you’ll find hanging around us is there’s a lot of entrepreneurial minds and creativity here. I think that’s infectious.”

In addition to the direct impact, that kind of research and collaboration could spin off companies and perhaps lead to manufacturing or service jobs that would further expand the hospital’s economic footprint, Crowley said.

“All of these create huge economic activities,” he said.


University of Colorado hospital lease proposal

University of Colorado Hospital’s bid to lease Memorial Health System was the unanimous choice of the task force weighing proposals for the city-owned hospital system.
University Hospital is offering the city an up-front $74 million lease payment, a $5.6 million annual payment for 30 years, a $1.12 billion capital commitment over the life of the lease, plus a commitment of $3 million a year toward establishing a branch campus of the University of Colorado School of Medicine at the University of Colorado at Colorado Springs. Also, UCH is offering a profit-sharing plan in which the city would get a projected $2.5 million a year.
UCH says it would investigate other ways to deal with Memorial’s pension liability, including potentially allowing some employees to remain in the state’s Public Employees’ Retirement Association.

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