Colorado Springs News, Sports & Business

Councilman calls for Memorial investigation, leadership to be put on leave

ANDREW WINEKE Updated: February 20, 2012 at 12:00 am

Councilman Tim Leigh is calling for an investigation of city-owned Memorial Health System and for Memorial’s senior leaders to be put on administrative leave during the probe.

Leigh said many local physicians have brought concerns to him about Memorial’s business dealings and medical policies. He said he’s asked Memorial for explanations for those concerns and not gotten answers. He said so making those issues public and calling for an investigation is his attempt to force the issue.

“I did not mean to be incendiary,” Leigh said. “I really meant to be inquisitive and ask legitimate questions. All I want is the truth.”

Memorial board chair James Moore issued a statement Monday saying that the board supports CEO Dr. Larry McEvoy and that it “is disappointed that Mr. Leigh has chosen to air anonymous rumors and innuendo in such a public way, without any attempt to substantiate the claims or understand the matters in context. The facts tell a different story, and we will be addressing Mr. Leigh’s e-mail with City Council directly, and in the honest manner to which we have always committed.”

In a newsletter sent out Sunday, Leigh questioned several real estate deals Memorial has been involved in, the amount of cash-on-hand on the hospital’s books, the profitability of its emergency department and other issues, along with a general complaint that Memorial’s leadership squelches dissent.

“I’m not this rabble rouser — there are legitimate constituent groups that have asked these questions,” Leigh said. “I don’t even know that there’s anything to be accountable for, I just would like to know the story.”

Leigh also questioned rumors that McEvoy and other senior leaders would be paid retention bonuses or severance payments to induce them to stay with the hospital while leasing talks with University of Colorado Health continue. In January, City Council voted unanimously to pursue a lease with University of Colorado Health and city attorney Chris Melcher is beginning those discussions. If a deal can be reached, voters would likely approve or reject the plan later this year.

Leigh said he hasn’t seen any formal proposals for the bonuses, but has heard the idea floated.

“I’m just not in favor of paying people an exorbitant amount of money to do the jobs they were hired to do,” he said.

McEvoy’s contract does not include a retention bonus or a severance package, a Memorial spokesman said.

Leigh called for an investigation by the Mayor’s office and for Memorial chief financial officer Mike Scialdone to be named interim CEO while that takes place. Leigh said he hasn’t discussed the issue with the rest of City Council yet, but that he plans to do so.

“I plan to have a conversation privately with my other councillors to see if they have an appetite for this,” he said.

________________________________________________________________

Read Tim Leigh's letter and James Moore's response below:

"Tim’s Market Report

02/19/12

THE FOLLOWING COMMENTARY IS NOT REPRESENTATIVE OF THE COLORADO SPRINGS CITY COUNCIL.  IT IS THE OPINION OF CITY COUNCILMAN LEIGH ONLY.

Pay attention.  Be informed.  Make a difference.  Keep it real.

Who doesn’t love a good story?  A love story, a horror story, West Side Story, The Story of Bonnie & Clyde, biography, history or fiction; and some stories are more interesting than others, for example, the story at Memorial Hospital.

THE BACKSTORY
* The City Council has oversight responsibility for the City’s Memorial Health System enterprise [City Code 13.1.104].
* The Mayor has the power to investigate and examine or inquire into the affairs or operations of any department, division, agency or office of municipal operations and enterprises [City Code 1.2.310].
* The Council has the authority to create boards and commissions, appoint and remove members of boards and commissions, and alter the powers and responsibilities of existing boards and commissions [Charter 9-10 and City Code 1.2.901].
* The Council may increase, reduce or change any or all of the powers, duties and procedures of any board or commission existing at the time of this charter or created by ordinance thereafter.  [City Charter paragraph 9-10 (b)].
* The Mayor shall have the power to designate committees necessary for the proper consideration of executive or administrative problems [City Code 1.2.307].  The Mayor has the power to investigate and examine or inquire into the affairs or operations of any department, division, agency or office of municipal operations and enterprises [City Code 1.2.310].

As a city councilman, (who by code and charter is in a supervisory position at MHS), I believe it could be a dereliction of my duty if I didn’t make some stories public, (which if the stories are true), could be examples of egregious action by the current leadership of MHS that need immediate investigation.

THE STORY
Over the past 12 months, I have been approached by dozens of physicians who didn’t buy-into MHS Leader’s plan to employ all physicians and thereby grow the hospital.  These physicians represent the broad spectrum of health care – general practitioners; cardiologist, radiologist, pulmonologists, anesthesiologists, oncologists, orthopedic surgeons, gastroenterologists.  They all recount the same basic story – they can’t negotiate with the administration because they will not “get with the program” and they don’t dare “go public” for fear of reprisal.
I’ve been told in 2007/2008, MHS invested $3,000,000 to finish 30,000 square feet at 4110 Briargate Parkway (a Medical Office Building owned HCP Briargate MOB, LLC., a private, for-profit interest) in  a deal to operate a surgery center.  The deal fell apart and MHS has been paying $750,000 per year in rent since – for space that’s still empty!
* At 10%, the capitalized value of a $750,000 lease payment equals $7,500,000 of debt
* Does that debt impact the negotiation with any Lessee?
* Are there other of these obligations we don’t know about?
I’ve been told there have been at least 2 attempts by private practitioners to sub-lease the vacant Briargate space (alleviating the $750,000 cost) that have failed
* I’ve been told that there was a similar situation at the Printer’s Park Medical Plaza which failed and ultimately forced MHS to sell to NV Printers Park MOB, LLC (another 3rd party, for-profit entity) because of deteriorating financial metrics, and in that process MHS had to sign a very (Landlord favored), long-term lease to guaranty the transaction.
* I’ve been told there’s a program at MHS designed to restrict “First Assist” positions.  First Assist’s are typically highly trained Nurse Practitioners and Physician Assistants who are the surgeon’s immediate assistant.  I’ve been told MHS’s program is not part of a nationally recognized protocol.  I’ve been told the program was emplaced because MHS’s operational process is to employ “their” First Assist folks so MHS (not the surgeon) could collect the billing for them and to create a barrier for physicians to bring their own First Assist to surgery.
* Last fall at Council, the CEO told us the financial situation at MHS was so dire that it would be subject to bond default and 3rd party management by December.  Then, after the City Council decided to look at competitive Lessee bids, we were told MHS Leadership “had a plan” and the system was so healthy “no 3rd party proposal was necessary”.
* At Council, we’ve been told we have 189 days cash-on-hand.  While that sounds good; without context, it has no bearing.  A good question might be, “What would our day’s cash-on-hand be if we’d taken advantage of missed business and operational opportunities?”  Would we be negotiating as a take-over, merging as superior or growing our system organically?
* At Council, we’ve been told by the current leadership that our emergency department earns about 4% profit from operations and that any new Lessee would likely reduce the size and scope of services because it is an “underperformer”.  But, I’ve also been told the typical emergency department should earn around 19% and that likely, instead of reduction, we should expect expansion in services and size.  Which is it?
* At Council, we’ve been told we need to consider an exit-payment plan for the current leadership and if we don’t some may quit “leaving-us hanging”.  I don’t do well with threats.  I say adios and good riddance – don’t let the door hit you on the way out!  Look – you can’t buy loyalty, and employees are either inside the tent or not.  Given the circumstances presented, why would we support golden parachutes?

MHS is a very desirable take-over prospect because experts see what we (Councilors) don’t, because we’re not experts.   We can merely ask questions and hope for answers.  Since answers are not typically forthcoming, and realizing there are many sides to every story, and realizing we have no process inside the current system to investigate stories for validity or invalidity, my 3-legged call is for 1) an immediate, arms-length investigation initiated by the Mayor’s office; 2) the immediate coincidental administrative leave of the CEO and his Chief Strategy officer; and 3) the promotion of the CFO to Interim CEO.
Since MHS is currently negotiating with UCH in good faith, we would be remiss if we didn’t share this information so as to ensure no derailment of the current process.
Pay attention.  Be informed.  Make a difference.  Keep it real."

Memorial board chairman James Moore's statement:

"The Board of Trustees is disappointed that Mr. Leigh has chosen to air anonymous rumors and innuendo in such a public way, without any attempt to substantiate the claims or understand the matters in context.

 The facts tell a different story, and we will be addressing Mr. Leigh’s email with City Council directly, and in the honest manner to which we have always committed.

 In his email, Mr. Leigh suggests that Memorial has not been honest with Council, questions our decision-making, and calls for ousting our CEO Larry McEvoy and CSO Carm Moceri. He has not discussed these matters with us.

 The Board of Trustees fully supports McEvoy, Moceri and the rest of Memorial’s senior leadership team. Further, we stand beside the staff and physicians at Memorial, who remain focused on patient care.  We are as committed as ever to keeping our organization as healthy as possible during this time of transition."

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