Updated: August 28, 2012 at 12:00 am
Colorado Springs voters on Tuesday overwhelmingly approved a plan to lease city-owned Memorial Health System to University of Colorado Health.
The proposal passed, 83 percent to 17 percent. About 41 percent of registered voters cast ballots in the mail election.
The lease agreement will pay the city $74 million up front and $5.6 million annually, which the city plans to put into a new foundation dedicated to local health needs. UC Health will also pay $3 million a year toward establishing a branch medical school at the University of Colorado at Colorado Springs.
Mayor Steve Bach called the result a “mandate” for the decision to lease the hospital.
“We are at the doorstep now of a wonderful future,” said Mayor Steve Bach. “I’m so proud to be standing here today and so thankful.”
At a press conference at City Hall, UC Health CEO Bruce Schroffel echoed the mayor’s thoughts.
“I’m sort of in shock at the mandate and the incredible show of confidence we got here,” he said. “We are extraordinarily excited to welcome Memorial to the University of Colorado Health family.”
UC Health will officially take over Memorial on Oct. 1. UC Health is a new organization formed by University of Colorado Hospital in Aurora and Poudre Valley Health System in Fort Collins.
“Tomorrow we’re going to roll up our sleeves and get to work,” said UC Health President Rulon Stacey. “We’re going to waste no time in proving to you that you’ve made a great decision here tonight.”
Children’s Hospital Colorado isn’t an official partner to the lease, but it is finalizing a deal with UC Health in which it would sublet Memorial Hospital for Children. Children’s CEO Jim Shmerling said he expects that agreement to be finished before Oct. 1.
“It’s a new chapter for us,” Shmerling said of the plan. “It’s heartwarming to see the overwhelming support and affirmation we’ve seen in this community.
Tuesday’s vote puts an end to more than three years of debate over whether the city should continue to own a hospital system. Dr. David Corry, a surgeon at Memorial who served on the city task force that unanimously endorsed the UC Health bid to lease the hospital, said the vote would end the uncertainty that has plagued Memorial’s employees and give them confidence to begin building for the future.
“At last we’ve settled on a model and we’re moving forward,” Corry said. “I see this as a huge step forward in the right direction, for patients, for doctors and staff and for the community.”
Memorial CEO Mike Scialdone said he planned to walk the halls of the hospital Wednesday morning and thank employees for their dedication during a trying period.
“This is something that clearly gives us a focus and a conviction that we’re very excited about,” he said of the vote.
All Memorial employees are guaranteed their jobs for six months after UC Health takes over. Schroffel said both University of Colorado Hospital and Poudre Valley have added employees in recent years and he expects the same will happen at Memorial.
“Memorial Hospital is meant to be the flagship, the southern flagship of University of Colorado Health,” he said.
The lease deal had widespread support from community leaders, including Bach and all nine City Council members. There was no formal opposition to the plan, although anonymous groups set up web sites, placed yard signs and conducted automated phone calls opposing the deal.
Bach very pointedly called the Memorial lease a “model for other city enterprises.” Bach has called for a review of the ownership and governance of Colorado Springs Utilities.
“I hope we would do the same with all of our enterprises,” he said of the lease deal.
In addition to the lease payments, UC Health will also give the city $185 million to cover potential pension liabilities for Memorial’s roughly 4,000 employees.
Earlier this month, the city sued Colorado’s Public Employees Retirement Association, arguing that the city owes the pension plan nothing if Memorial’s employees are no longer part of the system. If the city and PERA ultimately settle on less than $185 million, the city would keep the difference and put it into the health foundation.
UC Health is creating its own pension plan and does not intend to keep Memorial’s employees in PERA.
City Attorney Chris Melcher said the ball is in PERA’s court.
“The next step is really PERA’s, to see if they would like to sit down with us and resolve this,” Melcher said.