SEIU Report Critical of CHW, Sutter ‘Corporate Actions’
The not-for-profit hospital systems Catholic Healthcare West and Sutter Health have acted like "for-profit companies" at the expense of community hospitals and charity care, according to a new report commissioned by Service Employees International Union Locals 250 and 399. Conducted by Julio Mateo, an attorney and member of the California Attorney General's Hospital Charity Care Taskforce, the report's release today coincides with Attorney General Bill Lockyer's (D) appearance at a meeting in Oakland to discuss the "issue of holding [not-for-profit] hospital chains accountable to their charitable mission." Examining CHW's closing of Long Beach Community Medical Center and Morgan Hill's St. Louise Hospital, the report concludes that the attorney general "has the authority to enforce charitable trust laws" to help restore closed hospitals and to prevent future closures (SEIU release, 1/17). Last September, Lockyer initiated a review of the state's not-for-profit hospitals after CHW closed Long Beach (California Healthline, 9/27). Some of the report's findings include:
- CHW and Sutter control 75 not-for-profit hospitals, or more than 25% of all such hospitals in California;
- CHW spends just 1.1% and Sutter 0.6% of net patient revenue on the provision of charity care, while the national average for spending on charity care by not-for-profit hospitals is 3%;
- While CHW closed some hospitals "to consolidate market share at another hospital in that area," consolidation "has not always lead to savings but in some cases to mounting losses."
Addressing the closures of Long Beach Community and St. Louis Hospital, the report recommends that CHW "be required to return the hospitals to their former condition so that new operators can reopen the hospitals as quickly as possible and bear the burden of these costs." The report is accompanied by a letter to Lockyer, signed by several health advocacy groups, which states: "These not-for-profit chains are trying to have it both ways -- they take full advantage of the tax-exempt funding that their not-for-profit status conveys, then refuse to honor their part of the bargain by respecting the charitable purpose of the community hospitals they have acquired" (SEIU release, 1/17).
CHW officials said they had not read the report and declined to comment. However, the Los Angeles Times reports that CHW officials "have said repeatedly that they tried desperately to keep Community open but could not contain losses."
Meanwhile, the "coalition of residents and doctors" hoping to reopen Long Beach Medical Center needs city and state financial assistance before that goal can be reached, the Los Angeles Times reports. The group formed after CHW closed the facility in September and set January as the tentative reopening date. Although they have succeeded in arranging "millions in financing" and raising $4 million in "private and foundation gifts," coalition members now say the amount is "not enough" to replace the "old, failing equipment left behind" by CHW. The coalition believes it can reopen the hospital in March if the city of Long Beach offers a $2.8 million advance for "deferred maintenance," which would be repaid over the "next few years." Some residents, however, have "question[ed] the wisdom of public investment in the hospital"; the city has spent $125,000 a month since the closing for "upkeep." Some coalition members hope that CHW may be forced by the state to pay for the repairs, a cause they believe will be bolstered by the SEIU report's findings (Mathews, Los Angeles Times, 1/17).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.