Tough questions on the details of Memorial Health system deal

By: Bob Gardner
September 27, 2013 Updated: October 4, 2013 at 7:51 am

Like most citizens of Colorado Springs, I have watched with a keen interest over the past several years as studies were conducted, leadership changed, and then a transaction was finally announced regarding the city-owned Memorial Health System.

There can be a lot of discussion whether the bid selected by the city was the best choice or whether the lease versus sale decision was the best for our citizens. However, there is no debate that every bid and every description of the transaction had one thing in common, that Colorado Springs would come away from the deal with a charitable foundation (the City Healthcare Foundation) to aid with the health care needs of our community for years into the future. In my eyes, when I went to the polls and cast my vote regarding the deal, the foundation was important to me.

That's the reason for this article. The landscape has changed and it appears likely that there will be no funding for the foundation in light of the decision by city leadership to reverse course with regard to a portion of the deal. Originally the deal was that out of the initial payment made to the city by UCH, $50 million would be used to fund the foundation. But now through the unilateral decisions of a very few individuals, the entire proceeds, and all the funding originally identified for the foundation, are riding on one bet. The decision was made not to consummate the transaction as presented to voters but to instead litigate with PERA.

I don't claim to have enough information to know the legal intricacies of the respective positions but I do know the deal presented to me as a voter was to satisfy PERA obligations and put the balance to work for the community. Now, by the time this litigation is over, the entire proceeds will be at stake and we will have either nothing or a windfall beyond any amount contemplated as part of the deal.

Court records show that the city contends it owes nothing to PERA as a result of the transaction while PERA has recently publicly announced that the "disaffiliation liability" for the transaction is about $190 million plus interest accruing at approximately $1.4 million per month. Due to the lengthy court process which includes layers of appeal, we are several years away from a resolution. With interest continuing to accrue, the entire $259 million, and then some, could be completely exhausted by the time the case is over. This game of all or nothing is not what we the voters bargained for.

Again, the results of the litigation are unknown to anyone and I am not in the business of predicting the outcome, but the stakes have changed. Our community could well wind up with nothing. At a minimum, shouldn't City Council have a second or third opinion from an unbiased source? We know that UCH paid $185 million specifically identified for the PERA liability. Do we need to be betting the future of our foundation and of our community's ability to meet our future healthcare needs? These are very high stakes decisions and they shouldn't be left to behind-closed-door discussions with people who have already committed to a particular course. If the deal we approved as voters has changed, shouldn't we know about it?


Bob Gardner, a four-term legislator, is the ranking Republican member on the Colorado House Judiciary Committee. He represents House District 20, which encompasses portions of Colorado Springs and western El Paso County.

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