California Proposition 52

[Gregory Matthews]

The November  ballot contains a vote on Proposition 52.  This is a health care  measure that is related to the funding of health care in California.

Official records of the State of California state that so far Adventist Health has spent some $3,020,143.00 in an attempt to persuade California voters to vote in favor of the Proposition.

For more on this see:

https://ballotpedia.org/California_Proposition_52,_Voter_Approval_to_Divert_Hospital_Fee_Revenue_Dedicated_to_Medi-Cal_(2016)

 

[rudywoofs (Pam)]

 

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so far Adventist Health has spent some $3,020,143

that's a lot of money.... is it worth it?

Which monetary coffers has the money been coming from?

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Adventist Health is a not-for-profit health care organization which operates facilities throughout the western U.S. states of California, Hawaii, Oregon, and Washington.  It is run by the Seventh-day Adventist Church.

Does the SDA Church really run Adventist Health?  How is AH funded?

[Gregory Matthews]

Pam, questions, questions, questions.  Can't you just let things be and not stir the pot?  

1)  Where does the money come from?

Answer:  The money comes from patient care services and or gifts and grants made  directly to it.  IOW,  the SDA denomination does not fund it unless it contracts with it for specific services.  In actual fact, our Adventist hospitals make direct gifts/grants to the SDA denomination.

2)  Does the SDA denomination really run Adventist Health?

Answer:  This is a complex question on which, from the practical standpoint, people do differ. 

The first part of the answer involves legal issues:  At one time some parts of so-called Adventist Health were owned and controlled, by the SDA denomination.  The time came when lawyers working for the denomination became concerned as to financial liability risks to the denomination.   The result was that in an attempt to shield the denomination from such risks legal steps were taken to sever the corporate relationship between the denomination and Adventist Health.  In this new relationship, the denomination (see below) may influence Adventist Health, but it does not control it. 

The second part of the answer involves some  issues which have a legal basis but go beyond the above:  Denominational leaders are members of the respective governing boards of the constituent organizations of Adventist Health.   But, denominational leaders do not constitute a majority.  IOW, denominational leaders do not rule. 

[rudywoofs (Pam)]

Thanks for that info, Gregory.  I've always wondered just how much the church's "hand" was in the running of AH.

[Gregory Matthews]

To expand upon the answer:

In actual fact (Fact?   I can just see people challenging me on this.), from a practical point the Federal government probably has the greatest control over our health care organizations.

1)  A major part of the funding for health care providers comes from the Federal Government in the form of payments for services--Think Medicare, and a listing of other such funding.

2)  With the exception of a few hospitals that would only admit very  wealthy people who could afford to pay cash for their services, no hospital in the U.S. today could exist without accepting Federal payments.

3)  In order to receive such payments, hospitals must comply with Federal mandates which cover just about every aspect of care.

4)  In some places in the U.S. (not all), due to mostly State laws, hospitals can not be built unless the State grants permission for the hospital to be built.  In those areas, expansion of services provided may be regulated by obtaining permission from the State.

5) The fees that may be charged for hospital services, in the majority of  cases are set by the Federal government.

6)  In cases where fees are not regulated, the hospitals feel that they are required to overcharge in order to make up the loss that they incur for services for which they are not paid their full costs.  This is why a hospital may bill a patient $15 for a single asprin pill.

7)  One study has stated that on the average one agency of the Federal Government pays 42% of the cost of medications that you would pay if you were purchasing that medication for yourself. 

8) I use a mechanical device in my own health-care.  That device is paid for with Federal funds.   The financial regulations that govern Federal payments to the provider of that device are complex.  During specific defined periods of time that device must be  provided with no payment going to the provider.  So, the provider simply increases the costs during the time periods that the provider will be paid. In addition, the provider of that device is determined by a bid process for each county.  In counties where a number of providers bid on the contract, the cost to the Federal Government is lower than in counties where there is only one provider that bid on the contract. 

9) I am aquainted with a case where a Federal hospital needed to contract for a CABG with a non-Federal hospital.  In this case the surgery would be performed by the non-Federal hospital and the post surgery care would be provided by the Federal hospital.  In this case the surgical fee was not set in law and was to be negotiated.  The non-Federal hospital requested $100,000 for the surgery.  The Federal hospital said that was robbery.  NOTE:  As a point of information the surgery involved the heart and is one that is routinely done every day.

Pam, I am going to have to get off of my soap box.  I have  just gotten started on the subject of health care costs. 

 

[Tom Wetmore]

9 hours ago, Gregory Matthews said:

2)  Does the SDA denomination really run Adventist Health?

Answer:  This is a complex question on which, from the practical standpoint, people do differ. 

The first part of the answer involves legal issues:  At one time some parts of so-called Adventist Health were owned and controlled, by the SDA denomination.  The time came when lawyers working for the denomination became concerned as to financial liability risks to the denomination.   The result was that in an attempt to shield the denomination from such risks legal steps were taken to sever the corporate relationship between the denomination and Adventist Health.  In this new relationship, the denomination (see below) may influence Adventist Health, but it does not control it. 

The second part of the answer involves some  issues which have a legal basis but go beyond the above:  Denominational leaders are members of the respective governing boards of the constituent organizations of Adventist Health.   But, denominational leaders do not constitute a majority.  IOW, denominational leaders to not rule. 

Correct that it is complex, but perhaps not the question.  It really is the answer that is complex and to that extent the above is not quite correct, primarily because it is incomplete. The way it is phrased it sort of makes Adventist Health (and by implication Adventist healthcare generally) sound like a monolithic entity.  It is not a single entity. (Of course, neither is the denomination.)  There are multiple corporations and denominational relationships  with varied interrelationships.  There are also a couple details that are incorrect.  Strictly speaking the corporate relationship was not severed.  It was changed and perhaps in some ways clarified.  There remains a definite corporate relationship (or relationships to be more accurate)  still. And a definite denominational relationship complying with denominational status policy is required for them to be considered to be Adventist entities.  If an Adventist healthcare entity satisfies the requirements of the denominational status policy (and they do) they are deemed to be an integral part of the denomination.

There is more to corporate governance and control than just the governing board.  At that corporate layer it is true that a majority of the members of the board are not leaders from other denominational  institutions and organizations.  While a board could be said to "run" an organization to the extent that they have broad oversight over operations, it is really the officers and administration that "run" the organization under the oversight and general supervision of the board.  These officers are considered to be denominational leaders. ( A key role of a governing board is the selection, appointment and oversight of the corporate officers. And to replace officers that are not functioning as expected or required.)

But the more fundamental corporate governance that is really at the heart of the question is who controls Adventist healthcare.  That corporate control is not in the officers, nor the governing boards. The missing corporate governance layer in the above description is what may be the most important to the question - the corporate membership.  It is effectively the constituent governance layer, somewhat like the constituency of a conference and it is the corporate membership to which the non-profit corporation is ultimately accountable.  In a non-profit corporate context it is functionally like the shareholders of a for-profit corporation. The most significant distinction would be that shareholders both own and control the corporation, while non-profit corporate members would only control the corporation. (Since a nonprofit corporation would be organized as a tax exempt organization, its ownership cannot be said to be by another entity or persons.) One of the fundamental responsibilities of the corporate membership is the appointment of the board, just as shareholders would for a for-profit corporation.  In that ultimate sense, the denomination does indeed control Adventist healthcare.  That level of control would effectively say that if the board and officers are not running the entity as expected and required by, and to the satisfaction of, the corporate membership, that corporate membership has the authority to and can remove one or all of them and put in place others who will do so.  It is at that layer where the most essential control exists for any denominational entity.  Powers reserved to corporate membership (similar to shareholders) also include major disposition or encumbrance of assets, significant changes to corporate purposes and functions, and any changes to articles of incorporation and often even bylaws.  

Who exactly controls any given Adventist healthcare entity depends on who or what entity or entities comprise the corporate membership.  It does vary from one to another.  But denominational status policy requires that a clear majority of the corporate membership be individuals in leadership positions from currently existing denominational entities, or in some cases an existing denominational corporate entity.  For example, for a regional Adventist healthcare entity with healthcare operations and facilities within the geographic territory of a single union conference, the executive committee of that union conference would likely constitute the majority of the corporate membership of that regional Adventist healthcare corporation.  In that sense, the union conference would have ultimate control of that corporation and the corporation is accountable to that union conference.  Another denominational status policy requirement that gives a finality to who has ultimate control is a required dissolution provision in the corporate articles and/or bylaws that has to provide that a designated denominational entity listed in the SDA Yearbook is to be the final recipient of net assets in the event the corporation is dissolved.  Most typically that would be the same entity identified that controls it.

While there is more complexity to all of this, there is one general bit of information about non-profit corporations that should be noted.   Some who are familiar with this area of corporate law may know that a non-profit corporation, under most state non-profit corporation laws, can be organized and operated without a corporate membership, and only act through its board of directors that assumes the functions of a corporate membership, essentially making them accountable to only governmental oversight.  This form of corporate structure is prohibited by the denominational status policy for the simple reason that it removes that essential layer of denominational accountability and control.

Edited September 7, 2016 by Tom Wetmore
typo correction...

[Gregory Matthews]

Thank you Tom.  I fully expected that you would join the conversation and add important elements to what I had said.  I was intentionally brief and I did not post everything that I could have said about it.  I expected that you would add what you considered to be the most important elements.  In addition, I responded to what I considered to be the most important elements of Pam's question.

Paragraphs 1 & 2:  I agree and I was aware.

Paragraph 3:   I would not have thought to have added it.  Thank you.  A variety of views helps to make something better and more complete.

Paragraph 4 adds to my knowledge.

Paragraph 5 is beyond my level of knowledge.

So, all in all, thank you.  Probably, my post represents what a non-attorney, SDA member, who had some knowledge of denominational organization would think.