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FOR QUALITY HEALTH CARE 3741 Stocker Street, Suite 208, Los Angeles, CA 90008 Phone: (323)295-9372 Fax: (323) 295-9467 |
1535 Mission Street, San Francisco, CA 94103 Phone: (415) 431-6747 Fax: (415) 431-0906 |
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Press Release January 24, 2000 |
Contact: |
LOS ANGELES, CA - Consumers Union and the Los Angeles Coalition for Quality Health Care applauded the decision of Attorney General Bill Lockyer today to oppose efforts by QueensCare Foundation to modify the terms of its charitable trust. QueensCare has petitioned the Los Angeles Superior Court to allow it to contract with Queen of Angels/Tenet Hospital, the for-profit hospital created by the sale and conversion of the nonprofit Queen of Angels/Hollywood Presbyterian Medical Center in 1998. Lockyer initially gave his support to the request in October, but began to reconsider his position when community groups expressed concerns about it.
"We are pleased that the Attorney General has come out against the QueensCare petition," said Laurie Sobel, a staff attorney with Consumers Union's West Coast Regional office. "We remain concerned that QueensCare is not meeting its current obligations as a charitable trust and believe the proposed change would not be in the best interests of the community."
When a non-profit hospital converts or is sold to a for-profit, the law requires that the sale proceeds (which should equal the full fair market value of the assets of the non-profit less the retired debt) must be returned to the local community that created them. This is accomplished by the non-profit's transfer of all of its assets to another charitable organization, usually a new or pre-existing foundation. These assets must be used in a manner consistent with both the non-profit's mission and historical uses of its assets. When Queen of Angels/Hollywood Presbyterian Medical Center was sold to the for-profit Tenet Healthcare Corporation, it created the QueensCare Foundation, using the charitable assets in excess of $263 million that had been built up by the hospital during its years as a non-profit.
Under the terms of the original sales agreement, the QueensCare Foundation is prohibited from giving grants to and contracting with certain for-profit hospitals, such as Tenet Healthcare. The community is concerned that such grant making or contracting authority could result in the nonprofit foundation subsidizing Tenet's independent charity care obligations under the sales agreement. The groups are also concerned that eliminating this restriction would also limit consumer choice, and create potential conflicts of interest between QueensCare and Tenet Healthcare.
Over the last few months, the Attorney General's Office investigated these concerns and initiated an effort to provide for public comment on the issue by organizing a meeting attended by representatives from community groups, QueensCare, Tenet Health Systems, and the offices of City Councilmember Jackie Goldberg, Assemblymember Scott Wildman, and LA County Board of Supervisor Zev Yaroslavsky. When it became clear that an impasse had been reached, the community groups, including Consumers Union, Community Health Councils, Inc., SEIU Local 399, and Latino Coalition for A Healthy California, urged the Superior Court to deny QueensCare's petition and called on the Attorney General to reconsider his position.
"We support efforts to increase access to health care through the effective use of the foundation's resources," said Carolina Briones of Service Employees International Union Local 399. "But we believe that QueensCare should make better use of available non-profit health care providers in the area instead of contracting solely with Queen of Angels."
The sales agreement that led to the creation of QueensCare set forth a number of conditions that have yet to be met by the Foundation. For example, in FY 1999, QueensCare only spent 13.2% of its Inpatient Fund spending obligation ($667,000 expenditure versus a spending obligation of $5.05 million). Additionally, it only met 6% of its spending obligation in the Transportation category and completely failed to meet its spending obligation in the AIDS Services category (spending $0 of its $100,000 spending obligation).
"Given the large number of uninsured residents within QueensCare's service area, its failure to meet its Inpatient Fund spending obligation is particularly troubling," said Lark Galloway-Gilliam, Executive Director of Community Health Councils, Inc. "We don't believe QueensCare has made the case that contracting with Queen of Angels will further this important goal."
The community groups are also concerned about the lack of public scrutiny under which QueensCare has operated. This lack of public involvement was reflected by the fact that community groups learned about QueensCare's petition by happenstance and some groups did not receive a copy of the document until December 14, 1999, despite the fact that it was filed with the Superior Court on October 5, 1999. As a result, the groups have urged the Attorney General to institute a community review process for any future modification request.
"The public must be involved in any process that affects QueensCare's mission," said Julio Mateo, Jr. of the Latino Coalition for a Healthy California. "A meaningful and fair process hinges on timely notice to the community of the proposed changes, the release of documents, and the scheduling of a community forum at a time when participation can be maximized. QueensCare has done none of this, even though there is ample precedent for them doing so."
Finally, the groups have called on Lockyer to begin a fact finding process and an independent audit to assess such important issues as:
· Why the full annual allocation is not being spent by the foundation;
· How to eliminate the obstacles to full expenditure of the annual funds;
· What is the fiscal relationship between QueensCare's Franciscan Clinics' ongoing contractual commitment with funders such as the County of Los Angeles under the Public/Private Partnership Program and the foundation's support;
· What criteria was used for selecting QueensCare's board members, including areas of expertise and residence within the ten zip code area directly served by QueensCare; and
· Whether there are there any meaningful provisions in the current charitable trust to ensure that there will not be even an appearance of a conflict of interest between the boards and staff of QueensCare and Queen of Angels-Hollywood Presbyterian Medical Center.
Consumers Union, publisher of Consumer Reports, is an independent, nonprofit testing and information organization, serving only the consumer. We are a comprehensive source of unbiased advice about products and services, personal finance, health, nutrition, and other consumer concerns. Since 1936, our mission has been to test products, inform the public, and protect consumers.
