CALIFORNIA: BILL WOULD EASE LIMITS ON NONPROFIT HOSPITALS
"A bill starting its way through the state legislativeThis is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.
process would largely clear the way for for-profit Columbia/HCA
Healthcare Corp. to try to take control of nonprofit Sharp
HealthCare," SAN DIEGO UNION-TRIBUNE reports. A proposed joint
venture between Sharp and Columbia/HCA collapsed earlier in the
year when the state attorney general's office announced
opposition to it (see AHL 2/24). The bill (SB 848), which was
authored by state Sen. Ken Maddy (R), "would permit trustees of
nonprofit health care facilities to use assets for virtually
anything." UNION-TRIBUNE reports that the bill is being
supported by the Good Samaritan Charitable Foundation, a
nonprofit organization created by the sale of three nonprofit
hospitals that now holds approximately $72 million in assets and
"wants more leeway in the use of annual returns from the fund."
Gary Allen, executive director of Good Samaritan, said, "We think
the law needs flexibility to do preventive, wellness activities
with a majority of the funds."
SIDE EFFECTS: Some state officials, however, see the bill
"as being part of a campaign by Nashville, TN-based Columbia/HCA
to make it easier to buy nonprofit hospitals in California,"
UNION TRIBUNE reports. State Deputy Attorney General Dave
Schwartz said, "If this bill were passed, it would eliminate the
legal obstruction to the Sharp transaction with Columbia/HCA."
Schwartz had threatened to sue Sharp if it went ahead with the
Columbia/HCA deal, because, he contended, "Sharp's articles of
incorporation and trust documents for the formation of the
group's flagship hospital limited the use of its assets to
operating nonprofit hospitals in the city of San Diego." State
Deputy Attorney General Peter Shack said, "There is no reason to
vary the terms of the charitable trust unless its purpose becomes
illegal, impossible or impracticable. This office has fought
long and hard over many years to uphold this venerable and vital
principle." Sharp spokesperson Jackie Hill said that the
organization "knew little" about the bill until it had been
contacted earlier in the week and that it "had no position on
it." She said, "Sharp has never done anything to pursue a
legislative remedy." Columbia/HCA had no comment (Dalton, 4/16).