The City Council voted 5-2 Tuesday to support a proposal to turn the city-owned Memorial Health System into an independent nonprofit and to recommend that the incoming council put the proposal to voters in November.
A citizens’ commission recommended the nonprofit proposal after studying options for nine months last year and a council task force has spent the last four months hammering out principles of understanding that to set up the new Memorial, including an initial $5 million contribution and a minimum of $1 million yearly contributions to a locally focused health care foundation.
"I really do believe in the vision we see from the nonprofit," said Councilwoman Jan Martin.
Mayor Lionel Rivera said Memorial's leadership has a compelling plan to grow an independent Memorial into a regional health care provider, bringing jobs and economic growth back to Colorado Springs.
"I do believe that by converting Memorial into a (nonprofit) 501c3, it gives them the opportunity to grow in the region," Rivera said. "I think the vision that the executive staff has put forth will benefit the city."
Council members Sean Paige and Tom Gallagher opposed the resolution. Paige said he believes the city isn't getting enough back for its investment in Memorial.
"It's just not true that the citizens are not owed anything for this asset," Paige said. "I think it's a giveaway."
The recommendation is not binding on the next council, nor does it provide a solution to the $246 million Memorial was told it would cost to leave the state’s Public Employees’ Retirement Association, which would be required for it to become independent.
Memorial CEO Dr. Larry McEvoy has said the hospital couldn’t afford to pay that as a lump sum, although Memorial has commissioned its own analysis of its PERA liability and McEvoy said he hopes to have a plan to deal with the pension obligation by this summer.
"There's no answer to that," McEvoy said of PERA. "If that number stands, that's not good."
Vic Andrews, a member of Memorial's board of directors, said the board has had informal discussions with some of the new council and believes they are open to putting the proposal on the November ballot.
"It doesn't appear to us that there's any opposition," he said. "Shortly now starts the most important part of this issue and that's informing the citizens of Colorado Springs (about the proposal)."