Community Involvement

cartoon Each conversion represents a tremendous opportunity to preserve community assets and target them toward state or local unmet health needs. At the same time, the potential for loss of services and nonprofit dollars continues to be staggering. Despite the billions of dollars and the many health institutions that have converted, the majority of hospitals and a significant number of health plans remain nonprofit. Some of these institutions are contemplating a move to for-profit status and may be taking actions to facilitate a conversion. With so much at stake, community groups play a critical role in the conversion process. It is important that organizations and advocates are vigilant and get involved to ensure that community resources are secure in all future conversions. Local leaders and advocates can also play a role in re-examining past conversions to determine whether transactions have adequately protected the public’s interest. Community health resources may be lost forever if local organizations and advocates do not get involved.

Coalitions across the country have successfully ensured continued access to health services even as a new for-profit takes over a former nonprofit corporation. These same communities are often able to assure that nonprofit assets are preserved in a charitable foundation dedicated to promoting community health and endowed with millions, sometimes billions, of dollars. Other communities have successfully changed the course of a conversion, either stopping it entirely or ensuring that a nonprofit bidder is awarded the sale. Public participation can help ensure the likelihood that a nonprofit conversion is fair and that it serves the public interest.

There are four key elements to community participation:

Timely public disclosure of the conversion proposal, including transaction agreements and valuations;
Public hearings to explain the conversion and respond to questions and concerns from members of the community;
Public scrutiny to alert regulators to new and possibly better methods for properly valuating nonprofit charitable assets and distributing assets
Public input informing the structure, purpose, governance, and community accountability of a conversion foundation.

Not in the Public Interest: Insurance Commissioners in Washington and Alaska Reject Premera Blue Cross’s Proposal, Costing Too Much, Offering Too Little (PDF). This document tells the story of the proposed conversion of Premera Blue Cross. It demonstrates the positive impacts that a careful, thorough regulator and committed consumer coalition can have in protecting the public interest during the conversion process.

Issues Raised When a Nonprofit Hospital or Health Insurer Proposes to Convert to For-Profit Status (PDF). Here is a handy one-pager detailing the important issues that arise around proposed conversion transactions. All of theses issues are explained in greater detail, throughout this site.

Recommendations for Community Involvement

Explore the links below to learn about the many different ways that community members can participate in a conversion, in order to help guide the best outcome.

Community Involvement	What you can do…
Identifying Allies	Organize local groups to identify and set priorities for the community’s highest needs related to the mission of the nonprofit. Hold workshops for the public, community organizations, and community leaders to explain the opportunities and process for engaging in a conversion transaction.
The Regulators Perspective	Meet with the regulator to learn how s/he intends to handle the conversion, what her/his process will be, what opportunities will exist for community participation, what the time frame will be, etc.
Public Disclosure	Research and learn more about the local nonprofit proposing conversion. Demand access to conversion-related documents.
Formal Participation and Funding	Try to become a formal party to any administrative or court proceedings. File position papers with the Attorney General and demand that these documents be considered part of the public record of the conversion.
Public Hearings	Request and participate in public hearings.
Using the Media	Inform regulators of community concerns through meetings, letters, and communication with the media.
Gathering Information about the Conversion	Gather information about the Parties, Articles and Bylaws, Fair Market Value, Competition, Private Inurement and Benefit and Health Impact that may result from the conversion.
Specific Considerations for Hospitals	Property Restrictions, Fair Market Value, Charity Care, Service Guarantees, Capital Improvements
Preserving Assets	Make sure the sale proceeds are properly distributed and preserved for charitable purposes in the nonprofit sector, with community input and needs in mind, particularly the needs of vulnerable and underserved populations.
After the Conversion	Stay engaged. Community should provide oversight of the new health entity. Advocate for a formal role for community members in the ongoing work of the nonprofit foundation.