In the olden days, before a bride and groom exchanged vows, it was common for a minister or judge to include the admonition, “Speak now or forever hold your peace.”
On Thursday, July 31, at 4 p.m., Phil Weiser, the Colorado Attorney General, will come to Estes Park for a required public meeting to hear community members’ thoughts about the proposed acquisition of EP Health by UCHealth.
The meeting at the Community Center is the last opportunity community members will have to publicly voice their opinions and weigh in on the acquistion before the attorney general is expected to approve the terms.
CONSIDER THE FINANCIAL DEAL
In evaluating whether this acquisition is a good business deal for local property taxpayers, the community should consider the Park Hosptial District’s ongoing obligation to pledge more than $4 million yearly in property taxes to support the hospital.
The affiliation agreements provide that UCHealth assumes bonded debt of about $10 million. Since the lease extends for 50 years and is non-cancellable, this debt assumption is effectively the purchase price for the District’s assets.
Under the agreements, UCHealth will have absolute control over the hospital’s policies and operations, and the effect of the 50-year lease is substantially the same as that of the sale of EPH’s assets.
The affiliation agreements also provide that UCHealth will commit $20 million towards capital improvements over the first 10 years of the lease. There is no commitment beyond this initial period.
EP Health’s annual depreciation expense has averaged $3 million over the 2021-2023 years, and it has budgeted $3 million for capital expenditures for 2025. If that trend continues, there will likely be at least $30 million of capital needs over the same 10-year period.
While UCHealth could invest more than the guaranteed $20 million, if it fails to do so, the quality of the building and facilities could suffer through inadequate replacement and modernization.
As a result, the $20 million UCHealth capital commitment is meaningless and presents a false narrative that UCHealth is paying $30 million rather than $10 million for the hospital.
A December press release from EP Health reported that the hospital had losses of $8 million in 2022, $1.7 million in 2023 and $500,000 in 2024, but has budgeted a net increase (i.e., income) in 2025 of $1.4 million. In addition, it reports that budgeted tax revenues for 2025 would be $4.4 million.
The press release also states that EP Health’s capital budget for 2025 was $3 million.
Operating businesses are typically sold as a multiple of EBITDA (earnings before interest, taxes, depreciation, and amortization), a measure of cash flow that is often substantially greater than their earnings.
The extent of the multiple paid depends on several factors and is industry-specific.
Since the hospital’s website is opaque, a search for the term EBITDA only lists budgeted EBITDA for 2023 of $5.1 million. This means that the purchase price of $10 million through assumption of debt represents a 1.96 multiple of the 2023 budgeted EBITDA.
This seems low since private businesses sell at EBITDA multiples from four to ten. However, because EPH has not published EBITDA beyond 2023, the number may not represent current EBITDA, and the current multiple may be different.
The appropriate market multiple for the sale of EP Health is unknown, although the history of losses suggests a relatively low multiple of EBITDA would likely be appropriate.
This analysis suggests that the pricing of the deal for UCHealth is within the realm of reason, particularly given EP Health’s losses in 2022 through 2024.
The affiliation agreements require the Park Hospital District to a non-cancellable pledge of its tax revenues to support the hospital as authorized by the ballot initiative and pay the newly formed hospital entity – UCHealth Estes Valley Medical Center – all tax revenues, other than a $200,000 retainage by the Estes Park Hospital District to cover administrative expenses.
NEW ENTITY TO RECEIVE PROPERTY TAXES
Based on the 2025 budgeted tax revenues, and assessed property valuations, local property taxpayers will contribute approximately $4.2 million annually to the hospital over the next 50 years throughout the term of the lease. This amount could be substantially more if property valuations increase as they have over the past 50 years.
The District will be contractually bound to pass these tax revenues on to the hospital for the next 50 years, and it cannot pass a referendum to dissolve the Park Hospital District to avoid this obligation or to reduce the mill levy.
There is no doubt that the community fears losing our hospital, and many seem desperate to approve the UCHealth deal without any critical analysis. But we should not be so desperate that we do not question the terms of this acquisition.
We bring more to the table than UCHealth, as we bring an ongoing property tax revenue stream of $4.2 million per year to support hospital operations, while UCHealth has only committed $2 million per year in capital through the first 10 years of the lease with no ongoing commitment beyond the first 10 years.
It is also concerning that UCHealth ‘s capital commitment to EP Health is only two-thirds of EP Health’s depreciation expense.
Will the property deteriorate, or is UCHealth willing to provide greater support for the upkeep and improvements to the hospital facility (real estate and equipment)? Will UCHealth maintain EP Health as a critical access hospital facility, or will it simply become an outpatient physician clinic with an emergency room?
Last summer, the Estes Valley Voice requested information from EP Health about the average daily inpatient census. We were surprised to learn it is 4.1 patients. That is effectively concierge medicine and does not seem sustainable from an economy of scale perspective even with the additional reimbursements from Medicare, Medicaid, grants, and other partnerships available to facilities designated as rural critical access hospitals.
With proposed cuts in Medicaid and Medicare and other federal grant programs on the chopping block or being clawed back, no government funding source can be considered stable. Are we to believe that UCHealth will somehow increase the number of inpatient stays in Estes Park and not send patients down the hill where staffing and facility costs are less?
UCHEALTH CONTROLS OPERATIONS
UCHealth will have absolute discretion on all policy and business decisions without the Park Hospital District having any measure of control.
Control of the new will UCHealth Estes Valley Medical Center reside with UCHealth. While there will be Park Hospital District nominees and community nominees to a new board, in the end, UCHealth will have complete control of who sits on the board by virtue of the requirement of its consent for appointments and the power of removal retained by UCHealth.
There is even a provision in the acquisition agreements that allows UCHealth to abolish the District representatives if UCHealth rejects three successive nominations.
This reaffirms the characterization of this transaction as a sale of the hospital and not an “affiliation,” which is how this deal was sold to Park Hospital District voters.
It is also concerning that under these agreements, the elected Park Hospital District board of directors will be relegated to setting the mill levy at a level at least equal to the current level, passing most of the tax collected to the hospital, and nominating two of the seven board members to the new board. They will have no other duties.
While UCHealth commits to report its use of the tax revenues funneled to the hospital annually, it is not obligated to spend those funds as directed by the Park Hospital District, and it is possible that the funds may not be used to maintain the facilities and operations in a manner that local taxpayers prefer.
Effectively, local taxpayers will have no say. In simple terms it is taxation without representation.
As locals, are we so concerned about the hospital’s survival as a locally controlled entity that we are willing to have no control over operations or what happens with the money we contribute?
Have we sufficiently evaluated the continuation of the hospital as an independent entity in light of cuts made to improve profitability? The affiliation has clear benefits – such as administration and staffing, for employee continuing education and group benefits, for expediency of referrals within the UCHealth system – but the loss of control over what has been a local hospital for 50 years is a significant detriment.
The price UCHealth will pay through the assumption of debt is not the problem. The District’s total lack of control over hospital operations, despite devoting property tax funds that will be over twice as much annually as UCHealth ‘s capital commitment, is a significant problem.
The members of the Estes Valley community have a greater interest in operations and capital decisions than the proposed affiliation offers. Given this perspective, renegotiation of the terms at this time may be in our interest.
WHAT WASN’T SHARED
It is unfortunate that the Park Hospital District Directors kept the community in the dark about the details of this matter for months.
Hundreds—HUNDREDS—of executive session meetings were held, which excluded the stakeholders. Information has been withheld, the lack of transparency has been legion, and community dialogue with the Directors has been thwarted by moving public meetings online, requiring people to register to watch the video meetings, and not providing email addresses for the Directors so community members could directly and openly email their elected representatives.
The community was told this deal was “an affiliation,” when it is, in fact, an acquisition. When it was announced in October that a letter of intent had been signed with UCHealth two weeks earlier, the community was denied the opportunity to see the letter and to weigh in on the details.
In a jaw-dropping and head-spinning Machiavellian move, the particulars of this acquisition were revealed to the community eight months later, on May 6, 2025, the day Park Hospital District voters went to the polls to elect two new board members.
By withholding information about this deal, the Park Hospital District board members failed to treat the voters, taxpayers, and community members with the respect they deserve.
It is up to the current District Directors to accept these one-sided terms because our hair is on fire with fear and we are desperate to do the deal or to possibly attempt to renegotiate better terms. The deal is not over ’til it’s over.
While the timing does not accommodate for people who work a traditional 9-to-5 job, the Estes Valley community needs to turn out for the public meeting with the Colorado Attorney General on July 31 from 4 p.m. to 5 p.m. at the Community Center, 600 Community Dr.
To return to the imagery of the bride and groom, this is not a shotgun wedding. But when the attorney general comes to Estes, the community needs to show up and ask some hard questions. Is this a good deal? Is this a bad deal? Is this the best deal we can get? Is it the only deal we can get? Is this little more than a fire sale? And at the end of the day, the ultimate question is: is this the right deal?