February 11, 1999 | Read Time: 1 minute
The Arlington Health Foundation, a non-profit grant-making organization in northern Virginia, and Columbia/HCA, a major for-profit hospital chain, have decided to end their formal partnership.
Both sides blamed delays by the Internal Revenue Service for the partnership’s demise. When the two joined forces in 1996 under the name of Columbia Arlington Healthcare System, LLC, a for-profit company, the Arlington Health Foundation wrote to the I.R.S. for assurances that it could keep its charity status while owning a 50-per-cent stake in the partnership. But after more than two years without a response from the revenue service, the charity has decided to end the deal rather than risk an adverse ruling.
Other non-profit health groups have faced similar situations. The I.R.S. postponed making any decisions on specific joint ventures while it sorted out its policy on such deals. Last spring, the service issued its first detailed ruling on hospital joint ventures (The Chronicle, March 26, 1998). In that ruling, the I.R.S. said a charity must maintain control of the assets it turns over to a joint partnership — a test that some observers have predicted will be difficult for many existing joint ventures to pass.
Despite ending their joint venture, Arlington Health Foundation and Columbia officials plan to continue to find ways to work together. Meanwhile, each side will resume control of the hospitals it had originally overseen. Neither organization would say how much money, if any, would be exchanged as part of the dismantling of the partnership.
