Shakeup at Saint John’s Health Center Will Have Unknown Consequences for Santa Monica Charities

December 7, 2012 – When St. John's Health Center ousted its two top executives and 15 members of its 17-member board last week, it raised questions about the future of its foundation's support to Santa Monica non-profits.

In 2008, $8,585,751 was devoted to Saint John's community benefits program, which helps fund everything from local schools and homeless agencies to senior and youth programs, according to the latest data obtained by The Lookout.

However, with hospitals across the country struggling to conform to new regulations under the Affordable Care Act, community beneficiaries might well wonder how they can fit in with health care's new fiscal reality. Saint John's posted losses of nearly $22 million in 2010 and nearly $13 million in 2011.

Sisters of Charity of Leavenworth Health System, a Catholic nonprofit that owns Saint John's, had little to say about the abrupt dismissals or about the future direction of its Foundation, other than to affirm that they are “setting off on a new strategic direction,” according to Michael Slubowski, chief executive of SCL Health System.

Mary Luthy, director of community benefits and spiritual care, said that Saint John’s overall charity care expenditures over the past year had increased substantially, to a total of $44,600,000, above the median for Catholic hospitals. Their community benefits program rose from $8 million to $10 million.

“I think it’s a sign of the times,” Luthy said. “There is a lot of need out there right now for charity care.”

Saint John’s Foundation's primary purpose is to act as the fund raising arm for the hospital, said a knowledgeable source who asked to remain anonymous. Because Saint John’s is a nonprofit organization, it is required by law to report its annual charitable and community benefits.

“Their community giving is a way to maintain their nonprofit status,” the source said. “The Foundation trustees all seem to have remained in place, so it is not clear how the shakeup will affect fundraising for Saint John’s.

“I think it is important that the hospital board be replaced with local movers,” the source said. “The board that was ousted were really captains of industry here.”

The sudden administrative changes left community leaders mystified and wondering what it might bode for the future.

“The health care industry is in such turmoil right now,” said Iao Katagiri, director of Community Relations at the Rand Corporation, who served on Saint John's Board until last year.. “All hospitals are losing money, what with the Medicare reimbursements issue. It’s something that they will be dancing around for awhile.”

Katagiri declined to speculate on how the hospital’s foundation and its charitable work will shape up.

“It depends on the hospital leadership and who they decide will fill out the board,” she said. “It looks like those board members that were retained are not from around here.

“Hopefully, the new crop of board members will be local and they’ll have a good chance of maintaining their community presence,” she said. “But I have no idea how the board wants to position itself.”

Sarah Phelan, manager of communications at Saint John’s was noncommittal in commenting on the situation.

“We’ll pretty much continue, but things haven’t been decided yet,” she said.

SCL Health System’s actions might have a direct impact on its own benefactors. Los Angeles billionaire Patrick Soon-Shiong has committed $100 million to the hospital in recent years and is said to be “shocked and disturbed” by the unexpected firing of Saint John's CEO Lou Lazatin, according to the Los Angeles Times.

Nonprofit groups benefiting from St. John’s largesse include the Venice Family Clinic, the Santa Monica-Malibu Unified School District, the Westside Family Health Center, the Saint John's Child and Family Development Center and the Lifelong Learning Community.

Also receiving funding from Sant John's are WISE & Healthy Aging, Step Up on Second, Upward Bound House, St. Anne's School, Pico Youth & Family Center, Westside Shelter & Hunger Coalition, The Serra Project, the Santa Monica Chamber of Commerce, the Santa Monica Firefighters Association and the American Red Cross.