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Because of state law, selling Memorial Hospital likely wouldn't solve the city's financial problems
As pots of gold go, Memorial Hospital System definitely would be a large one. But before people start counting the treasure and planning how to spend it, they should be aware of strings attached to selling the city-owned conglomerate to a for-profit corporation.
Under a 1998 state law, the money couldn't go to fill potholes, water the parks, bring back night and weekend bus service, or chip away at a $700 million backlog of road work, concrete repairs and stormwater projects for which the cash-strapped city has no funding.
If that's an unwelcome blast of cold water, here's another: Though you'd naturally assume there would be proceeds from a sale, it's not a given. There might not be any money left after the hospital pays off its $315 million debt, coughs up tens of millions of dollars to pull out of the Public Employees' Retirement Association, and gives six executives, if they choose to leave or are terminated, a year's severance pay. Only CEO Larry McEvoy doesn't have that "change of control" clause in case of a sale, merger or consolidation, because Memorial's future ownership wasn't a hot issue when he was hired as chief medical officer in 2007 and promoted to CEO in 2008.
Those obligations, especially the spending restriction, make City Councilor Jan Martin and some of her colleagues cool to the idea of selling the health system.
"I think it would force us to reconsider what some of the advantages would be to selling the hospital if the money was restricted in that form," she says of the 1998 law. "Most importantly, if the committee should decide they wanted to sell the hospital and a ballot measure was put in place, it would be extremely important for the public to be made aware of this."
Too much risk
In August, the city's Sustainable Funding Committee called for an analysis of whether to sell Memorial, keep it, or change how it's governed to reduce . the city's risk. Under a 1949 ordinance adopted by voters, Council could levy a property tax to plug a deficit, if necessary. City Attorney Pat Kelly says the ordinance predates and, therefore,...