A new government report circulating in Washington has found nothing seriously unseemly about not-for-profit hospital conversions, but the report has yet to be released by the agency that conducted it or the lawmaker who requested it, a vocal foe of such deals.
Skeptical leaders of the hospital industry fear that the report is being shelved until something more damning can be found.
MODERN HEALTHCARE obtained a copy of the report exclusively last week.
The report, prepared by the General Accounting Office, found in the 14 not-for-profit conversions that the agency reviewed, most of the for-profit buyers involved had overpaid for the facilities and transferred the appropriate amount of money into foundations.
The report's lone criticism is the lack of community involvement in the disposition of charitable assets historically controlled by the not-for-profit hospitals. The report recommended that such deals be subject to greater public disclosure rules.
It said "the community at large was often unaware of the pending sale and uninformed of the sale price or the structure of the transaction." The GAO concluded that "concerns about the conversion of not-for-profit hospitals . . . still exist because they are carried out essentially privately between boards of the selling hospitals and management of the purchasing for-profit companies."
Those problems might be solved by increased state oversight, according to the report. More than a dozen states over the past two years have passed legislation governing the sales of not-for-profit hospitals.
Aside from its criticism of the lack of community involvement, the report was largely inconclusive.
Other issues reviewed by the GAO involving the conversions, which occurred between 1993 and 1996, included how the hospital valued its assets, whether the hospital was sold for more or less than the valuation estimate and how much money was transferred to funds or endowments set up as part of the sale.
The GAO found that all but one of the hospitals for which a pre-sale valuation was available were sold for more than the estimated value.
In several cases, the hospital would not furnish a valuation estimate but assured the GAO that the sales price exceeded the estimate.
But several of the hospitals reviewed were not sold to the highest bidder. The GAO did not attempt to determine if the sales prices in those deals were fair.
Rep. Pete Stark (D-Calif.), an outspoken critic of not-for-profit conversions in the healthcare industry, requested the study from the GAO more than a year ago (Oct. 28, 1996, p. 16).
Sources told MODERN HEALTHCARE that Stark's office, as well as dozens of other not-for-profit hospital advocates and conversion critics, have had copies of the report for several weeks.
An aide to Stark said the report had not been released because of concerns over the data, which were being checked. The release is now scheduled for the end of the month.