Carondelet sale leaves future of two hospital foundations in doubt

When Carondelet Health announced in July that it intended to sell its two Kansas City area hospitals to Prime Healthcare Services Inc., some local philanthropists had a $20 million question.

They’re still asking.

Longtime supporters of St. Joseph Medical Center and St. Mary’s Medical Center want to know what will happen to about $20 million that has been donated to the two hospitals’ philanthropic foundations over the years. They want the money that was raised locally to stay here and be used in the Kansas City community.

Ascension Health, the large national nonprofit Catholic health care system that owns Carondelet, did not include the two charity foundations (or three Kansas City area nursing homes) in its sale to Prime Healthcare. By law, the for-profit Prime can’t benefit from the foundations, so hospital backers have been asking Ascension what it plans to do with the foundations’ assets.

Ascension, based in St. Louis, so far has declined to comment except to say that it will address the matter “later.”

The foundation serving St. Joseph Medical Center in south Kansas City had assets of about $19.1 million, according to a public tax filing for the fiscal year ending in June 2013.

For St. Mary’s Medical Center in Blue Springs, the latest available tax filing for its foundation listed assets of slightly more than $1.1 million, although insiders said the amount has been spent down for the hospital’s benefit.

Current and former board members of the hospitals’ foundations interviewed by The Star privately expressed frustration over the uncertainty about how their assets will be handled. But citing Ascension’s control of the funds, most have been reluctant to go public with their complaints.

“Let’s just call it a question of whether the money stays here or goes to (Ascension in) St. Louis,” said Sam Sabaugh, a former member of the St. Joseph foundation board. “The intent of the board is to keep the money in Kansas City because the majority of the money came from Kansas City.”

The two foundations raised that money by holding annual dinners and golf tournaments and through donations, many from the physicians on the hospitals’ staffs.

Money from the foundations has been used to buy medical equipment for the hospitals and for projects such as expanding the emergency room at St. Mary’s and renovating the intensive care unit at St. Joseph.

Foundation money also has paid for a prenatal program for low-income women, providing them visits with a nurse, and childbirth and breastfeeding classes. Women recovering from breast cancer have received help paying for their medical supplies and medicine, as well as their rent and utilities. And nurses have gotten tuition money for continuing education.

Questions about the foundations’ future first came up two years ago when the for-profit Hospital Corporation of America chain was negotiating to buy St. Joseph and St. Mary’s. The deal with HCA eventually fell through.

During those negotiations, HCA raised no objections to the hospital foundations remaining independent, but Ascension would never commit, Sabaugh said. “We went around and around last time with little or no resolution. It seems that we were always negotiating with Ascension.”

The foundations’ future is of more than casual interest in the Kansas City area, which has seen the number of independent local health care philanthropies grow over the past decade as more and more nonprofit hospitals have been sold to for-profit corporations.

The largest have been the Health Care Foundation of Greater Kansas City and the REACH Foundation, created when the Kansas City-based nonprofit health care system Health Midwest sold its hospitals in 2003 to HCA. Together, the two foundations received about $500 million from the sale. The foundations now pour millions of dollars into local health care programs and services.

The foundations of individual Health Midwest hospitals were able to keep their assets. They found new missions as independent philanthropies after the hospitals they served became for-profit properties of HCA.

The Baptist-Trinity Lutheran Legacy Foundation, for example, evolved from the foundation of Baptist-Lutheran Medical Center. Instead of benefiting the hospital, the legacy foundation now runs a program called Kansas City’s Medicine Cabinet that provides prescriptions and vision care and emergency dental care to people in need. The foundation’s assets have grown from about $20 million to more than $40 million, thanks to continued bequests.

Similarly, the foundation of Menorah Medical Center reorganized as the Menorah Legacy Foundation, with assets of more than $20 million. It funds health-related services for both the Jewish community and the greater Kansas City community. Its Beans & Greens project provides farmers markets the technology to accept food stamps and helps low-income families pay for fresh foods bought there.

More recently, after Prime Healthcare acquired Providence Medical Center in Kansas City, Kan., and St. John Hospital in Leavenworth in 2013, the $3 million in those hospitals’ foundations was redirected to other local projects.

A legacy fund operated by the Sisters of Charity of Leavenworth received some of the money to be used for health care needs in Wyandotte and Leavenworth counties, the mission of the original foundations. And donations made to the foundations for specific purposes now support cardiology programs at the University of Kansas Medical Center and scholarships at St. Mary’s and Donnelly Colleges.

Members of St. Joseph and St. Mary’s foundation boards said they studied the way local hospital foundations, such as the one at Menorah, were able to redirect their philanthropy after their hospitals were sold. But the plans they were making have been put on hold as they’ve waited to hear what Ascension will do with the foundations’ money.

There is precedent for an Ascension hospital’s foundation to remain a local institution after the hospital is sold to a for-profit corporation.

In 2006, Triad Hospitals, now part of Community Health Systems, bought St. Joseph Hospital in Augusta, Ga., from Ascension. The hospital’s foundation remained in local control after the sale.

“Once it sold, the nuns running the foundation said, ‘What are we going to do with the funds?’ They gave it a lot of thought,” said R. Lee Smith Jr., president of the Community Foundation of the Central Savannah River Area, which manages the foundation’s assets of slightly more than $3 million. They decided to use the foundation to provide health care to the community’s poor by directing their support to a local hospice.

“They had to create a new mission for the foundation,” Smith said.

This story was originally published November 2, 2014 at 7:33 PM with the headline "Carondelet sale leaves future of two hospital foundations in doubt."