Putting together a merger between a Roman Catholic hospital and a secular hospital is tough, and it just got a little tougher because of actions by two diametrically opposed interest groups. One group wants reproductive services preserved at the secular hospital, and the other wants to make it harder for those services to remain.
A women's legal advocacy group is distributing a how-to guide to help communities use charitable-assets laws to challenge mergers between Catholic and non-Catholic hospitals when those mergers threaten women's reproductive services.
The National Women's Law Center in Washington published the report last month, timely because U.S. Catholic bishops recently took action to tighten church rules on deals between Catholic and non-Catholic hospitals.
The National Conference of Catholic Bishops, at a mid-June meeting in Atlanta, voted to revise church rules in such a way that it could become more difficult to preserve women's services, mainly elective sterilization, in deals between Catholic and non-Catholic hospitals (June 18, p. 6).
"What we're concerned (about) is the impact of this clarification (by the bishops) on healthcare providers that are trying to continue to provide quality and accessible healthcare services to women," said Elena Cohen, senior counsel at the law center, a not-for-profit group that works to protect women's legal rights. "Any message that calls their ability into question is a concern for us."
Because of the bishops' changes, Catholic hospitals can no longer cite duress, such as losing money or losing a facility, as justification for continuing to offer elective sterilization in the hospital after they partner with a non-Catholic hospital.
The women's law center report focuses on charitable assets laws. The laws are an increasingly popular tool that state attorneys general-often spurred by community groups-have successfully used to challenge the mergers and the business decisions of not-for-profit hospitals. The hospitals, as charitable institutions that accept private donations, enjoy state and local tax breaks (Jan. 29, p. 22).
The business of healthcare was a prominent topic on the agenda at last month's summer meeting of the National Association of Attorneys General in Burlington, Vt.
The women's law center report urges community advocates to make the case that a secular hospital's agreement to follow Roman Catholic Church rules and limit women's reproductive services might constitute an illegal change in the hospital's charitable missions.
The report says charitable institutions have a duty to uphold their charitable missions because of their special legal status.
Michael Peregrine, a tax lawyer with Gardner, Carton & Douglas in Chicago, called the law center report a well-considered and thoughtful "road map for how to try and blow up a merger based on nonprofit and charitable trust laws."
The recent action by the bishops could force many of these Catholic-with-non-Catholic partnerships back into the limelight.
The bishops' revisions to the Ethical and Religious Directives for Catholic Health Care Services, which is a set of moral guidelines for Catholic healthcare providers, require that such partnerships be reviewed to make sure they are in line with Catholic teachings.
"For the lawyers, the consultants, it's probably good news because it creates more change and more work," said Paul DeMuro, a healthcare attorney at Latham & Watkins in San Francisco.
Review and approval of these partnerships is left to local bishops, and that can account for why some partnerships are allowed in some areas of the country but not in others, DeMuro said.
The bishops' revisions require that a Catholic partner distance itself further from the governance, management and finances of objectionable services in a hospital partnership, such as elective sterilization. Church rules prohibit elective sterilization.
Healthcare attorneys say the bishops' changes, which were prompted by the Vatican, could result in the unwinding of some partnership deals and the close scrutiny of others that are in the works.
"I think it's going to be more difficult," said Marty Thompson, a healthcare lawyer at Riordan & McKenzie in Orange County, Calif.
Unwinding deals that don't pass muster also could cost hospitals money.
"A lot depends on the agreements that were struck," said Dale Webber, a healthcare lawyer with Buchanan Ingersoll in Tampa, Fla.
But San Francisco-based Catholic Healthcare West, a giant healthcare system that has affiliations with 18 community hospitals, isn't concerned that the bishops' latest actions might affect some of its deals where reproductive services are involved, said Bernita McTernan, senior vice president of sponsorship and mission services at the system.
For example, the California attorney general in March cleared the way for CHW's 101-bed Mercy Hospital and Health Services in Merced, Calif., to buy the business operations of 158-bed Sutter Merced Medical Center, the city's only other hospital. But the state's approval came on the condition that Mercy would continue performing reproductive healthcare services at the former Sutter hospital, including tubal ligations, contraceptive services, family planning and emergency contraception (April 23, p. 4).
"We don't anticipate any changes in any of our hospitals," McTernan said.
But for Catholic or non-Catholic partners looking to end a deal, the bishops' action may give them the excuse they were looking for.
"Here's a perfect situation for some group to say, `It hasn't been working. Now we've got a reason that we all have to get out,' " DeMuro said.