Finally, it's almost over. The long, dreary, contentious and spectacularly mismanaged process that has put Memorial Health System in play for three years is about to end. On Dec. 17, the four City Council members who are now the lone voting members of the latest "Let's Sell Memorial" study group will offer their preferred option to their peers.
Then we may finally see some action. Council will send a ballot measure to voters, and then it's up to us to approve or reject the proposed deal.
So let's think about the proposals — in the context of our city's long history.
Seventy-four years ago, Spencer Penrose established the El Pomar Foundation. He was, for his time, an extraordinarily rich man. He had never been particularly charitable, unless you call his local hobby businesses (The Broadmoor, Cheyenne Mountain Zoo and Pikes Peak Highway) charitable endeavors. Yet as he approached the end of his life, he chose to create the entity that has enriched beyond measure this city, this region and this state.
Absent El Pomar, there would be no U.S. Olympic Committee, no World Arena, no Pikes Peak Center, no renovated Fine Arts Center and no Penrose Hospital. Colorado College would be an obscure private school, not a world-class liberal arts institution. The Tigers wouldn't be the nation's No. 7 college hockey team; in fact, the college might not even have a hockey team.
That's just scratching the surface, because even an abbreviated list of beneficiaries of El Pomar's largesse would require several pages of this newspaper. So as we consider Memorial's fate, let's try to channel Spec (and Julie!) Penrose.
Penrose made plenty of money in Cripple Creek, but most of his fortune came from his 1903 investment in a Utah copper mine. It wasn't really an investment, but a speculative play. With his Cripple Creek partners, Charley Tutt and Charlie McNeill, Penrose bought into a dubious scheme to mine low-grade copper at Bingham Canyon in Utah. So successful was the deal that, from 1909 until his death, Penrose's income from Bingham Canyon exceeded $1 million a year.
It was a lucky hit — as unlikely as winning the lottery, as unlikely as the city of Colorado Springs becoming the owner of a health care system worth hundreds of millions. Money that comes through luck or inheritance never seems quite real. That's why feckless heirs blow their trust funds and fortunate gamblers put their winnings back into the casino. And that may be why City Council may pass up the opportunity offered by HCA-HealthONE to create and endow an El Pomar-scale foundation.
HCA is offering a clean deal. The city would be off the hook for Memorial's Public Employees' Retirement Association obligation, off the hook for Memorial's debt, and out of the health care business completely. Most proceeds would, as Colorado law requires, be used to create a foundation dedicated to health care. Its initial capitalization: $325 million. By comparison, El Pomar's assets as of Dec. 31, 2010, amounted to $436 million.
The other proposals, all from nonprofits, call for the city to remain in the health care business for the foreseeable future. Proceeds would be paid out over time, with annual payments dependent upon hospital revenues. Forget the optimistic projections — in business, as in life, there are no guarantees.
Some Councilors may see the Colorado law that prevents the city from grabbing all the cash from a sale to a for-profit entity as an obstacle. Annual revenue streams, which local government controls, may seem more attractive to them than a lump sum that will be forever out of their grasp.
And some seem suspicious of privately owned hospitals. Won't they refuse to treat the indigent? Won't they jack up prices, fire loyal employees, reduce quality of care, and loot the system for whatever they can get?
Valid concerns, I suppose — but most likely unfounded. They'll certainly try to contain costs, but competition will keep them from downgrading care.
If City Council leaves $325 million on the table and tries to sell a nonprofit takeover to the voters, I don't think we'll buy it — and we'll be stuck with a devalued asset in an untenable situation.
That's a gamble City Council shouldn't take — because, to paraphrase Lloyd Bentsen, "My Mom knew Spencer Penrose ... and you guys are no Spencer Penroses."
Also see Triage for Memorial, an online-only Your Turn column by Bob Todd.