In the latest example of state attorney general oversight of the use of hospitals' charitable assets, Connecticut Attorney General Richard Blumenthal sued Yale-New Haven (Conn.) Hospital last week for allegedly hoarding $37 million in charitable funds to collect the interest income instead of spending the money on indigent patients.
In testimony before state legislators, Blumenthal said he is reviewing more than 500 similar "free-bed funds"-charitable trusts created by individuals to support indigent care-to determine if Connecticut hospitals are using such money appropriately.
In a lawsuit filed in Hartford Superior Court, Blumenthal charged that Yale-New Haven created administrative barriers to using the funds as donors intended, billed patients whose care should have been covered by the funds and hired collection agencies to pursue the patients for nonpayment. In several instances, the hospital also shifted the payment burden to taxpayers by requiring patients to apply for government assistance, he said.
"As the amount of free-bed funds rose, the hospital reaped the interest income for other purposes," Blumenthal said in a written statement, adding that the free-bed fund administered by Yale-New Haven is not a hospital asset (See related story, p. 12).
Yale-New Haven officials said they had not seen the complaint and had learned of the suit only after reading a story in a local paper. "Until we have had a chance to receive and review those documents and understand fully what they contain, it would be premature for us to speculate further at this time," said Yale-New Haven spokesman Mark D'Antonio.
In the lawsuit, obtained by Modern Healthcare, Blumenthal accused Yale-New Haven of failing to provide free medical care for eligible patients, despite the fact its endowment for free-bed funds has "risen dramatically" over the years. From Oct. 1, 1997, to Sept. 30, 1998, the hospital earned $274,574 in interest income and took in more than $5 million in other investment gains on its bed funds but spent $258,143 on free beds during the same time period, according to the complaint.