Statewide: Healthy foundations

 In 2015-07

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by Kathy Blake

Looking for an upside to the declining number of North Carolina’s independent community hospitals may be a fool’s errand, given how the institutions have long provided an economic bulwark for cities and towns across the state. Rutherfordton, like many others, suffered an emotional loss when Duke LifePoint Healthcare bought an 80% stake in Rutherford Regional Health System in June 2014. But the sale made sense financially because it wiped out the hospital’s $22 million in debt, while Duke LifePoint — jointly owned by Duke University Health System Inc. and Brentwood, Tenn.-based LifePoint Health Inc. — pledged $60 million in improvements over the next decade. Just as important, the nonprofit that previously owned Rutherford Regional hung on to a 20% stake, and assets of $30 million, up from $1 million. Now the affiliated RHI Legacy Foundation, led by Executive Director Jill Miracle, is prepping to address some critical problems in a county of 66,600, where half of the households report income of less than $36,000 and 21% live in poverty.

Rutherfordton is among a dozen or so North Carolina cities in which foundations have formed with proceeds from the sales of local hospitals, creating a honey pot available to nonprofits that often provide critical services for people in need. Health legacy foundations, sometimes called conversion foundations, are intended to provide long-term benefits to communities. They don’t start out of the kindness of hospital officials’ hearts: State law requires that assets from a dissolution or sale must be used to pay off debts and obligations, with the remaining money to be transferred either to the state, a charity or representatives of tax-exempt nonprofits.

The foundations, which span the state from the coast to the far west, “represent a valuable source of funding, expertise and connection for the people and places they serve,” says Ret Boney, executive director of the North Carolina Network of Grantmakers, a Raleigh-based nonprofit. At least seven foundations have formed during the last four years, she says. North Carolina now has fewer than 20 stand-alone hospitals, compared with 115 in the late 1980s, with the bulk owned by Carolinas Healthcare System, Novant Health Inc. and other large companies with multiple operations. (Duke LifePoint has acquired seven hospitals in North Carolina.) About 13 health legacy foundations in North Carolina now offer a helping hand. At least three have more than $50 million in assets, topped by Greensboro’s Cone Health Foundation which had assets of $113 million in 2013.

 

“Legacy foundations are really an important revolution in the health care landscape,” says Allen Smart, vice president of programs at the Kate B. Reynolds Charitable Trust in Winston-Salem, which has $532 million in assets as of August 2013, its last public report. The trust, while not a legacy foundation, directs 75% its grants toward improving health and wellness in North Carolina. “In the ideal, the result is you maintain or maybe even enhance the type of care from the hospital, because this new buyer has more financial resources. But you also get a new health leadership organization that can focus on local health issues. The reality is, the quality of the hospital has been strengthened, and the new organization is an asset that helps the community.”

Cone Health Foundation formed in 1997 as part of the merger of Greensboro nonprofits Wesley Long Hospital and The Moses H. Cone Memorial Hospital. Since then, it has handed out more than $71 million, including $4.5 million to 43 Greensboro-area nonprofits in 2014. Organizations promoting access to health care received about half of the monetary donations last year; major outreaches include substance abuse, mental health services and adolescent pregnancy prevention. The group is particularly pleased with its impact on reducing teen pregnancy, which reached a record low in the region last year, according to the foundation’s annual report. “It is critically important to understand that teen pregnancy and childbearing can carry high health, emotional, social and financial costs for both teen mothers and their children,” says Sandra Boren, vice president and senior program officer.

Cape Fear Memorial Foundation in Wilmington, formed in 1996 with $45 million from the sale of Cape Fear Memorial Hospital to Columbia/HCA Healthcare Corp., has provided $43 million since its inception. (The hospital merged with New Hanover Regional Medical Center in 1998.) The foundation typically offers $2.5 million to $3 million in grants annually, President Anna Erwin says. “Our biggest challenge recently has been access to health care, specifically chronic disease management, to fund the underinsured and noninsured in our service area. It’s a pressing problem and it costs our communities great sums of money, because you can’t deny medical care to sick people. It’s just not done.” The foundation awarded grants to 22 groups last year in Bladen, Brunswick, Columbus, New Hanover and Pender counties, including $60,000 over three years for the Community Boys and Girls Club’s Healthy Habits program.

Many North Carolina cities have foundations bolstered by proceeds from sales of hospitals. At least three have assets of more than $50 million, including Cone Health Foundation with $113 million.

Newer foundations can be leaders in assessing key community health care needs, says Smart, who worked for a legacy foundation in Alexandria, La., before moving to North Carolina. The newer foundations “have grant dollars, but they also have a seat at the table, a voice in the community, whereas a hospital is just trying to deliver quality care. The foundations have a different role, which I think is really critical. It’s a really interesting and important movement in North Carolina.”

In Rutherford County, the new foundation expects to make a dent by investing in programs that address the county’s most critical unmet needs. It plans to provide about $500,000 in grants to local nonprofits this year. Projects that could receive assistance include camps for children with asthma and diabetes, lifeline services for seniors, and cancer screenings and treatment for uninsured women.

“We have a lot of hopes and dreams, but we don’t have a lot of infrastructure to solve those problems, so a big piece of our work is going to be to actually start the organizations to solve the problems that exist in our community, primarily around cancer services and nutrition,” Miracle says. “We want to be able to move the needle with the significant assets we have, and have some programs that change how people look at health and wellness.”

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