Hospital slams bribery accusations |

Hospital slams bribery accusations

Jennifer Davoren
Aspen Times Staff Writer

Aspen Valley Hospital did not resort to bribery as it sought annexation into the city, hospital officials said Tuesday, denying accusations that an offer of discounted health services to city employees is unethical.

The issue of employee discounts – addressed recently in the editorial pages of local newspapers and in a meeting of the Pitkin County commissioners Tuesday – was raised last week as the city’s annexation agreement with the hospital was finalized. The agreement, approved by the Aspen City Council in a 4-1 vote, calls for a combination of benefits for the city, including a 15 percent health care discount for all city workers.

The hospital, in return, is absorbed into the city’s jurisdiction. Some believe the hospital, which is about to begin a multimillion-dollar renovation and expansion, will have an easier land-use review in the city.

In their Tuesday meeting, the county commissioners called for a conference with hospital heads in an effort to better understand certain elements of the agreement – the discounts, in particular.

“To me, the question is fairness to the general public,” Commissioner Jack Hatfield said in a separate interview. “Bottom line, [the discount] means the rest of the users will have to pick up the city’s share. I think it’s patently unfair, and needs to be addressed immediately and changed.”

Hospital officials, however, say rumors of bribery and increased costs are unfounded.

John Sarpa, president of the Aspen Valley Hospital board of directors, took particular offense with a recent editorial in The Aspen Times.

“It said we bribed somebody and conducted unethical behavior. I can’t think of a more egregious accusation you could make,” Sarpa said. “We’re not just another outfit – we’re the health care provider. We take that very, very seriously.”

Allegations that the city acted improperly by accepting the discounts are also unfair, Sarpa said.

“The city has not only the right, but the responsibility to make sure that the impacts of annexation are offset to the best of its ability,” he said. “It’s absolutely appropriate for the city to say, `OK, if we bring this hospital into our jurisdiction, what are its impacts?’ That can be lots of things, and that certainly includes money.

“Yes, we were paying to be annexed – we were paying part of the costs,” Sarpa said.

The cost of annexation for the city – the city estimates $80,000 to $100,000 each year over the next decade, while the hospital puts the number closer to $30,000 – requires compensation, which translates into added benefits. For example, the hospital has offered the city $100,000 for improvements on Castle Creek Road, which was annexed with the hospital.

Hospital and city staff spent months hashing out additional benefits, including the employee discount, Sarpa said. The city, which already had a 5 percent discount for employees before the annexation process began, was looking for a higher number.

“They wanted a much larger discount,” between 20 and 30 percent, Sarpa said.

“That was really the stumbling block for months. They wanted more than we wanted to give,” he said.

The two agencies never agreed on a final number, and City Manager Steve Barwick declined to recommend the annexation based on the projected cost to the city. However, hospital officials weren’t ready to offer a larger discount than the one they gave its biggest local client.

“We have, as any business does, a list of cash flows and clients that are our biggest customers,” Sarpa said, but declined to name them for proprietary reasons. “Not surprisingly, as a good business, we like to encourage those large customer bases to use our facility instead of Valley View [Hospital in Glenwood Springs]. It’s a competitive business, so, being good business people, we provide incentives to our largest clients to use our facility.”

These discounts do not translate into higher costs for regular hospital users, Sarpa said.

“It actually is a benefit to the citizens of Aspen and the city of Aspen, not the employees of Aspen,” he said. “We, the citizens, pay the entire budget of the city of Aspen. The city of Aspen has a health care plan, an insurance plan, and it has to pay for that … When we can reduce the cost of insurance to the city, then we’re saving all taxpayers money. It’s just that straight forward.”

“The employee is getting zero benefit – their deductible is not going to change one iota. All the benefit goes to the taxpayer,” added AVH board member John Jellinek.

Barwick estimated the city provides the hospital with $91,000 in revenue per year, compared to the $40 million AVH generates annually. Adding the 15 percent discount on each bill would amount to more than $13,000 per year, affecting less than 1 percent of the hospital’s total revenue.

Those not employed by the city would see “zero” change to their health care rates, Barwick said, but the hospital could eventually benefit. Only half of the city’s employees actually use Aspen Valley Hospital for their needs, he said, and a discount could earn their business – and additional revenue for the hospital, as well.

Hospital CEO Randy Middlebrook sits in on negotiations between the hospital and various employers and insurance providers. The process allows all entities to benefit, he said.

“We hope to be getting what we call `steerage,’ meaning they will funnel patients our way rather than the next provider,” Middlebrook said. “If we can offer a bigger discount for greater volumes, we’re, in effect, putting money in the pocket of the consumer.”

[Jennifer Davoren’s e-mail address is]

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