A room in Lansing (Mich.) General Hospital's cancer center is dedicated to the memory of a former president of a local community organization. It's the kind of gesture hospitals typically extend to big donors.
Now, Lansing General is preparing to shut down its cancer unit and move it across town to Ingham Medical Center, a fellow system hospital. Consolidating cancer care and other acute-care services at Ingham may generate savings over time, but it leaves the $7,000 tribute at Lansing General in limbo.
When hospitals merge or consolidate, they run the risk of upsetting carefully cultivated relationships with donors and jeopardizing an important and inexpensive income source.
Fund-raisers are getting stuck in the thick of it. As conduits to the community, they must respect donors' wishes.
"What we're there for is to make sure when a person gives money, we're honoring what they gave it for," said Charles R. Hillary, president of Michigan Capital Healthcare Foundation, the hospital system's philanthropic arm. The foundation was created from scratch last year, consolidating the two hospitals' separate development activities. Lansing General and Ingham merged in January 1993 to create Michigan Capital Healthcare.
Hillary said he'll make good on the memorial room at Lansing General by dedicating another room at the other campus.
As a regular lecturer on healthcare philanthropy, Hillary speaks to a lot of development professionals whose hospitals merged without giving prior consideration to the impact on fund raising.
"A lot of decisions are made (by hospital administrators and boards of directors) and the fund-raisers are never asked, `What do you think about what we're doing? How is it going to affect our donor base?'*" he said.
Since hospitals have their own boards of directors involved in merger discussions, foundation board members often are overlooked and excluded from those negotiations, development experts said. For employees and physicians who are frustrated or upset by the effects of a merger, "the foundation can become a way of striking back at the hospital," Hillary noted. Those who've contributed to hospital campaigns in the past may decide to withhold future gifts.
The Lansing deal has generated some resentment over department mergers and physicians on the two campuses coming together, Hillary said. "Sure, I have doctors who say, `I'm not giving another cent," he said.
Healthcare mergers and network development pose "incredible implications in terms of donor understanding, donor concerns and relationship-building," said Suzanne Ryan Curran, a vice chairwoman of the Association for Healthcare Philanthropy and vice president of Memorial Foundation, the fund-raising arm of Memorial Healthcare System in Houston. To educate the community, development officers may use any number of approaches-from newsletters to one-on-one meetings, Curran said.
Satisfying skittish and dissatisfied donors is one part of a difficult balancing act. Increasing charitable giving to offset dwindling profits is another.
Healthcare recruiters said development professionals are under intensifying pressure to raise greater amounts of money. Quite a few aren't meeting their CEOs' expectations and are being driven out to look for new jobs after just two to three years, headhunters said.
One recruiter, who asked not to be identified, told MODERN HEALTHCARE about a healthcare foundation president in Southern California who accepted a position at a nonhealthcare community foundation rather than attempt to satisfy the unrealistic expectations of the system's president. The foundation executive had pulled a whopping $22 million into the foundation but was expected to double that amount in a single year.
There are some 30 to 40 major openings in healthcare development right now, said John S. Lloyd, vice chairman of Witt/Kieffer, Ford, Hadelman & Lloyd in Oak Brook, Ill. Selecting the right candidate can take a year or more because of heightened expectations, especially in merger situations, he said.
"It's taking a very different type of development officer to steer those waters," Lloyd said. They need people who can lead the foundation through a mission redefinition process and manage larger staffs, he said.
Educating the community.
Community education materials are just beginning to be developed to explain the impact of the pending merger of Riverside Methodist Hospitals and Grant Medical Center, two Columbus, Ohio, hospitals located five minutes apart. As part of the merger, a single foundation will be created.
Communicating to donors is "one of the biggest issues for us," said Dennis Stefanacci, president of Riverside Methodist Hospitals Foundation. "We want to be able to alleviate any fears the donors have," he said.
Because of the economies of scale created, the hospitals' combined pool of cash will drive down the cost of investment management and attract top money managers who can leverage the funds to generate larger returns, Stefanacci said. No estimates of the savings have been determined yet.
In addition, by pooling the two hospitals' fund-raising staffs, at least one duplicative position will be eliminated, saving $50,000 to $60,000 a year, he said.
But Stefanacci also believes the new foundation will be able to raise more money as a single entity than the hospitals did separately. Instead of competing with each other for corporate grants and gifts, the hospitals will be able to present a unified front, he said.
"I think eventually that's absolutely true," Hillary said, "but I think there's a long period (of adjustment) for some hospitals." Combined giving to Michigan's Lansing General and Ingham Medical Center has declined by $500,000, a 20% reduction, he admitted. Hillary thinks the foundation can restore giving to pre-merger levels and eventually increase the total, but it will take time.