Aug 29, 2012 8:44 PM by Jacqui Heinrich

Memorial Hospital lease leaves PERA problem pending

A community vote Tuesday night determined Memorial Hospital's fate: an overwhelming 'yes' majority signed on to more forward the hospital's lease to the University of Colorado Health System. Though the change is immediate, it leaves one $185 million dollar question unanswered.

More than 76,000 voters weighed in on Memorial Hospital's future, with 82% in favor of the lease. Colorado Springs Mayor Steve Bach said it's a necessary move: "Honestly for Memorial to survive we are going to have to team up with a larger, stable organization."

Still unresolved: what will happen to Memorial employees' government retirement plan. Before the UCH deal the city had to pay a pension plan-- the Public Employees' Retirement Association, also known as PERA-- money for each city employee. PERA wants the city to pay an exit fee since the hospital will now have a private retirement plan for employees under new hospital leadership. The city has already filed suit to stop PERA. City Attorney Chris Melcher said Tuesday night, "The city's position is when the Memorial employees transition into UCH they will transition into new employment and our obligations to PERA will cease at that time."

As part of the deal, UCH already paid the city $185 million in case they have to buy out of PERA. The city will also receive $74 million up front and $5.5 million each year. UCH will also pay $3 million each year toward building a medical school at UCCS. Bruce Schroffel, CEO of University of Colorado Health said about the medical school, "That will probably be about 2 to 3 years before you actually see the start. They have to go through a process of accreditation before it can actually begin."

Though some strings are left untied, new hospital leadership says one thing's for sure: lower costs. According to UCH President Rulon Stacey, "The cost of health care throughout University of Colorado Health is going to go down because of our ability to collaborate and affiliate."

Mayor Bach says the lease money paid to the city by UCH will be put into a separate healthcare fund, available to the community possibly as a loan.

As far as PERA goes, the city's position is well-known. News 5's calls to PERA went unanswered. A response in the coming days is expected.



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