Colorado re­align­ment

Univer­sity of Colo. Hospi­tal at cen­ter of deals

Modern Healthcare - - REGIONAL NEWS - An­dis Robeznieks

Ne­go­ti­a­tions are just get­ting started on one mul­ti­sys­tem busi­ness ar­range­ment in Colorado, while an an­nounce­ment about an­other deal in­volv­ing the same play­ers is ex­pected shortly. The Colorado Springs City Coun­cil voted unan­i­mously Jan. 10 to choose a joint bid sub­mit­ted by the Univer­sity of Colorado Hospi­tal and the Poudre Val­ley Health Sys­tem to lease the as­sets of the city-owned Me­mo­rial Health Sys­tem.

Talks will ham­mer out the final terms of a 30-year lease—which would in­clude hav­ing UCH’S neigh­bor at the An­schutz Med­i­cal Cam­pus in Aurora, 318-bed Chil­dren’s Hospi­tal Colorado, sub­lease Me­mo­rial’s ap­prox­i­mately 100 pe­di­atric beds.

Once talks con­clude, the pack­age will be pre­sented to the city’s vot­ers for final ap­proval some time this year.

“Our goal is to work through ne­go­ti­a­tions as quick as we can,” said Poudre Val­ley CEO Ru­lon Stacey.

Chil­dren’s and UCH are al­ready af­fil­i­ated in that most physi­cians at Chil­dren’s also are fac­ulty at the Univer­sity of Colorado School of Medicine, Chil­dren’s spokes­woman El­iz­a­beth White­head said.

Sep­a­rately, 437-bed UCH and the two-hospi­tal Fort Collins-based Poudre Val­ley Health Sys­tem also have been dis­cussing merg­ing their op­er­a­tions to form a new sys­tem to be called Univer­sity of Colorado Health. The an­nounce­ment that a let­ter of in­tent to merge the two en­ti­ties had been signed was re­vealed last June, and an­other an­nounce­ment is ex­pected shortly. In un­dated ma­te­ri­als ex­plain­ing the pro­posed ar­range­ment on Poudre Val­ley’s web­site, it is noted that “the joint op­er­at­ing agree­ment has pro­gressed steadily and ap­pears on track to be signed near the end of 2011.”

“We’re work­ing out those de­tails right now,” Stacey said.

Af­ter its pro­posal re­ceived a neg­a­tive rec­om­men­da­tion from a city task force re­view­ing the five final bids for leas­ing the Me­mo­rial sys­tem, Hca-healthone re­leased a Dec. 19 state­ment com­plain­ing that the Univer­sity of Colorado bid re­lied on “en­ti­ties that don’t cur­rently ex­ist.”

“Healthone laid out the clear­est path for im­prov­ing the qual­ity of care and turn­ing Me­mo­rial around fi­nan­cially to en­sure sta­bil­ity and save jobs,” Hca-healthone CEO Jeff Dorsey said in the state­ment. “Our plan is much stronger in qual­ity im­prove­ment, fi­nan­cial in­vest­ment, lo­cal con­trol and ex­pe­ri­ence in grow­ing a hospi­tal sys­tem.”

Ac­cord­ing to the state­ment, HCAHealthone’s pro­posal would have gen­er­ated $332 mil­lion more for the lo­cal econ­omy, and in­cluded an up­front pay­ment of $500 mil­lion for a 40-year lease of the Me­mo­rial as­sets, which in­cludes its 548-bed name­sake hospi­tal.

The Uch-poudre Val­ley joint bid in­cludes an ini­tial $74 mil­lion pay­ment, an­nual pay­ments of more than $5.6 mil­lion for 30 years, and an an­nual pay­ment of $3 mil­lion for 40 years to fund de­vel­op­ment of a Colorado Springs branch school of medicine cam­pus for the Univer­sity of Colorado. UCH spokesman Dan Weaver said the med­i­cal school fund­ing was an im­por­tant fac­tor in se­cur­ing the city’s ap­proval.

Un­der a joint bid by UCH and Poudre Val­ley, Chil­dren’s Hospi­tal Colorado would sub­lease pe­di­atric beds at Me­mo­rial, left.

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