THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Friday, June 21, 1996 TAG: 9606190122
SECTION: PORTSMOUTH CURRENTS PAGE: 02 EDITION: FINAL
COLUMN: Ida Kay's Portsmouth
SOURCE: Ida Kay Jordan
LENGTH: 98 lines
Since Tidewater Health Care announced the sale of Portsmouth General Hospital to Maryview's owners, Bon Secours, a lot of people have been raising questions about the deal.
Whatever happened to the money they paid for the hospital, one person asked at a City Council meeting. That set me off to check it out.
According to the record of 1988, Tidewater Health Care paid $10 million into the Portsmouth General Foundation and assumed $5 million in liabilities outside of normal operating expenses. At that time, $1 million of the cash was promised by the Portsmouth General board for removal of asbestos from the buildings. Another $1 million went into escrow to cover any contingencies that had not been reported to Tidewater Health Care.
Alan Gollihue, the foundation's executive director, said $1 million was spent on asbestos but that the second million came back, untouched, to the foundation within two years.
The foundation now is worth more than $13 million, Gollihue said. Meanwhile, the foundation has spent $3.5 million in seven years of making grants and another $1 million in operating costs, including a $400,000 management fee for the investments.
``We've been putting about $500,000 on the street every year,'' he said. ``The IRS says a private foundation has to grant 5 percent of the market value of its resources from the previous year. That means we'll be granting about $600,000 in fiscal year 1997.''
Gollihue said the foundation has made about 200 grants to projects in the community.
To make the money continue in perpetuity, Gollihue said he expects the foundation board will choose to stick to the 5 percent figure.
``We can go on until the cows come home at that rate,'' he said.
Gollihue said the foundation is unusually ``user friendly.''
He and board members talk to those who want to make proposals before they are written. The foundation becomes involved in the community.
``The board of this foundation takes very seriously its social stewardship and fiduciary responsibility,'' he said.
The foundation awards grants for prevention and education in substance abuse, teenage pregnancy and family health, research and coordination of indigent care, and in a broad category of community and humanitarian concerns.
Gollihue has a list of all the grants for anyone who wants to see it.
``We are a piece of a lot of puzzles,'' he said. ``I'm excited about the way we can operate.''
The foundation has teamed with the Portsmouth Community Trust and the Beazley Foundation to help leverage dollars for the city. A good example is the Community Health Center, which got matching money from other sources.
Will the foundation continue as an independent entity? That's another question that has been asked a lot.
Gollihue said it will have no connection with Bon Secours but will continue to operate as an independent, non-stock organization. Roger Reinhold currently serves as chairman of the board, which has 12 members. The paid staff includes Gollihue and one assistant.
Part of the deal eight years ago with Tidewater Health Care was that free office space would be provided for the foundation in the hospital buildings.
``As long as Maryview occupies the Portsmouth General building, we will be here,'' Gollihue said. ``If they move from this building, they are committed in their deal with Tidewater to find us a space in another of their buildings. It's in writing that they'll house us.''
Gollihue said the Portsmouth General and Maryview foundations have worked together as partners in projects such as the old Elm Avenue Center for Health and the Community Health Center.
There is no way the Portsmouth General Foundation can be anything but what it is, Gollihue said. That is, the foundation is independent of any hospital corporation. It does not belong to either Maryview or to Tidewater Health Care. It is an independent board with independent income.
Some people are convinced that nobody had any right to sell the hospital in the first place.
That question was raised back in 1987, when the independent, self-perpetuating Portsmouth General board decided it had to sell the facility. The board's only source of income was from the hospital, and the board of citizens was unable to sustain enough of a margin to keep going.
The board went to court to ``get the blessings'' of the Circuit Court and the state attorney general's office for the sale after the board's authority was questioned by some. The courts complied, and the board sold to Tidewater Health Care.
In addition to the cash for the foundation and assuming $5 million in obligations, Tidewater Health Care promised to spend $2 million per year in capital improvements over a 10-year period.
That lasted but eight years, and nobody ever will know exactly how closely Tidewater Health Care followed the agreement. However, Tidewater Health Care did spend a lot of money to spruce up the buildings in an effort to attract more patients. I know that for a fact, but I have no idea how much Tidewater Health Care ultimately spent.
Maryview probably is not obligated to honor Tidewater Health Care's promise to keep the hospital downtown at least until the year 2000, so we'll just have to wait and see what happens.
There seems to be nothing illegal about this deal. It's a deal between two legal, private organizations.
Maybe those who question the proceedings need to turn that energy to something else and just be glad the old Portsmouth General board had the wisdom to set up an independent foundation with any money realized from the sale. The whole city benefits from the trust. by CNB