Finally a Non-Profit Hospital Takeover Scam by HCA Comes to Justice

Health Care

New Orleans    The whole business of for profit hospital chains, like the giant Hospital Corporation of America (HCA) and others, buying tax exempt nonprofits in these huge wheeling deals, has to be looked at with huge skepticism.  Anytime the wolves are hanging with the lambs it is hard to believe that the people that are rooting for the lambs are going to come out well, especially if it is the communities where they have operated and the poor that depend on their care.   Finally a judge in Kansas City got the chance to get in the weeds and look at how a deal in that city where the lamb was shorn but luckily kept bleating until help arrived.

The normal way these deals are structured is that the nonprofit sells their health care apparatus and assets and creates a “community foundation” ostensibly to continue to serve the general charitable and tax exempt purposes with the millions they secured on the sale to a for profit hospital chain.  In Kansas City the judge ordered HCA to pay $162 million to the community foundation for its failure to made improvements to several dilapidated hospitals that were part of the deal, but that they had stiffed after the takeover.  The other critical issue the judge addressed was HCA’s failure to deliver on charitable health care at the level specified in the agreement.  Luckily, the community foundation negotiated a role in monitoring the level of care so had enough information to realize that charity was little and late from HCA.  A court-appointed accountant is now going to go over the HCA books to determine how much charity care was really offered and what’s happening with it.

HCA is of course going to appeal, so that justice already delayed for the people and poor of Kansas City since 2009 will not stretch on farther into the future, but the real issue that has to engage all of us is understanding how whether this situation is one off or common.  My bet, not surprisingly, is that when the wolves are at the table ripping flesh from the lambs is standard operating procedure.  It all starts from the level of desperation that puts the parties at the table in the first place.  Nonprofit, community leaders feeling that they cannot continue to pay hospital bills or compete in the future are fat far for a nonprofit willing to cash them out for sometimes hundreds of millions of dollars.  The community and charitable obligations in the language of the time might be “stakeholders” but most of the stake they are going to be holding will be the one thrust deeply in their chests, because they are certainly not at the table and their interests are often not as clearly protected even as we now see in the Kansas City situation.

If we surveyed and audited all of these deals around the country, I know the story would be a sad one, repeated time and time again.  We tried to do this several times at ACORN but were strained to have the research capacity to really navigate the finances and the obstacles to really ferreting out all of the facts from the fiction in these deals.

Maybe HCA will learn a lesson from Kansas City and maybe not, but regardless of the outcome there, all of us should learn something about these deals in our own communities as they arise in the future.