Memorial Hospital's financial sheets ran red during the first several months of its lease to University of Colorado Health, but few people appear to be sounding alarms.

The hospital's revenues fell more than $23 million below expenditures during the first nine months of its lease to UCHealth, when factoring in depreciations and interest, said Anthony DeFurio, the hospital system's chief financial officer.

While acknowledging that such losses aren't sustainable over the long term, he framed them as planned expenditures - part of a years-long turnaround needed to improve patient volumes and finances that languished under city oversight.

UCHealth officials planned for Memorial Health System to lose money until at least the budget year ending June 30, 2015, when the hospital is expected to break even, DeFurio said.

"That will take a little bit of time," DeFurio said.

The loss was mentioned in interviews after an otherwise glowing presentation to Colorado Springs City Council - an annual report that was mandated under UCHealth's 40-year lease to operate the city-owned hospital. UCHealth took over operations on Oct. 1, 2012 after voters overwhelmingly approved of the deal.

Monday's presentation was light on financial details and heavy on accomplishments at Memorial Hospital.

UCHealth implemented a $41 million electronic health system that went live Nov. 2, and also made $37 million in other capital investments, said George Hayes, the hospital's new chief executive.

Hayes highlighted improvements to patient safety standards since the lease began, including a lower patient fall rate, fewer pressure ulcers and fewer central line-associated blood stream infections.

But Memorial's financial picture appeared far more bleak than previously reported by officials running the hospital system.

When looking specifically at its earnings before interest or depreciation during that nine-month period, the hospital fell $12 million short of covering its obligations, which include capital investments, officials said.

During the final six months of 2013, Memorial Health System's overall patient volumes dropped 3 percent from the previous year, though outpatient visits were flat and surgical admissions increased 2 percent, DeFurio said.

Also, charitable care for the indigent and unrecovered bad debt - care given to people who can pay, but don't - rose nearly $31 million, to $113.6 million during the fiscal year July 1, 2012 through June 30, 2013.

"Memorial has historically always done more than their fair share in this community," DeFurio said. "And our experience in this past year has certainly been that we continue to do more than our fair share, and in an accelerating fashion."

Councilwoman Jan Martin criticized UCHealth and Memorial officials for not providing a more in-depth, "corporate" report to the community - one offering more year-over-year metrics to measure the hospital's performance.

"I think as a community we really want to know that the hospital is in good shape, and improving, and I don't think this report has done that for us," Martin said. "At least, what we see here."

Still, she expressed little surprise over the hospital's losses, and pointed out that UCHealth - not Colorado Springs taxpayers - would be left on the hook.

Councilman Merv Bennett said he expects the hospital's recovery to take at least three years.

"It's not going to turn around overnight," Bennett said. "They're doing the things that they need to do to recover that."

Memorial Hospital's former chief executive, Mike Scialdone, previously said the hospital had mostly flat patient volumes. He was abruptly replaced on Jan. 17 in favor of Hayes, who previously ran Medical Center of the Rockies in Loveland - another UCHealth hospital.

During Hayes introductory press conference last month, he downplayed questions about pending layoffs.

He said they are trying to cut costs across the board by renegotiating contracts and improving efficiency.

When pressed Monday about layoffs, Hayes and DeFurio acknowledged that staff had been reduced in some areas, but didn't provide specifics.

They gave an example of how the demand for transcriptionists will decline with the advent of Memorial Hospital's new electronic health system.

"We continually refine our workforce model, and we've had some small pockets of adjustments," DeFurio said.