Big Easy Giveaway

The Rapides Foundation is a case study in all the problems of conversions: board-of-trustees conflicts of interest, questionable grant-making, declining quality of healthcare after for-profit conversion and an indifferent state attorney general.

Rapides trustees control more than $200 million in a central Louisiana parish of piney-woods poverty and half a million residents. The trustees of the nonprofit Rapides hospital sold off 50 percent of it to the for-profit hospital company Columbia-HCA (now called HCA-The Healthcare Company) in 1994. With the proceeds, they created the first nonfamily foundation in Louisiana; it's still the largest. The joint venture was arranged secretively by a handful of the hospital trustees, and allegations that the hospital's charter was illegally changed to allow for the conversion have been leveled. Nonetheless, few observers dared criticize the trustees, says Dr. John Sams, a Rapides physician who is fighting to reclaim the hospital as a nonprofit. "People love their grants more than they love their birthday presents," says Sams.

The foundation's 1996 tax filings listed fourteen conflicts of interest involving trustees and grant recipients: a $2.8 million grant to the Alexandria Museum of Arts, whose treasurer was also a Rapides trustee; a $16,000 grant to the Dartmouth College Parents Fund while a board member's child attended the school; a $310,000 grant to an economic development agency whose chair was a Rapides trustee; $9,000 to a museum at the old Crowell family sawmill while Richard Crowell was a trustee; a $479,000 grant to Northwestern State University to build a flight simulator when Northwestern alumnus Greg O'Quin chaired the Rapides Foundation board and sat on the university's foundation board.

Many grants had nothing to do with healthcare, like $1.5 million to the Alexandria Zoo and $516,000 to Louisiana College to build a fitness complex. Joseph Rosier, executive director of the Rapides Foundation, says trustees must reveal any conflicts of interest regarding grants and abstain from voting on them. But in a small community, he says, it's hard to avoid funding projects with which some trustees may have a connection. As for funding priorities, "We've adopted a broader definition of health, including quality of life issues to address determinants of health," he says.

Of most concern, though, is that the Rapides Foundation, as a co-owner of the for-profit hospital, has presided over deteriorating quality of care, according to physicians there. Dr. Lawrence Dreup, a Rapides surgeon who was chosen by hospital staff as their representative on the foundation board, says equipment quality is down and patient care has suffered. "I didn't know much about Columbia when it took over, but it took over with a vengeance," he said. "The foundation, we thought, would be our ally. But when it came time for them to step up and help the hospital, they couldn't." The foundation and Columbia closed the childcare center for nurses' children and sold half the ambulance service. They also closed the school of laboratory and X-ray technology. And hospital rates have skyrocketed.

Meanwhile, the foundation and HCA are enjoying ample profits from the hospital's operations. According to the lab director, Dr. Hair, who is also chairman of the joint venture's governing board, the Rapides Foundation and Columbia have taken $63 million in profits from their enterprise since 1994. At the same time, capital outlays at the hospital have plummeted, he found, from an average $8.5 million annually before the for-profit conversion to $5 million.

Rosier denied that medical care has declined under the HCA-Rapides partnership. "There have been no issues of patient care that have reached the level of the board," he says. "If we thought we were doing good with our grant-making at the expense of the hospital, we wouldn't feel good about that."

Although Louisiana has no laws governing nonprofit conversions, the AG does have jurisdiction to monitor charitable trusts. But Pam LaBorde, his spokesperson, says, "We haven't received any complaints about this foundation."

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