Tri-County Health exit could mean big costs later for Arapahoe, Adams

With Douglas County setting off in its own direction on public health policy but still contracting to receive all services from Tri-County Health Department, Arapahoe County's public health programs are likely to remain unaffected for now.

But after the end of 2022 — when Douglas County could end its agreement with Tri-County Health and when Adams County expects to move to a new health department structure — the costs of Arapahoe and Adams counties pulling away from Tri-County could be in the millions, according to a consulting firm studying the benefits and drawbacks of the counties' potential decisions to handle public health services alone.

“In the short term, separate, single county public health agencies would have access to less public health revenue, and perhaps services, and would incur transition costs for start-up and (the) dissolution of TCHD,” the Oct. 12 report by the Otowi Group says.

On the other hand, single-county entities “would allow counties to wholly envision a health department to be what they want and need, from the ground up,” the report adds.

Douglas County had long been contemplating leaving Tri-County Health amid a rift over the health agency's coronavirus safety orders. Douglas County's elected leaders formalized the decision to leave Tri-County in a meeting Sept. 7, opting to form its own board of health in charge of matters such as countywide public health orders. But the county decided to continue to receive all services from Tri-County, approving an agreement on Sept. 28.

Services that will continue include restaurant inspections, nutrition counseling, maternal and child health services, and disease control, among others.

Adams County's elected leaders announced that Adams will also leave Tri-County, raising the question of whether Arapahoe County no longer has the option to partner with Adams down the road.

“Douglas County's decisions left us no choice but to reevaluate the future of public health services in Adams County,” Eva Henry, an Adams County commissioner, said in the Oct. 19 news release. “As a result, Adams County must determine the best option to move ahead for a health board and services provided to residents.”

The Adams commissioners were to bring forward a resolution at an Oct. 26 public hearing to provide notice of Adams' decision to leave Tri-County, according to the news release.

“Per its legal obligation, Adams County will remain a part of TCHD through December 2022,” the news release said. “Starting January 2023, Adams County will have its own health department structure in place.”

Arapahoe County confirmed in early September that Arapahoe and Adams had been contemplating splitting away from Tri-County, driven by Douglas County's intention to leave.

Luc Hatlestad, spokesperson for Arapahoe County, had emphasized that Arapahoe's consideration of leaving Tri-County isn't because of disagreement with the health agency. Douglas County's exit would potentially create financial or budgetary problems for the other two counties, Hatlestad said in early September.

But in light of Douglas County's decision to keep receiving services from Tri-County, the question of the financial impacts of Douglas' exit appears to be pushed down the road.

“Even though Adams and Douglas have decided to leave the partnership, it will (essentially) remain in effect through the end of 2022, so all three counties should be able to access all the services we always have during that time without making any budgetary adjustments,” Hatlestad said in late October.

If Douglas stops contracting with Tri-County in 2023, there could be some kind of budgetary impact on Arapahoe, but “we have no idea what it would look like,” Hatlestad said.

The Arapahoe County commissioners released a statement Oct. 19 that said the county “will begin developing the necessary transition plans as we form our own public health department.”

Regarding the idea that Adams could ultimately choose to form a two-county health agency with Arapahoe, Hatlestad said: “We haven't heard that specifically, but given the relative costs of everything, we're staying open” to any beneficial ideas.

Asked whether Adams County is still considering whether to form a two-county health department with Arapahoe County after 2022, an Adams County spokesperson reiterated that Adams has decided to stand up its own health department starting in 2023.

“Similar to the majority of counties in Colorado, Adams County will follow the common practice of providing its own health department for its residents,” the Adams announcement said.

But Christa Bruning, the Adams County spokesperson, also signaled that Adams plans to enter into some type of partnership for public health services in the future.

“Adams County intends to contract with a local health agency for many of its public health services starting in January 2023,” Bruning said. “It's too early in the process to know who that health agency is.”

'Some funding not guaranteed'

To start their own public health agencies, Adams and Arapahoe could run into costs up to millions of dollars each, according to the consultants' report.

“TCHD has the size, breadth and depth of staff expertise, good reputation, grant writing and management capacity, and status as Colorado's largest health department that allows the agency to procure funding not generally available to other health departments in Colorado,” the report says.

Public health agencies draw upon a variety of funding sources, and public health leaders seek grant and contract funds that are related to existing and desired programs, according to the report.

Working together in a two-county “district” public health agency would potentially make Adams and Arapahoe more competitive for grants and contracts, the report says.

In the single-county scenario, costs may stack up partly because developing single public health agencies “will require adding new organizational infrastructure and customizing existing infrastructure to support the unique aspects of public health,” the report says.

One part of the report points to “additional needed” revenue of $3.6 million in Arapahoe and $2.6 million in additional need in Adams.

“Some current funding lines are not guaranteed” in the single-county scenario, the report says.

It also lists roughly $1.5 million as “an estimated loss of program funds and fees that TCHD currently receives as a district health department.”

“This is a regional loss and the amount that affects Adams County (and Arapahoe) specifically has not been calculated. These are only revenues and don't reflect any other potential losses such as current liabilities, penalties or other losses,” the report says.

Under a section labeled “other fiscal implications,” the report says the potential transition costs involved in a separation from Tri-County could be about $62 million.

“Transition costs are the reasonable costs and the expenditures, labor, and materials that would be incurred through a separation,” the report says.

The vast majority of that total — $50 million — involves an entity called the Public Employee Retirement Association, or PERA. That's the state's public-employee pension fund, a program that manages benefits for current and former public employees such as teachers, snowplow drivers, corrections officers and other government workers.

The report calls that cost the “PERA calculated penalty for dissolving TCHD,” but it adds: “It has not yet been determined if and when this amount would be due and whether there are any financial obligations if TCHD dissolves and has no remaining assets.”

'Counties will not have that reputation'

Asked whether the three counties would likely split Tri-County Health's staff among their own health agencies if they all go the single-county route, Hatlestad, the Arapahoe County spokesperson, said: “I'm sure any number of them would be appealing candidates for any of the jobs in the counties.”

He added: “If we all do single-county health departments, we're going to be competing for talent, which is one of the reasons the costs go up.”

The report says: “Some public health professionals work at Tri-County because of its size, breadth and representation — the counties will not have that reputation.”

The report notes that it relied on assumptions “to create a usable analysis” and that the document “does not include a cost-benefit analysis.”

Arapahoe County's Oct. 19 statement said: “The Arapahoe County Board of Commissioners is saddened that our neighboring counties have chosen to end the productive 55-year partnership with the Tri-County Health Department.”

“The Board intends to do what it can to support the many dedicated employees of Tri-County Health throughout this process,” the statement said.