December 14, 2000 | Read Time: 2 minutes
By DEBRA E. BLUM
Foundations that are formed when nonprofit hospitals and other health-care providers convert to for-profit status are “the products of a deal with the devil,” according to The Nation magazine (December 18).
While many foundations have spent millions of dollars to improve health care, it says, many others have improperly diverted funds from health causes, contributing to a decline in the quality of medical care.
At least 134 conversion foundations exist, with assets topping $15-billion, and more are on the way.
Federal and state laws require proceeds from the sale or transfer of institutions that undergo such conversions to be used for charitable purposes, usually relating to the original charity’s mission. But a close examination by the magazine of six conversion foundations revealed that money is often given to programs and causes that don’t appear even remotely related to health care.
In addition, the magazine found foundation governing boards stacked with officials from the newly converted hospitals; lavish spending by trustees on meetings, offices, and their own compensation; and grants to for-profit corporate health-care companies and consultants.
As an example, the magazine cites the Arlington Hospital Foundation, which was created in 1996 when Columbia-HCA — a for-profit hospital company now called HCA-Healthcare Company — merged with Arlington Hospital, a nonprofit institution in northern Virginia. The foundation made its largest grant — $25-million — to a for-profit health-care system to build a new for-profit hospital in nearby Springfield, Va. The Arlington Hospital Foundation no longer exists because the hospital merger was dissolved under what The Nation calls “the threat that the I.R.S. would start taxing the foundation’s profits from its for-profit partnership.”
The article says regulators are doing little to rein in conversion foundations. State and federal officials have made little effort to oversee the foundations, it says, and philanthropy officials, worried about more scrutiny of charities overall, have kept silent. In addition, the article says, civic leaders “dazzled by the infusion of grants won’t criticize improprieties at the new foundations because that would mean alienating potential supporters” of causes in their cities.
The article is available online at http://www.thenation.com.
