Creating New Health Care Foundations

Abstract

More than 122 major new health care foundations have now been created as a result of the sale of nonprofit hospitals and nonprofit health insurers. The charitable assets held by these health care foundations are now in excess of $15 billion dollars. The charitable missions of these new entities focus generally on vulnerable populations. As a result, these foundations have a significant impact on the unmet health care needs of all of our citizens—by the priorities they establish, the grants they make, the issues they champion, and their ability to convene discussions on reform of our health care system. Given the increased financial pressures being experienced by nonprofit hospitals and the intense competitive environment among health care insurers, the prospect for the establishment of still more of these foundations is very real. This article describes the complex web of issues facing those charged with crafting these foundations and the tools used by state attorneys general in structuring the final documents. The core questions are simply stated: How do drafters define the proper charitable mission? What governance structure will best ensure constructive dialogue between the communities served and the governing boards? How to establish a proper balance between the competing perspectives and diverse skills needed on the initial governing board? The National Association of Attorneys General (NAAG) has wrestled with many of the issues raised by the sales of our nonprofit health care institutions, and its Model Conversion Act provides an analytical framework for resolving many of the issues in an efficient manner (see DeLucia 1998). This article is designed to identify questions for research and provide information for those researchers and practitioners in the nonprofit arena affected by the closing of a community hospital or a statewide Blue Cross Blue Shield Plan. It draws on the experiences of state attorneys general who are mandated by common law and charitable trust statutes to supervise nonprofit health