Roll On, Columbia
Last summer a Denver emissary for Columbia Hospital Corporation, the nation's largest for-profit health-care chain, had lunch with one of the city's prominent community leaders. A pair of hospitals were on the menu.
Leaning over the table during the meal, Richard Anderson, chairman of the local Columbia/HealthONE joint venture, reportedly made a threat that would change Denver health care forever. "He said, 'I want you to know--if they don't sell, we'll crush both Lutheran and Children's,'" says Charlie Steinbrueck, chairman of the board at Children's Hospital, Denver's premiere pediatric facility.
Steinbrueck says Anderson's comments were relayed to him by the community leader, whom he declines to identify. Anderson insists he never made the remark. "I've never made any threat against Children's or Lutheran," he says. "I've worked very hard for the last three years to do a deal with them."
Regardless of what was said over lunch, Steinbrueck's contention that Tennessee-based Columbia is out to get Children's and Lutheran Medical Center is widely accepted as true in the local hospital community. It's an indication of just how bitter the fight for Denver's health-care dollars has become.
The board at the nonprofit Children's ultimately decided not to sell to Columbia, which already has gobbled up a third of the hospitals and medical facilities in Denver. What it got in return was a crash course in corporate realpolitik. Following the rebuff from Children's, Columbia decided to expand its pediatrics facility at Presbyterian/St. Luke's, which it swallowed up in 1995. According to Steinbrueck, Columbia is now threatening the unique role Children's plays as a regional center for pediatric medicine.
The cutthroat struggle for the pediatric market is just one example of how health care has changed in Colorado. From the corridors of the legislature to hospital boardrooms across the state, old assumptions have been turned upside down by the new drive for profits in health care. Hospitals once known for candy-striped volunteers and society fundraisers find themselves in the middle of battles for dominance. Powerful new charitable foundations have been formed to control the millions of dollars in pay-as-you-go penance extracted from nonprofits who've switched to for-profit status. And in the Colorado statehouse, a recent showdown between Columbia and its nonprofit rivals provided a blunt demonstration of the power of money.
Last month the House health, education, welfare and institutions committee killed a bill that would have regulated the sale of nonprofit hospitals such as Children's to for-profit companies like Columbia. The law, sponsored by Republican Bill Kaufman of Loveland, would have required that all such sales be reviewed by the Colorado attorney general to be sure the nonprofit's assets are fairly valued. It also would have allowed the AG to oversee the transfer of funds from those sales into charitable foundations--a process that up to now has taken place behind closed doors. The idea was that since these hospitals were built up over the decades with indirect public subsidies--they paid few, if any, taxes--they should give something back to the public before earning millions for their new owners.
The law was also prompted by a series of scandals that have rocked the health-care world. Across the country, nonprofit hospital boards have agreed to sell community institutions at fire-sale prices. Later it's been discovered that some of the nonprofits' boardmembers and executives have arranged multi-million-dollar bonuses for themselves and high-paying jobs with the for-profit suitors.
In Colorado, Kaufman's bill had the support of state attorney general Gale Norton, state insurance commissioner Jack Ehnes, Catholic Charities, the American Association of Retired Persons, Jewish Family Services, and dozens of other community groups. Steinbrueck from Children's also testified on behalf of the legislation. But it was opposed by Columbia--and that made all the difference.
Columbia "played hardball" to defeat the bill, says Representative Kaufman. The company hired Frank "Pancho" Hays, the most powerful lobbyist at the Colorado legislature. It also called on the services of its local counsel, the Denver law firm of Brownstein Hyatt Farber & Strickland, which has earned a reputation for its ability to touch the hearts and minds of public officials. And Columbia has the cash to deliver its message in a way every politician understands: Its Colorado political action committee raised more than $100,000 last year and helped fund the campaigns of several local politicians, including U.S. Representative Dan Schaefer and unsuccessful U.S. Senate candidate (and Brownstein partner) Tom Strickland.
Columbia's deep pockets extend far beyond the statehouse. In recent years the company has acquired or taken over nonprofit hospitals that have served Denverites for generations. The company's cherry-picking campaign went into high gear in 1995 with the $180 million purchase of Rose Medical Center, long an institution in the Jewish community. An agreement to take over the management (and collect the lion's share of profits) at Presbyterian/St. Luke's, Swedish Medical Center and Aurora Presbyterian came just a few weeks after the Rose deal closed. By then, Columbia already owned Aurora Regional Medical Center and North Suburban Medical Center.
With its Denver base firmly in place, Columbia is now shooting for a statewide presence. The company recently tried to buy city-owned Memorial Hospital in Colorado Springs but was rebuffed. Now it plans to open a competing facility in the Springs and makes no secret of its desire to obtain Parkview Episcopal Hospital in Pueblo. "We are interested in developing a statewide network," says Jeffrey Dorsey, president of Columbia's Colorado division. "The insurance companies are looking at organizations like ours to contract with across the entire state."
Consumer advocates say those expansion plans explain Columbia's determination to kill Kaufman's law. "You have to ask yourself: Why did they fight so hard to defeat a bill that doesn't stop the conversions but just asks for public oversight?" says Mary Boland, chairwoman of the Colorado Health Care Conversions Project and vice president of Catholic Charities. "Why are they spending so much money on this?"
Dorsey claims the bill was unnecessary, and he makes no apology for Columbia's opposition. "We believe there is already adequate common law that empowers the attorney general to review those transactions," he says. Columbia also insisted the legislation should cover the mergers of health-care nonprofits as well as sales to for-profits. "If you're going to do this, why wouldn't you include all transactions?" he asks.
But Kaufman says Dorsey's and Columbia's main objective in Colorado was to confuse the issue--a tactic he says the company has used to scuttle similar legislation in other states. Kaufman doesn't disguise his anger at the defeat of the legislation, and he vows to reintroduce the bill next year. He says the public has a right to see the financial details when a nonprofit hospital is sold.
"You take Rose or Swedish--they were nonprofit institutions supported by the community," says Kaufman. "The community gave them nonprofit status for years. When a for-profit buys a nonprofit, where does that money go? Our bill would have brought the process into the sunshine."
The ongoing transformation of Colorado health care will touch the lives of every resident. And while legislators did pass a law last year guiding the pending conversion of Colorado Blue Cross into a for-profit health plan, the defeat of Kaufman's bill means Colorado still has no law governing the sale of nonprofit hospitals. Consumer advocates say lawmakers just fumbled their first opportunity to protect the interests of everyday Coloradans who may not understand how the sale of nonprofit hospitals can affect the community.
"It looks to me like the Colorado Legislature has handed Columbia the key to the bank," says Harry Snyder of Consumers Union, a San Francisco-based group that monitors the conversion of nonprofit hospitals around the country. He predicts that nonprofits sold in the coming years in Colorado will be undervalued as a result of insider deals and that community foundations will lose out.
"The legislators who voted against this bill will be responsible for the loss of hundreds of millions of dollars to Coloradans," adds Snyder. "That money will instead go to executive compensation and shareholders in companies like Columbia."
There is no guarantee that any of it will go to help care for sick people.
Before 1985, virtually every major hospital in Colorado was a nonprofit. But the emergence of chains like Columbia has transformed health care around the country--and has touched off a fierce debate over whether operating a hospital for profit is in the public's best interest.
Many of those who've spent years working for nonprofit groups dedicated to serving the poor and uninsured look askance at the sudden entrance of Wall Street into health care. They believe that, for corporate America, boosting profits will inevitably prove more important than helping sick people.
"Our profits are invested back into services that benefit the community," says Kay Phillips, president of Lutheran Medical Center in Wheat Ridge. "We provide indigent care that meets the needs of the community. We've opened up three clinics in Jefferson County for uninsured people."
Like many nonprofit hospital executives, Phillips fears that Columbia may begin sending uninsured patients who show up in its emergency rooms to local hospitals like Lutheran, a practice known in the industry as "dumping." Most area hospitals write off a certain percentage of unpaid indigent care every year. The lion's share of indigent care in Denver is provided by Denver Health Medical Center and University Hospital, but every hospital takes on some of the expense to care for those without insurance.
Will a for-profit health system be willing to serve indigent patients? Dorsey says yes. "Our level of indigent care actually rose in 1996," he claims. "There's an uncompensated newborn we discharged recently and we wrote off expenses of $1 million. We're doing our share of uncompensated care."
But others say Columbia's drive for profits provides a natural incentive to divert poor patients to other hospitals. "Oftentimes young parents can only pay little or nothing," says Lua Blankenship, president of Children's Hospital. "We've always been the safety net for the entire community. They expect us to always be ready to take care of a child." Blankenship says Columbia may try to use Children's as a backup, quietly referring uninsured patients to its neighbor down the street.
Finding out just how much free care each hospital in Denver provides isn't easy. In fact, the question of who is shouldering the burden of indigent care has become so controversial that the Colorado Hospital Association is re-evaluating its definition of exactly what constitutes indigent care. A spokeswoman for the group says it won't be able to release 1996 figures on the level of uncompensated care at each hospital until a committee determines a way of measuring such care that is acceptable to all its members.
Dorsey says the community benefits from a for-profit system in several ways, including the millions of dollars in taxes that must be paid by for-profit hospitals. He says the size of the Columbia system also allows the chain to buy medical supplies at bargain rates, reducing costs. And Dorsey believes Columbia has introduced a badly needed element of competition into a health-care profession that had grown lazy and complacent.
"I think we're changing the competitive standard," he says. "Our performance is causing others to look at how they're providing similar services. The presence of Columbia raises the bar."
It has also raised incredible amounts of money. The $20 billion corporation now owns more than 10 percent of the hospitals in the United States--more than 350 at last count--and announces new acquisitions on a weekly basis. Top executives with the company have even compared Columbia to Wal-Mart and McDonald's, saying the chain's enormous purchasing power helps it hold down costs. Columbia has a corporate goal of earning at least a 20 percent profit every year. Executives at Columbia hospitals that fail to meet that goal are reportedly summoned to meetings at the company's corporate headquarters in Nashville.
Columbia's growing power in the health-care industry has also attracted the attention of federal authorities. Last month several of the company's Texas hospitals were raided by federal agents investigating the firm's Medicare billing practices. A New York Times analysis of Columbia's Medicare billings found that the chain's hospitals tend to bill more frequently for higher-priced respiratory treatments than other hospitals. The Times story estimated the federal government spent an extra $50 million in 1995 on Medicare services at Columbia's Texas hospitals--services the newspaper said would have been cheaper at the chain's rivals.
Advocates of nonprofit hospitals say Columbia's troubles are a reflection of what can happen when profit becomes the priority in health care. "There's a different dynamic that drives a shareholder-owned company than a community facility like Children's," says Blankenship.
According to Blankenship, that dynamic is reflected in what he calls Columbia's largely vindictive decision to expand its pediatrics facility at P/SL. "Pediatrics is not where the big money is in health care," he says, and Denver already has a surplus of hospital space. "Why would you build an infrastructure that already exists?" asks Blankenship. "They say the market demands it. That's simply not true."
But Columbia says it's simply doing what it does best: looking for new ways to make money. "We do a fantastic job with our pediatric programs, and people want to choose our system," says Dorsey. "This growth is in response to what's going on in the marketplace. Children's Hospital wants to receive some kind of protected status from competition."
The fear at Children's is that Columbia will cut into its business by offering the basic pediatric services that make up the bulk of its revenues. While Columbia presumably would take the profit it makes off those services and distribute it to shareholders, Children's says it uses those revenues to support highly specialized--and unprofitable--medical services that aren't available anywhere else in the region.
"What concerns us is that we provide valuable services to the community that cost us money," says Blankenship. "We have the largest heart-transplant center in the country. Treatment of child abuse and genetics costs a lot. Those things are typically funded off those areas where you can make a profit."
Dorsey says that, far from trying to destroy Children's by building a new facility, Columbia/PSL is simply enlarging a pediatrics facility that already exists. "What we're doing is expanding our pediatric and newborn intensive-care units," he says. "That is in response to market forces. I don't see anything wrong with that."
Dorsey denies Children's charge that Columbia is "skimming" the most lucrative services. "This issue that we're skimming is categorically untrue," he says. "I've heard that from them forever."
Just how seriously Columbia takes the possible public-relations problems posed by its conflict with Children's is revealed by an internal Columbia document obtained by Westword. The "pediatrics communication strategy" outlines how Columbia should deal with the press, beginning with an upper-case admonition to "TAKE THE HIGH ROAD--NEVER SPEAK NEGATIVELY ABOUT CHILDREN'S." The document goes on to claim that Columbia's services are more cost-effective than Children's and cites one analysis that estimates Children's costs per day are $400 higher than Columbia/PSL's.
Children's acknowledges those higher costs. But it says there's a good reason it spends more money: because it treats sicker patients.
From New Jersey to California, the sale of nonprofit hospitals and health plans has created one scandal after another. Insiders serving on charitable boards have secretly negotiated sale agreements that give boardmembers millions in bonuses, and hospitals and insurance plans have been auctioned off at bargain rates.
The proposed $299 million sale of Blue Cross Blue Shield of Ohio to Columbia became enormously controversial after it was revealed that three of the Blue Cross executives who approved the deal stood to pocket $15 million in "severance pay"--an arrangement that struck some observers as more akin to a bribe. Ohio Attorney General Betty Montgomery sued last year to stop the sale, describing the bonuses as "inappropriate and excessive" for a nonprofit that had been founded to serve the working poor. Critics said Ohio Blue Cross had also been grossly undervalued and was worth at least $1 billion. The Ohio Blues finally decided to cut their losses and called off the deal last month.
In California, the conversion of Blue Cross to a for-profit was widely criticized after the health plan proposed giving just $5 million to a foundation in return for permission to scrap decades of service as a nonprofit provider. After consumer groups mounted a fierce protest, Blue Cross eventually agreed to donate $3 billion to two new California foundations--an increase of 600 percent over its original offer.
The Colorado Blue Cross Blue Shield plan itself is in the process of going for-profit. Like their counterparts in Ohio and California, local Blue Cross officials argue that they need to become for-profit to compete with rival health-maintenance organizations. The result has been a scrap that pits the health plan--which has been widely criticized during the past few years for its creative bookkeeping, including a plan to loan more than $13 million to its sister organization in New Mexico--against a consortium of community activists, including several from the Catholic Church.
Colorado is no stranger to disputes over the sale of nonprofits. The only difference is that, even in the recent past, the disputes came after the deals had already been done. "Colorado is one of the very few states where sales happened completely shrouded in secrecy," says Linda Miller, president of the Volunteer Trustees of America, a national group that monitors the sale of nonprofit hospitals. "Denver demonstrated to the country what can happen with these deals."
Miller and other health-care watchdogs cite the original sale of Presbyterian/St. Luke's twelve years ago as a good example of how not to go about selling a nonprofit hospital. The shenanigans that engulfed P/SL and the foundation that was created from the sale, the Colorado Trust, represent a textbook case of what can go wrong when a community hospital is sold with little public scrutiny.
After selling Presbyterian/St. Luke's to for-profit American Medical International Inc. for $178 million in 1985, many of P/SL's directors joined the board of the newly endowed Colorado Trust, set up to administer the millions of dollars AMI had paid for the hospital. They claimed the trust would fund projects to improve health care around the state. But in time questions surfaced about whose health the board was concerned with--the public's or P/SL's.
After AMI got into financial trouble following a leveraged buyout in 1989, many P/SL doctors became critical of the company's management of the hospital. They put together a deal in 1990 to buy back the hospital for more than $200 million. And they turned to their friends at the Colorado Trust for help. The Trust board responded by giving the group $60 million in grants and loans to help with the buyback, justifying its action by noting that the doctors intended to return the hospital to nonprofit status.
The net effect was that $60 million that had been earmarked for charity instead went to finance a business transaction. "The Colorado Trust was created from the sale of P/SL," says Boland. "The doctors used funds from the Trust to buy it back. You ought not be able to have a community foundation in your pocket."
And though buying back Presbyterian/St. Luke's was supposed to benefit the public, it didn't quite work out that way. P/SL incurred massive debts while converting back to nonprofit status. It hiked its prices and became one of the most expensive hospitals in Denver. That left it vulnerable--and in 1993 P/SL merged with Swedish Medical Center and started marketing the two hospitals under the name HealthONE. Little more than a year later, HealthONE announced a fifty-fifty joint venture with Columbia. In return for paying off HealthONE's debts, Columbia was allowed to take over day-to-day management of the hospitals and collect almost all of the profits. HealthONE now exists as little more than a shadow of its former self.
As part of a cost-cutting spree that took place after Columbia's arrival, Columbia/HealthONE laid off 169 people in November 1995 and another 139 in March 1996. However, not everyone left the company with bad memories. When Columbia took over, several HealthONE executives received "golden parachutes" in the form of bonuses. Former P/SL boardmember Mary Anstine acknowledges that "ten or fifteen" HealthONE executives had provisions for golden parachutes written into their contracts. But she says they were inserted long before Columbia came calling.
Columbia always inserts a secrecy clause in its agreements, forbidding the nonprofit hospital's directors from disclosing any terms or conditions of the sale, so it's unclear just how generous those executive bonuses, widely rumored to be in the six-figure range, might have been. The financial agreement between HealthONE and Columbia is on file at the state insurance commissioner's office. However, Columbia claims the release of financial data would harm its competitive situation in Colorado and has asked the commissioner to withhold all data on financial transactions, including any bonuses paid to HealthONE executives. As a result, those parts of the document available to the public have been censored. Westword filed a request under Colorado Public Records Law to see the document in its unaltered state, but that request was denied by the state attorney general's office, which ruled that releasing the document would infringe on Columbia's right to protect "trade secrets."
A veil of secrecy also cloaked Columbia's 1995 purchase of Rose. In that sale, questions were raised about Columbia's employment of Brownstein Hyatt Farber & Strickland to help negotiate the terms of the deal. Both Steve Farber and Norm Brownstein had served on the Rose board, and there was enough concern about potential conflicts of interest that the firm recused itself from the final negotiations. (Or as one local attorney puts it, "They took a coffee break," since the firm soon resumed working for Columbia.) After the sale, Rose president Jeffrey Dorsey was appointed head of Columbia's Colorado division.
Don Kortz, a former Rose boardmember who now leads the Rose Community Foundation, says none of the Rose executives received bonuses as a result of the sale. "Was there any incentive for the administration to sell to Columbia? Absolutely not," he insists. Instead, says Kortz, the decision to sell came only after an emotional debate over whether it was better for the Jewish community to continue to fund its own hospital or to sell the hospital and use the money to set up a charitable foundation.
Rose was founded in the 1940s, a time when many Jewish doctors weren't allowed to practice in Denver's other hospitals. The Jewish community rallied around the new hospital, hosting countless fundraisers and events that helped build Rose into one of Denver's finest medical centers. The decision to transfer the hospital to Columbia was a painful one--and one that didn't sit well with some of the hospital's longtime supporters.
"There was a sadness on the part of some people," says Rabbi Steven Foster of Temple Emanuel. "The dollars that were contributed over the years by the community were because Jewish doctors were discriminated against. Many people looked on Rose as a product of the Jewish experience in America."
Rose's decision to sell not only made waves inside the Jewish community; it also rocked Denver's hospital community to the core. Children's president Blankenship says he got calls from longtime donors who said they wanted their money back if Children's were ever to sell. Since then, he says, countless Children's supporters have thanked him for not cutting a deal with Columbia.
The questions that surfaced in the Rose and HealthONE sales also led to calls for greater public oversight of hospital sales. "This is about protecting the community's assets," says Mary Boland of Catholic Charities. "The community did fundraising; they gave endowments to these institutions."
Under the common law that now governs such sales, it's up to the boards of directors of nonprofit hospitals to set a value before selling. But Boland points out that in that system, the public has no way of knowing whether the asking price is reasonable or if the directors may have ulterior motives in striking a deal. "Six community hospitals were transferred to Columbia [in Colorado]," she says. "There was no public disclosure of the value of those assets. $180 million for Rose may be the right number, but who knows? Was it worth $180 million or $580 million? Columbia has acquired several facilities with no objective valuation, and we don't know the terms of the deals."
That means the public has virtually no way of knowing exactly who is benefiting from these transactions. While publicly traded for-profit corporations have to disclose voluminous amounts of data to potential investors and to the federal Securities and Exchange Commission--including information on executive bonuses and other perks--tax-exempt nonprofits are only required to make public their tax returns, known as Form 990s. While these documents contain some information on salaries and expenses, they pale in comparison to the kind of information found in the 10-K reports many public companies file every year with the SEC. And unless the nonprofit organization is audited by the IRS, there is no independent verification of the information on the form. That means the public often knows more about the financial affairs of General Motors than about the nonprofit hospital down the street.
Common-law precedents put the responsibility for seeing that charitable assets aren't used for private gain in the hands of state attorney generals. In Colorado, that means only AG Gale Norton can intervene in a sale--and then only by filing a lawsuit. Norton chose not to interfere in the Rose or HealthONE transactions. But lately she's taken a more aggressive stance, vowing to scrutinize any new sales of nonprofit hospitals in Colorado.
"We've seen what's happened in other states, and we realize it's very important for us to be involved in this," says Norton. "Never before have we seen these large-scale acquisitions of hospitals."
Norton says she's disappointed that the proposed legislation governing hospital sales was shot down in the legislature. She says the proposed law would have created a public process to guide the sales, avoiding potential lawsuits down the road. "In a litigation situation, you have to scrape together information as best you can and then decide whether to file suit," she says. "That makes the whole situation much more difficult."
One Capitol Hill insider who asks not to be named says Norton has already vowed to sue Columbia if the company buys another nonprofit hospital in Colorado. Norton won't confirm that.
In the days before for-profit health care, little thought was given to having governmental officials or anyone else monitor the financial activities of hospitals. After all, most health-care facilities were built by churches. Serving the public--including the poor and the uninsured--was viewed not as a fiscal burden but as a moral duty. That was how Blue Cross was born.
Under the leadership of a legendary priest, Monsignor John Mulroy, Catholic Charities established one of Denver's first free clinics downtown in 1933. Mulroy went on to establish the Colorado Blue Cross plan in 1938 as part of an effort to make hospital care affordable for working people. Blue Cross offered 21 days of guaranteed hospital care to individual members for 75 cents a month and $1.50 per month for families.
Sometimes history seems to run in a film loop, replaying the same scenes over again. Today, not far from where Mulroy started his first free clinic, a Catholic parish is following in his footsteps. Our Lady of Guadalupe Catholic Church in northwest Denver opened Clinica Tepeyac at 3617 Kalamath Street two years ago. Since that time, more than 2,000 people have visited the clinic for free or low-cost immunizations, cancer screenings and blood-pressure exams.
"We charge $2 every time they come in, but nobody is turned away if they don't have $2," says Jim Garcia, who helped found the clinic. "There's a huge number of people in the parish without health insurance. They're the working poor--they can't afford insurance. We're open in the evenings and on weekends to serve working people."
Clinica Tepeyac has a staff of 200 volunteer doctors and nurses who operate out of a small house near the church. Demand is so heavy that the clinic has had to establish a waiting list for services.
Sixty years after Mulroy did the pioneering work that led to the establishment of Colorado Blue Cross, the Catholic Church is in much the same situation. Thousands of church members have no health insurance, and many of those who do can afford only limited coverage that runs out when bills start to mount.
"We're seeing a lot of people with huge bills for health care," says Mary Catherine Rabbitt, a public-policy advocate for Catholic Charities. "These are working families that don't have health insurance and one of their kids gets sick. They're facing eviction or foreclosure because of mounting medical debts."
Several clinics in Denver that serve the uninsured and poor have had to turn away clients in recent months because of cutbacks in funding. University Hospital, an important provider of indigent care in Denver, has cut back on those services, in part because of pressure to hold down costs in the newly competitive environment. And health-care activists like Rabbitt want the wealthy new Denver foundations that have been created through the sale of nonprofit hospitals to step up to the plate and fund some of these services.
The sale of several of Denver's most prominent hospitals has created the biggest transfer of charitable assets in the history of Colorado. Old-line, old-money foundations like Boettcher and Gates have been eclipsed by new foundations with huge endowments and enormous power. The foundation created by the sale of P/SL, Colorado Trust, has a remarkable $310 million in assets. Columbia's purchase of Rose Medical Center endowed the Rose Community Foundation with more than $175 million. The planned conversion of Blue Cross Blue Shield into a for-profit could create a new foundation with assets of as much as $300 million. By comparison, the Boettcher Foundation, once the unquestioned leader among the city's charitable trusts, has a mere $170 million tucked away.
Activists say the wealthy new charitable trusts should devote themselves to funding hands-on groups like Clinica Tepeyac. But they may be in for a long wait.
The Colorado Trust, Denver's biggest foundation, oversees its huge endowment from a neoclassical marble headquarters at 16th and Sherman streets in Capitol Hill. Its nine boardmembers are paid $23,000 per year to attend two meetings a month, a practice that is considered highly unusual in the nonprofit world. The Trust pays its president, John Moran, $172,000 per year; its vice president for administration, Peter Konrad, $120,312; and its vice president for programs, Jean Merrick, $114,586.
Trust officials have tried to put the foundation's controversial $60 million support for the buyback of Presbyterian/St. Luke's behind them. They now point with pride to an array of programs they've funded all over the state, including efforts to prevent teen pregnancy and reduce violence. One such "educational" program, an effort to encourage safe sex in the town of Delta, even made the news: Religious conservatives objected to the distribution of condoms in the dressing room of a local formal shop before the high-school prom.
One of the Trust's largest programs is the Colorado Healthy Communities Initiative, a $6.9 million project that brings together civic leaders and volunteers in 28 Colorado locales to discuss community needs. Meetings are often held with the help of paid facilitators, who encourage "dialoguing" among participants. And the Trust has an unusually broad definition of a healthy community. It includes everything from a "sustainable ecosystem" to a "vital and innovative economy."
So far, participants in the project have identified a variety of goals, many of which seem to have little to do with health care. A 1994 progress report on the Healthy Communities Initiative listed community goals that included the development of an "integrated resource mapping system" in Delta and Montrose counties, an "adopt-a-block" trash pick-up program in Trinidad, and the creation of a "community orientation kit" for people who had just moved to Summit County.
The Trust pays the Denver-based National Civic League more than half a million dollars per year to administer the healthy-communities program. It is also paying a team of researchers to evaluate the initiative, led by a "social ecology" professor from the University of California at Irvine.
Critics of the Trust say such expenditures are inappropriate at a time when thousands of Coloradans are without health insurance and community clinics are closing for lack of funds. "The Colorado Trust is not using its dollars to support clinics and other services," says Boland. "The dollars for those services are diminishing. The Trust's funds aren't being dedicated to funding health care."
Trust officials insist they have provided funding for community clinics and other direct health-care services. They say critics like Boland don't understand that it would be impossible for one foundation to cover the health-care needs of Colorado's uninsured.
"Government should be taking care of the medically indigent," says Konrad, vice president of the Trust. "If we used our money to pay for that, it would all be gone. How long would our $300 million last in caring for them? As much money as we have, it's a drop in the bucket."
Konrad says the Trust is trying to get at "root causes" of problems, funding experimental programs that wouldn't happen otherwise. "We're the venture capitalists of the nonprofit world," he says. "The medical profession doesn't have time to focus on keeping people healthy. That's what we're trying to do with the Healthy Communities Initiative. We don't have enough money to take care of all the sick people in the world."
A similar philosophy appears to guide the Rose Community Foundation, now Denver's second-largest charitable trust. "To say that a hospital conversion should put all its money into health, to me that's too narrow of a vision," argues foundation president Don Kortz. "When you look at health in a macro sense, I see kids not being educated and hungry. I have a hard time saying that's not part of the health of the community."
The fact that Rose was founded as a direct result of ethnic discrimination has brought a special focus to the question of the new foundation's proper role. After an extensive period of soul-searching, the foundation board decided to focus on five areas: education, the elderly, health of the community, children and families, and Jewish life. The foundation has been criticized in some quarters for taking its time in getting under way, but Kortz says the first major grants will be made later this year.
The next big foundation to arrive on the local scene will be the one founded by Blue Cross Blue Shield of Colorado. After witnessing the controversy in Ohio and California, the Colorado Blues decided last year to ask the state legislature to set up a public conversion process. The law, which won the support of both Blue Cross and consumer groups, calls for insurance commissioner Jack Ehnes to determine the market value of Blue Cross. The Blues received a lesson in what public oversight means last spring, when Ehnes shot down a plan to give Blues executives bonuses after the conversion.
Hearings on the Blue Cross conversion will be held around the state beginning in July. Ehnes will set a value on the company later this year. The Blues have proposed funding a pair of independent community foundations with the money paid by Blue Cross. As much as $300 million may flow into the charitable trusts, whose boardmembers would be appointed by Governor Roy Romer.
Health-care activists want to make sure the foundation or foundations that emerge from the sale of Blue Cross will reflect the health plan's origins as a service to the poor and uninsured. Instead of boards dominated by establishment types, they want to see people with diverse backgrounds, including those from outside the health-care industry.
"The guys who are running the health-care show are failing us, so the hell with them," says Robert Danknich, a Gray Panthers activist who is involved in the coalition now monitoring the Blue Cross conversion. Danknich says a foundation board that breaks away from the mold and includes everyday people will be more likely to fund innovative programs. "There are probably 100,000 children in Colorado without health insurance," he says. "We've got to have some earthshaking changes in how we deal with health care."
If Father Mulroy were still around, he'd probably be distressed by the new reality of health care in Colorado. As nonprofit hospitals and health plans--including his beloved Blue Cross--are converted into profit-seeking companies, doctors are pressured to cut costs, patients are tossed out of hospital beds as quickly as possible, and thousands of Coloradans are still without health insurance.
And just as demand is increasing for services at places like Clinica Tepeyac, funding is being cut back. Several other low-income clinics around the metro area, including Clinica Campesina in Westminster, are turning away patients for lack of funds. Last month, the Westminster clinic's director told reporters, "There's no room at the inn."
But for those with an invitation, there's still plenty of room at the inn. Columbia posted record profits of $1.5 billion last year. Fourth-quarter earnings alone were $414 million. The corporation recently announced it would pay $1.12 billion in cash to buy another health-care company. It also said it would buy back $1 billion of its own stock so it could guarantee its shareholders a 15 percent increase in earnings per share.
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