Out-of-Touch Trustees

For 50 years Centinela Hospital Medical Center was operated by its board of trustees as a nonprofit facility serving mostly working-class families in Inglewood. Then, like so many community hospitals in recent years, it was sold to a for-profit chain.

Many similar deals have paid off for consumers. To compensate taxpayers for the breaks afforded all those years by a hospital’s nonprofit status, the law mandates that profit from such sales be set aside for the public benefit. In the biggest example, the conversion of California’s Blue Cross plan to for-profit status in 1993 generated more than $3 billion, which is being funneled through two charitable foundations funding health programs statewide.

So far, though, the Centinela deal, completed last fall, has not done much for Inglewood. The hospital’s trustees, in accord with state law, set aside for charity the $50 million in profits derived from the deal. But it now appears that the trustees have paid scant attention to the basic aim of existing law: that such profits be used to meet the needs that the nonprofit hospital traditionally served. Instead, the trustees have made preliminary moves to allow the City of Hope, a cancer treatment center 32 miles from Inglewood, to manage the money, provide services and perhaps claim a chunk of it for its own programs.

City of Hope is a respected nonprofit hospital. But is it the best body to assess and provide for the health care needs once served by the community-focused Centinela? Even if it established neighborhood clinics, consumer advocates rightly wonder how cancer specialists would deal with such things as hypertension and heart disease and the rest of the range of medical problems associated with low income (one in five children in Inglewood lives below the poverty line).

The public will have a chance to voice its views at an Oct. 28 meeting with the Centinela trustees, but complain is about all they can do, for state law gives full power over such decisions to boards set up by the nonprofits.

Some consumer advocates argue that boards like Centinela’s, however adept they may have been at managing a hospital, are ill-equipped to assess and meet public health needs. Consumers Union, for instance, maintains that the public would be better served if hospital sale profits were distributed through independent “community advisory committees.” The idea is now being debated in Colorado. California Atty. Gen. Dan Lungren, whose office regulates nonprofit hospitals, should consider applying it to this state.

Earlier this year, legislation was enacted requiring the attorney general to assess how conversions could best serve the public interest and to hold at least one community meeting before approving a conversion. The new law won’t redefine how charitable dollars are distributed, but by giving the public a formal avenue to make local needs known, it should prevent sagas like Centinela’s from occurring as starkly again in California.