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Weld County, Banner Health and NCMC Inc. announce landmark agreement

Posted on 08/01/2019
Weld County, Banner Health and NCMC Inc. announce landmark agreement

Weld County has been involved in or owned hospital operations since 1904, but that will change under a deal intended to provide new ways to support health care and education for residents.

The Weld County Board of Commissioners plans to officially divest itself of the land and assets associated with North Colorado Medical Center to Banner Health, which has operated the hospital since 1995.

The Colorado attorney general must sign off, but Weld County and hospital officials are optimistic about receiving approval, because the transaction provides new avenues for charitable support countywide.

The sale of the hospital and related assets by the county to Banner Health will allow the parties to retire existing real estate leases and will allow NCMC Inc. to fully retire the outstanding bank and bond debt against the assets. Net proceeds from the transaction will fund an endowment for ongoing support of both health and education in Weld County.

NCMC Inc. will receive a portion of the sale proceeds, because it owns outright some of the land and assets Banner is buying. Those proceeds will expand funds available to NCMC Inc. to bolster its philanthropic efforts to benefit Weld County’s most vulnerable.

Weld County Government will also receive a portion of the sale proceeds.

“The commissioners are determined to use the proceeds in a manner that benefits our residents for years to come,” said Barbara Kirkmeyer, chair of the Weld County Board of Commissioners. “We are grateful to all of those who worked over the decades to make this hospital a jewel in northern Colorado.”

Specifically, the commissioners will use the proceeds to invest in the Bright Futures program to help Weld County students go to college or take vocational training to ensure a workforce for the county.

“We are proud to be able to use the funds from this sale to create and support beneficial programs for Weld County residents,” said Commissioner Sean Conway, who serves as the commissioners’ liaison to the NCMC Board of Trustees.

In 1983, commissioners transferred the management of the hospital to NCMC Inc. In 1995, NCMC Inc. entered into an operating agreement with Lutheran Health Systems, which became Banner Health four years later. The county and Banner Health have enjoyed a long-standing relationship. This transaction allows Banner to now own the hospital assets and its business operations, providing for greater flexibility into the future for delivering health care to Weld County residents.

“Weld County and NCMC Inc. have been exceptional stewards of the people’s health care assets,” said Margo Karsten, CEO of Banner Health in Northern Colorado and president of the system’s Western region. “With support from these two organizations, Banner has and will continue to provide excellent, compassionate care for generations of Weld County residents.”

Banner Health will pay $328.4 million for land, assets and equipment, a large portion of which will be used to pay off $209.5 million in existing hospital debt. The purchase includes not only North Colorado Medical Center land and buildings but also urgent care, emergency room and clinic buildings throughout Weld County.

After the sale, Banner will continue its commitment to support those who are uninsured or underinsured. In 2018, Banner provided $34.3 million in uncompensated care to people who were unable to pay. NCMC Inc. will also continue to provide support for Banner’s charity care endeavors.

At NCMC, Banner has created a nationally-recognized heart program, a regional burn center, an advanced neonatal intensive care unit, the Banner MD Anderson Cancer Center and an innovative local health care network.

“We are thrilled that we will be able to provide significant grants to health and educational nonprofits in Weld County,” said Tom Grant, chair and president of NCMC Inc.

The remaining sale proceeds will go to NCMC Inc. and Weld County. NCMC Inc. is expected to receive $59.5 million and when paired with their existing operating cash, NCMC Inc. will have approximately $300 million to form a new philanthropic foundation that will serve residents of Weld County by promoting health and education countywide. This foundation will be the new duty and function of the NCMC Inc. Board.

Finally, an estimated $59.4 million in proceeds will be invested in an endowment in the foundation and earmarked for the Weld County Commissioners to select the program or programs the earnings will be directed to within the county. Initially, the County Commissioners are directing all of the earnings of the $59.4 million endowment to the Bright Futures program, generating approximately $2.5 million a year for Weld County students to pursue continuing education opportunities and ensure a workforce for the county.


Additional comments from the Weld County Commissioners:

Commissioner Pro Tem Mike Freeman
"The ability to establish a viable philanthropic foundation for the benefit of all Weld County residents was an important part of this agreement," said Commissioner Pro Tem Mike Freeman. “And being able to put significant financial support toward the Bright Futures program is truly the icing on the cake.”

Commissioner Scott James
“This sale is not only good for the county and its residents but also for community health-care providers,” said Commissioner Scott James.

Commissioner Steve Moreno
“This is a smart move for the county,” said Commissioner Steve Moreno. “It ends county involvement and puts hospital operations in hands of health-care professionals.”


For questions, please contact:
• Weld County: Jennifer Finch, jfinch@weldgov.com, 970-400-4232
• Banner Health: Sara Quale, sara.quale@bannerhealth.com, 970-810-6133
• NCMC Inc.: Tom Grant, tgrant@grantandhoffmanlaw.com, 970-356-5666

Images, including the timeline graphic below, are available at: https://weldcounty.sharefile.com/d-sbf6de20acde447f9


FAQs
What is the sale price of the hospital?
NCMC Inc. paid for a valuation, and the sale price of $328.4 million was agreed upon by all parties involved

Is the hospital sale a done deal?
While all parties have agreed to the hospital sale, the Colorado state attorney general will review the details of the agreement within a 60-day review period before the sale is considered complete.

How will the sale proceeds be distributed?

$209.5 million will go toward the bond debt held by Colorado Health Facilities Authority.

Of the remaining $118.9 million in sale proceeds, $59.5 million will go to NCMC Inc. and when paired with their existing operating cash, NCMC Inc. will have approximately $300 million to form a new philanthropic foundation that will serve residents of Weld County by promoting health and education countywide. This foundation will be the new duty and function of the NCMC Inc. Board.

Finally, $59.4 million in proceeds will be invested in an endowment in the foundation and earmarked for the Weld County Commissioners to select the program or programs the earnings will be directed to within the county. Initially the County Commissioners are directing all of the earnings of the $59.4 million endowment to the Bright Futures program, which will generate approximately $2.5 million a year for Weld County students to pursue continuing education opportunities and ensure a workforce for the county.

Why is the county selling the hospital now?
For 115 years, Weld County Government has had some involvement with the local hospital system in Weld County. Over time, private hospital models have been established and county government no longer plays a crucial role in the local hospital system. It makes the best sense for the county and county taxpayers that county government get out of the “landlord” business with the hospital. The timing was such that Banner wanted to purchase the hospital and by doing so wholly own the facility.

How was the decision made to use the proceeds?
Members of the Weld County commissioners and the NCMC Inc. board all agreed the hospital was a Weld County community asset and the sale proceeds should be used to benefit Weld County residents.

What will NCMC Inc.s’ role be if the sale is approved?
NCMC Inc. will become a philanthropic organization aimed at funding targeted initiatives in health and education.

Does NCMC Inc. currently give out money?
Yes, there is a long list of nonprofit groups to which NCMC Inc. gives money. The sale will allow the organization to expand its role in helping Weld County residents.

Why was the Bright Futures program chosen to receive earnings from the endowment?
The Weld County Board of Commissioners originally started the Bright Futures program in 2015 and although management of the program has been handed to Upstate Colorado, the board is still very much committed to seeing the program succeed. Created as a workforce development program, Bright Futures was an obvious choice for the board as the recipient of the funds at this time, which will be used to financially support the program and our residents.

Will the Hospital Board of Trustees (appointed by the Weld County commissioners) be disbanded?

Yes. This board will have served its duties and responsibilities and will disband upon completion of the hospital sale.

Are there other examples of the county transferring or selling assets to non-profits in the community?
Yes. The Weld County Board of Commissioners is always considering what is in the best interest of the residents of Weld County. There are numerous examples of successful community organizations, originally created by the board and then transferred to non-profits, that continue to serve the needs of Weld County residents.

• Weld Mental Health is now North Front Range Behavioral Health

• Regional Visiting Nurses Program, once under the health department, is now done by private companies

• The United Way of Weld County building was originally purchased and remodeled by the county through a community block grant, then sold to the local United Way organization

Timeline
Timeline Graphic