Newspapers / Philanthropy Journal of North … / May 1, 1995, edition 1 / Page 19
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May 1995 Philanthropy Journal of North Carolina 19 Hospitals Continued from page 1 Tenn., a private foundation created by the sale of St. Francis Hospital to American Medical International in April 1994. AMI has since sold its assets to National Medical Enterprises. Assisi foundation offi cials would not disclose their assets. •The Hilton Head Island Foundation in South Carolina, a $22 million-asset community foundation created by the sale of Hilton Head Hospital to AMI in September 1994. •The J. Marion Sims Foundation, a $50 million-asset private founda tion created by the sale of Springs Memorial Hospital in Lancaster, S.C., to Community Health Systems Inc. in November, 1994. PRESSURE FORCES CHANGE Competition in the health-care field has put pressure on many of the nation’s 4,500 nonprofit hospitals to merge or sell in order to survive. The New York Times reports that for-profit companies bought at least 47 nonprofit hospitals in 1994, and experts expect that number to rise. Health maintenance organiza tions also have been changing to for- profit status at a rapid pace. The Chronicle of Philanthropy reports that two-thirds of the country’s HMDs are now owned by for-profit companies - up from fewer than 20 percent in 1981. The burden of competition was what led the board of Springs Memorial Hospital in Lancaster, S.C., to sell to a for-profit company last year. “We’re about 30 miles from Charlotte and 55 miles from Columbia, so we’re sitting right between two areas that attract a lot of our patients,” says James K. Davis, chairman of the board of tbe newly-formed Sims foundation - named for a renowned Lancaster- area physician. “That and the rising costs of operating a hospital, the limited amount of capital resources - all the things you need to stay competitive,” convinced the board to sell. Officials at Mercy hospitals in Charlotte say their decision to sell to the authority that runs Carolinas Medical Center was based, on the board’s assessment of how best to meet community needs. “When the Sisters began Mercy Hospital in 1906, they did it because acute care in the Charlotte area was an unmet need,” says Kim Rickwood, the hospital’s director of community relations. “That’s no longer the case. In all frankness, the Sisters are more interested in a one-on-one, grass roots level of service. Multi-million- dollar health-care [operations] are not totally consistent with their mis sion.” CHOOSING A MODEL The key issues facing nonprofit hospitals boards in the wake of sales to for-profit companies are which type of charitable organization they wish to form. Peter Dunn, program coordinator for community foundation services at the Council on Foundations in Washington, has been studying the trend. He says while most foundations formed after hospital sales stay with health issues, there are other mod els, including community foundations with broad grantmaking guidelines and supporting foundations that are connected to existing community foundations. Martin Lehfeldt, a consultant for the Atlanta-based Southeastern Council of Foundations, says boards that choose to form community foun dations must be sure they can meet a “public support test” - meaning, they can show that support comes from a broad spectrum of the community. That is precisely the route that •leaders of the Hilton Head Island Hospital opted for after the hospital was sold for $32 million to AMI in 1994. “People who looked at the situa tion and the size of the island, the amount of money available, decided that would be absolutely the best use of that money,” says John Taylor, former chairman of the hospital board and its pre-sale foundation. He now heads the board of the new for- profit hospital entity. “We are a relatively small town with a permanent population of 26,000. We have lots of needs. And there was no such foundation on the island.” While the new Hilton Head Island Foundation is still in the process of completing grant guidelines, it plans to fund a range of community needs, from the arts to health to social ser vices. The foundation board includes eight former hospital board members and 10 new member from the com munity, including local business own ers, a member of the town Planning Commission and head of the local Boys & Girls Club. In an unusual twist, the communi ty foundation used $6 million of its assets to purchase a 20 percent stake in the new for-profit Hilton Head Health System. “That was a way of keeping some local com munity involve ment in the hos pital,” says Lee Carey, chair man of the Hilton Head Island Founda tion. “It pro vides the com munity with some input into the local hospi- Lee Carey tal.” Officials at Springs Hospital in Lancaster, S.C. held a three-day retreat after the sale of their non profit hospital to discuss what shape a new foundation should take. 'The mission of the J. Marion Sims Foundation - which grew out of that retreat - is to “support programs and projects of prevention, education and therapy that enhance the heaith and wellness of the citizens of Lancaster County and the communities of Great Falls and Fort Long.” Plans for the new foundation in Charlotte still are being hammered out, but Rickwood says it will Ukely be a supporting organization for the Sisters of Mercy that will provide funds for new ministries in a number of areas, including health care. BOON OR BUST? Eugene Cochrane, head of the hospital division of the Charlotte- based Duke Endowment, says the endowment looks forward to collabo rating with new foundations in the same way it does now with the Kate B. Reynolds Charitable Trust in MTnston-Salem. 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PhilanthroTec, Inc. 10800 Independence Pointe, Suite F Matthews, NC28105 (800) 332-7832, FAX (704) 845-5528 SOFTWARE/VOLUNTEER MANAGEMENT Myers & Associates, Inc. P.O. Box 560 Dover-Foxcroft, ME 04426-0560 1-800-332-1933, Fax: (207) 564-7956 M8A-ISIS-VOLUNTEER MANAGEMENT. Tracks Tim^Eair Value Schedules, Skills Assignments. Wordprocessor/Mailmerge. Full reporting capabilities, User-Modifiable 800 helpline, first year support included TRUST SERVICES DeBerry AssocTRenaissance Adv. P.O. Box 4020 Chapel Hill, NC 27515 (919)489-6500 Charitable Trust Administration. Douglas J. Lewis, CFP 4904 Professional Court, #101 Raleigh, NC 27609 (919) 872-7000, FAX (919) 872-7004 Lewis Financial Management Charitable Trust Strategies and Wealth Presen/ation Licensed RENAISSANCE Advisor. SURVEY RESEARCH Lewis & Clark Research 6040-A Six Forks Rd, Suite 112 Raleigh, NC 27609 (919) 676-2036, FAX (919) 846-4021 Specializing in Mail Surveys Since 1982. VIDEO PRODUCTION Charlotte Public TV, WTVI 3242 Commonwealth Avenue Charlotte, NC 28205 PHONE/FAX (704) 372-2442 Award-winning video production services. New Context Video Productions 924 Chapel Hill Road Pittsboro, NC 27312 PHONE/FAX (919) 929-3058 Also radio spots and photos. Vernon Apperson Post Office Box 61056 Durham, NC 27715-1056 PHONE/FAX (919) 286-3504 Writing services "on call." 'The two foundations - among the state’s leading health-care funders - have worked together to support rural health-care programs and avoid dupUcation of efforts. “We look at these [new founda tions] in the same way as a United Way or any other entity in a commu nity,” says Vance Frye, director of the health care division at the Reynolds Trust. “Anything that we do in our statewide perspective, we have to look at what is happening in the local community.” While hospital sales have brought windfalls for philanthropy, it is less clear what they will bring to health care. In many communities, the prospect of losing a nonprofit hospi tal has raised concerns about what wili happen to the quality of health care services and the mission of pro viding care to the needy. Those worries were expressed by some residents of Hilton Head when the sale of the island’s hospital was announced last year. “The community was quite con cerned,” says Taylor, who heads the new for-profit hospital board. “We set up a series of pubhc forums and bought advertising in our local news paper to explain what we were about...I think we succeeded in even tually allaying the fears.” Rickwood of Mercy Hospital in Charlotte says the purchase of the hospital by a for-profit authority will result in increased choices for health-care consumers. “The new hospital authority, once it includes Mercy, will include four acute-care hospitals, a number of specialty hospitals and a physicians group serving not just Charlotte, but a five-to-six-county area,” she says. “It will provide exactly the opposite type of thing that people fear.” Only about 20 percent of North Carolina’s 129 Ucensed hospitals are for-profit and regulators do not expect that number to change signifi cantly. “Nonprofit hospitals in this state have very strong roots in the commu nity and are strong financially,” says Bob Fitzgerald, assistant director of the state Division of Facility Services, which Ucenses hospitals. “I would think it very unlikely in the short term that any of these facilities will be bou^t up by for-profits. ’They are just not very good targets.” Others are less definitive about the future. ‘"The health-care field in general is in a really unsettled transition period,” says Ellen MacMillan, vice president of the North Carolina Hospital Association. “I don’t think anyone wants to predict how things are going to come out.” MORE QUESTIONS Nationally, some government reg ulators and consumer advocates have questioned whether charities are getting their fair share when nonprofit health-care organizations become for-profit. For example. The Chronicle of Philanthropy reported last year on a battle between Blue Cross of California and the state over how much money should go in a charita ble foundation. Some nonprofit leaders are philo sophically opposed to the idea of changing the status of their organi zations. John Stevens, chairman of the board of Memorial Mission Medical Center in Asheville, says the hospital “would never even entertain the idea” of becoming a for-profit busi ness. “We would regard it as selling out our heritage,” he says. “The hospital is part of the fabric of our communi ty. It’s our culture.” Others say the creation of new foundations is the best way to pre serve nonprofit missions beyond the life of a single organization. “This [foundation] is more of a guarantee that we can continue to furnish good health-care to our citi zens,” says Davis of the Sims Foundation in South Carolina. “We have a lot of agencies that provide for ... our community. 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Philanthropy Journal of North Carolina (Raleigh, N.C.)
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May 1, 1995, edition 1
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