While the deal has been called an “affiliation,” UCHealth is effectively buying Estes Park Health for $10M and the taxpayers must continue to pay a mill levy but the Park Hospital Distict Board will have no control or oversight.
The Estes Valley Voice received an email on June 24 from the office of the Colorado Attorney that a transaction notice had been filed regarding the pending acquisition of Estes Park Health by UCHelath.
The EVV then submitted a Colorado Open Records Act request for the documents. On June 30, we received copies of documents including a notice of integration and affiliation on UCHealth letterhead, dated June 10 and signed by Vern Carda, the Chief Executive Officer of Estes Park Health, and Elisabeth Concordia, President and Chief Executive Officer of the University of Colorado Health; a 150-page Health System Operating Lease Agreement by and among the Park Hosptial District, University of Colorado Health, and UC Health NewCo Hospital. Also received were a one-page certificate of public notice, a four-page resolution of the board of directors of Park Hospital District to authorized entering into definitive agreements with University of Colorado Health, and a one-page certificate of no material change in purpose.
In a nutshell, the basic deal is a 50-year lease for $1 per year, with automatic 10-year renewals unless either party elects to terminate at least two years prior to the scheduled expiration date of the lease and its renewals.
While designated as a lease, the lease is essentially the same as a purchase agreement in form, with representations and warranties from the parties and termination provisions similar to those contained in a business purchase agreement.
Funded debt of the District will be assumed by the new hospital entity and/or UC Health, but any other pre-closing liabilities, such as employment-related liabilities and medical malpractice liability, are not assumed by the new corporation.
The Park Hospital District agrees to give UCHealth the right of first refusal if the District receives an offer to purchase its assets, and the District also agrees not to compete with the services provided by the hospital.
In connection with the lease, the District will escrow $2 million of its funds to secure its compliance with representations and warranties. However, any amount left in the escrow will pass to UCHealth on the second, third, and sixth anniversaries of closing.
UCHealth will exercise ultimate authority and management responsibility over all Estes Park healthcare operations.
UCHealth maintains control over the appointment of the new seven-member hospital board’s members. While the District may nominate two members, those nominations are subject to approval by UCHealth and may be removed by UCHealth at its discretion, at any time, with or without cause.
If UCHealth disapproves of three successive nominees, UCHealth may, in its discretion, eliminate the District representatives from the hospital board.
UCHealth appoints two members, and three members are appointed as community members. For the four-year period following closing, UC Health will give due consideration to historical members of the District board in the appointment of the community members.
UCHealth commits to expending $20 million for capital improvements and maintenance during the 10-year period following closing. Additionally, the hospital will evaluate its services in relation to community and financial needs for behavioral health, telehealth, and pain management.
UCHealth also agrees to use commercially reasonable efforts to retain the ambulance service.
UCHealth will annually report on the application of the tax revenues of the District and shall provide unaudited financial statements of the hospital.
The hospital will retain the CEO, CFO, CNO, and the senior director of support services for 18 months following the closing. The District commits to not decreasing tax revenues, all of which will be allocated to the hospital, except for an administrative portion of approximately $200,000 per year for board functions and public services.
If the lease is terminated within the first 10 years, the District will pay for post-closing capital improvements and the assumed debt. After 10 years, the District will pay for post-closing capital improvements only.
The attorney general has 90 days to review the contract details. Before the deal is closed, the attorney general will hold a hearing in Estes Park to hear from the public.
“UCHealth is effectively buying Estes Park Health for $10M and the taxpayers must continue to pay a mill levy but the Park Hospital District Board will have no control or oversight.”
This is a big “no” for me. I believe it’s time for a voter’s referendum that will dissolve the hospital district. This new arrangement is so, so far from what the community authorized back in the late 1960s.
I’m fine with UCHealth buying and running the hospital if they want, but not with these conditions.
Also: it appears that the potential for taxation without representation is written into the acquisition agreement. How is even being considered as a ‘good deal’ for the citizens of the hospital district? Yet another reason to dissolve the District:
“UCHealth maintains control over the appointment of the new seven-member hospital board’s members. While the District may nominate two members, those nominations are subject to approval by UCHealth and may be removed by UCHealth at its discretion, at any time, with or without cause. If UCHealth disapproves of three successive nominees, UCHealth may, in its discretion, eliminate the District representatives from the hospital board.”