Memorial Hospital’s lease paid off in a new way this year.

The hospital system shared about $1.3 million of its revenue with Colorado Springs on Wednesday, signaling Memorial’s improved financial footing amid expanded Medicaid reimbursements and increased patient visits, admissions and surgeries.

“As you can imagine, there’s been a lot of work over the last few years to improve Memorial,” said Dan Rieber, the hospital’s chief financial officer.

Wednesday’s one-time payment adds to the $5.6 million that University of Colorado Health agreed to pay annually when it began leasing the city-owned hospital in October 2012.

All of that revenue – including the bonus payment – will go directly to the Colorado Springs Health Foundation, which grants money for public health initiatives across El Paso and Teller counties. The foundation was created to receive all revenues from Memorial’s lease, and it plans to begin granting money in 2016.

“We’re thrilled for the community,” said Cari Davis, the foundation’s executive director. “Both because this payment means that Memorial is doing well, and that the benefits of that performance will come back to the citizens of the community through our foundation.

The extra payment happens whenever the Memorial Hospital system – which includes Memorial Hospital Central, Memorial Hospital North and its affiliated physician practices – meets certain financial benchmarks, Rieber said.

Specifically, Memorial Hospital’s earnings before interest, taxes, depreciation and amortization must exceed 8 percent. The city then receives 5 percent of whatever is earned above that mark.

More bonus payments could be made in future years if Memorial Hospital continues performing above that level.

In a statement, George Hayes, Memorial’s president and chief executive, said the increased revenues and resulting bonus payment show the hospital was committed to “significant changes” under UCHealth.

Fall rates have dropped significantly, as have infections and pressure ulcers, said Dr. Patrick Faricy, Memorial’s chief medical officer. It also has restructured Memorial Hospital Central’s emergency room, allowing patients to see doctors within an average of eight minutes, he said.

“We’re trying to improve the patient experience,” Faricy said.

The payment also highlighted Memorial Hospital’s swift financial turnaround after years of deep financial losses.

The hospital routinely lost money before Colorado Springs voters overwhelmingly approved the hospital’s 40-year lease to UCHealth.

It lost another $42 million in the two fiscal years leading up to June 30, 2014, and it expected to lose money again during the July 1, 2014 through June 30 fiscal year, said Hayes, citing unaudited figures during an interview with The Gazette in late September.

But outpatient visits grew 8 percent, emergency department visits grew 1.7 percent and inpatient surgeries grew 6.3 percent, he said.

And rather than lose money, the hospital posted a $53.6-million profit last fiscal year, he said.

It remained unclear Wednesday whether those figures – the only ones released detailing Memorial Hospital’s finances – were comparable to the measurement affecting the lease’s revenue-sharing clause.

Rieber declined to provide additional patient figures or audited financial statements to The Gazette until City Council views them at an upcoming meeting.

He said Colorado’s decision to expand Medicaid – the federally funded, state-run health insurance program for low-income residents – partly drove the financial turnaround.

The program expanded in 2014 under the Affordable Care Act, or Obamacare, and it offers free health coverage to Coloradans earning up to 138 percent of the federal poverty level. That equates to annual incomes of roughly $16,200 for a single person and $33,500 for a family of four.

Before the expansion, usually only women and children were eligible for such coverage. Impoverished people were treated on the hospital’s dime – leaving Memorial on the hook for millions of dollars in uncompensated care.

Rieber added that other savings came from consolidating administrative services with UCHealth. And Memorial has received better rates while renegotiating contracts with many companies serving the hospital by leveraging its ties to UCHealth, he said.