E-mail may be in violation

Document leaked details of proposed TMH $2.5M expenditure


A broadcast e-mail inadvertently sent to staff members at The Memorial Hospital did more than leak the details of a proposed $2.5 million expenditure; it also may have violated a confidentiality agreement signed by hospital board members at the onset of negotiations.

The Memorial Hospital Board of Trustees President Sue Lyster confirmed Wednesday that hospital officials are negotiating a lease agreement for a medical office building, X-ray equipment and a Magnetic Resonance Imaging machine.

A June 17 letter drafted by TMH Administrator Randy Phelps and sent to the owners of the Northwest Health Specialists on Yampa Avenue indicates the hospital's desire to lease the building and equipment with the option to own them at the end of the 20-year term.

Phelps sent an e-mail that outlined the values the board would use as starting points for negotiations. The building was given a value of $1,138,000. Lyster said that value was based on an analysis by a bank. The assessor's office values the building and property at $210,298.

The value of the 3-year-old refurbished General Electric GoldSeal MRI was estimated at $1,117,750.

Greg Barber with General Electric Health Services, estimated that the machine was worth up to $1.2 million. Another, consultant, a representative of MedTech in Denver, estimated its value at $932,500.

Barber said a new, top-of-the-line MRI would cost $1.7 million to $2 million. A new machine comparable to Northwest Health Specialist's GoldSeal would range from $1.2 million to $1.5 million, he said.

E-mail is not always considered confidential by Colorado open records laws, so even if Phelps had corresponded only with hospital board members, it might be considered a breach of the confidentiality agreement.

The Colorado Open Records Act indicates that in most cases, e-mail of a business nature between members of a public board is open to public inspection.

In the hospital's June 17 offer, Phelps proposed a lease payment of $35,575 a month for 60 months and then $8,653 for the remaining 180 months.

At the end of the 20-year-term, by that proposal, the hospital would have paid $3,692,040 for possession of the equipment and building.

"The Board of Trustees are very interested in concluding a lease agreement that would result in the hospital operating the clinic activity and derivative X-ray services and the MRI imaging program," the letter reads. "The board makes this offer in order to determine if there is any productive purpose in continuing negotiations that could ultimately result in the execution of an agreement to implement the lease-to-own arrangement."

Phelps declined to comment Wednesday.

Lyster said the document was a letter of intent and a stepping stone in the negotiation process. She said the owners of Northwest Health Specialists -- Bob and Eddie Jean Quillen, Vernon "Lop" Behrman and Richard Barnes -- have countered the original offer, and TMH has replied to the counteroffer.

Pam Young, the financial manager for Northwest Health Specialists, declined to comment on the advice of her lawyer.

Until Phelps' e-mail inadvertently was released, there had been no public discussion about the hospital's intent to lease or purchase the building and equipment, Lyster said.

She said the confidentiality agreement prevented a public announcement. Negotiations were discussed during executive sessions flagged as "contract negotiations."

Board member Gene Bryant said the board intended to make the decision public "at the right time," which would follow research by the board and contract negotiations.

It's uncertain whether past indicators of the profit-to-cost ratio of having an MRI in Craig favors the hospital's acquisition. General electric initiated collection proceedings in June of 2003 when Northwest Health Specialists was nine months late making the $22,368 monthly payment on the machine, putting the business delinquent $221,297.79.

The bill was settled three days before the case was scheduled to be heard by a judge.

Lyster said reimbursement rates are different for hospitals than private businesses and that the hospital already profits from the use of a mobile MRI machine that comes to Craig once a week.

Purchasing a new machine would not cost substantially more than what the hospital has valued the used machine, Lyster said, but there's not enough business in Moffat County for two MRI machines.

Lyster said the medical professionals who make use of the office space at Northwest Health Specialists would be allowed to continue their agreements as part of the package -- if an agreement is negotiated.

The Board of Trustees would have to approve the agreement at a public meeting, and it also would have to be approved by the Moffat County Board of Commissioners.

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