What are not-for-profit hospitals trying to hide in their deals with for-profit buyers? Plenty, according to the Ohio attorney general's office.
Since October 1995 the office has scrutinized nine not-for-profit hospital conversions. In at least six cases, it threatened to go to court to block the deal if the terms weren't changed. Currently, Attorney General Betty Montgomery's staff is pushing for legislation to give it formal approval power and require public disclosure of the terms.
Craig Mayton, chief of the attorney general's charitable foundations section, provided Outliers with a list of unscrupulous practices by not-for-profit hospitals and their for-profit suitors in his state. Mayton said current law bars him from identifying the offenders.
Mayton's staff found:
A for-profit purchaser attempted to channel proceeds back to itself by requiring the charitable foundation to pay an ongoing fee to the for-profit.
An investment banking firm hired by a hospital conducted the valuation of the hospital's assets. The firm has an incentive to undervalue because it gets paid if the assets are sold.
A for-profit imposed geographic restrictions on a charitable foundation's grants.
Improper inducements were made to not-for-profit trustees.
Gross undervaluation of charitable assets.
A hospital failed to perform any valuation of charitable assets before signing a contract to sell.
A charitable organization refused to provide the attorney general's office with any relevant information.
A hospital's financial projections were lowered for the purpose of a sale.
Collection of accounts receivable were delayed past the closing date to lower a hospital's valuation.
A hospital's business operations were negatively described in valuations while glowingly described elsewhere.
Philing in the numbers.Less than a week after he threatened to stop all White House nominations for HHS posts, Sen. Phil Gramm (R-Texas) got the numbers he wanted.
Gramm had told HCFA Administrator Bruce Vladeck, "I'm going to make your life miserable" unless the Clinton administration furnished him with 10-year projections of the cost and savings for Medicare-related items in the administration's fiscal 1998 budget (March 17, p. 40).
The White House Office of Management and Budget decided to avoid a showdown and supplied the numbers to Gramm.
A spokesman for the OMB said officials never intended to withhold the estimates, and an aide to Gramm said the senator was satisfied the issue was settled.
Back to the future.The name "Sutter" may become healthcare's version of "Coke Classic."
Sutter/CHS was the name given to the organization created by the merger of Sacramento, Calif.-based Sutter Health and San Francisco-based California Healthcare System last year. But the name was changed back to Sutter Health earlier this month. Sutter's pre-merger logo of a medical cross with river-like grooves running through its center was restored.
"At the time of our merger we wanted to send a message that two health networks had come together. The name Sutter/CHS enabled us to accomplish that short-term objective," said Sutter Chief Executive Officer and President Van Johnson.
System spokesman Bill Gleeson said an internal team of marketing and communications officials had studied the name issue for five months before deciding that shortening it was the best option. Initial suggestions to use a new name were rejected. "A lot of equity had been built into the Sutter name," Gleeson said.
Conversely, few consumers showed awareness of the CHS portion of the name, one of the reasons Gleeson said it was dropped. "Health" was added to convey the "nature of (Sutter's) service-health-in a permanent, formal name," Johnson said.
As for the changeover's cost, Gleeson said it would run only into the "thousands of dollars," mainly because of the changing of business cards and letterheads for system employees. "Most of our affiliated hospitals already had just the Sutter name," Gleeson said.
It's certainly a lot cheaper than Coke's switchback after it dumped the old formula for new.
Hail to the Outpatient in Chief.Apria Healthcare Group, a leading home-care provider, was able to boast last week about caring for the nation's First Patient.
The Costa Mesa, Calif.-based company said its branch office in Beltsville, Md., had been called to duty as the supplier of home medical equipment for President Clinton to use while recovering from his recent knee surgery.
Apria said discharge planners at the National Naval Medical Center in Bethesda, Md., enlisted the company's services upon Clinton's return to the White House last week. Apria said it outfitted Clinton with several pairs of crutches, a folding walker and a reclining wheelchair complete with leg rest. A physical therapist from the medical center's staff also followed Clinton home.
Clinton has apparently taken advantage of his new outpatient services. "He's not doing wheelies, but he's getting pretty good at moving around," said White House spokesman Michael McCurry.
Clinton, described by aides as being in good spirits, told McCurry he woke up sore from his first physical therapy session. The therapy includes lessons on using those crutches.