The Montana Attorney General’s Office has received a torrent of public comments, which cover the spectrum from complete support to outraged opposition, on the proposed distribution of $74.9 million in proceeds from the sale of Community Medical Center.
The AG’s office approved the actual sale earlier this year, but because the Missoula hospital was a nonprofit that was sold to a for-profit corporation, the state must also approve how the sale proceeds are used.
Community Medical Center is now owned by a partnership between Billings Clinic and RegionalCare Hospital Partners.
The CMC Board of Directors submitted a plan to use the bulk of the proceeds, $64.2 million, to create a new nonprofit foundation, the Community Hospital Legacy Foundation, which will have the same health care-minded mission as CMC and will serve the same geographic region.
The more contentious issue is the part of the plan that calls for two gifts totaling $10.5 million to the University of Montana Foundation.
The money would be used to help build a CMC Legacy Health Professions Complex on the UM campus, create a physician assistant program, create a scholarship endowment for health care students and help fund health care programs and infrastructure at the new Missoula College.
Many of the public comments are opposed to the proposed distribution plan, although a sizable number are supportive.
Meanwhile, with the deadline for a decision by March 13, the AG’s office has submitted a series of questions to Community Medical Center, asking for clarification on a number of issues.
“Did the Board contact entities other than the University of Montana concerning the allocation of funds for health and health-care programs that would benefit people in the CMC service area?” the AG’s office asked. “Describe each of those contacts and the other programs considered by the board. Did the Board distribute a request for proposals or other documentation seeking applications? If so, how were the requests distributed? To whom was it distributed? What criteria were used to select the University of Montana or its Foundation?”
The board’s response was lengthy.
In summary, board members contended that the “only entity in the service area capable of operating a graduate program in mid-level clinician studies is the University of Montana.”
The board also wrote that it had other proposals under consideration, and a task force was created to review them.
The proposal from the University of Montana, which was made by UM President Royce Engstrom in a presentation and slideshow, was “the subject of much discussion and revision," the board said.
“The principal criteria used for the selection of this proposal were the robustness of the proposal, the lack of any other entity capable of starting such programs, the fact that the University of Montana is already a sponsor of the residency program, and most importantly, the Montana Healthcare Work Force Strategic Plan of 2011,” the board wrote.
The AG’s office also asked if the board considered transferring the funds to an existing foundation or nonprofit organization.
The board responded that the existing Community Medical Center Foundation, the Montana Community Foundation and the Montana Healthcare Foundation were among the “numerous alternatives” considered.
The board wrote that the Montana Community Foundation “was felt not to be as sophisticated as the Montana Healthcare Foundation or the UM Foundation, and it has no specified purpose.”
The board said the Montana Healthcare Foundation received serious consideration, but questions were raised as to whether a foundation with statewide coverage and located in Bozeman could focus on the former service area of CMC.
Other members of the board were concerned with the time and money that had been spent getting the Bozeman-based foundation up and running.
CMC board members said they initially thought that the UM Foundation had “excellent investment policies” and was the best alternative. The board originally wanted to give the entire bulk of the proceeds to the UM Foundation, but the AG’s office objected, so “the board made the decision to not use (the UM Foundation) as a vehicle for the endowment funds.”
As far as all the other, smaller, foundations and nonprofit organizations that requested the funds, the board felt none “have the necessary focus on our service area, and none have the sophistication needed for the management of such a large endowment. Based upon issues with all of the other potential foundations, it was decided that the creation of a new company would be the best alternative for fulfilling CMC’s mission for a long time.”
Many of the public comments filed with the AG’s office to date express dissatisfaction with the CMC board’s final proposal.
Meredith Printz, executive director of the Missoula Community Foundation, co-wrote a letter with the foundation’s board chair Patsy O’Keefe to express concern about the proposal, saying it was "precedent setting."
“Our concern is balancing donor intent with Missoula’s benefit,” they wrote. “A fundamental principle of philanthropy is maintaining the public trust. We ask that you carefully consider whether the CMC proposal to donate $10,000,000 of the sale proceeds to the University of Montana meets the requirements of the Cy Pres Doctrine, which requires applying the funds in a manner ‘as nearly like’ as possible to the settlor’s original charitable purpose. Donors and community members in the CMC region have a keen interest and right to expect that if any nonprofit organization ceases to exist its assets will be transferred to the nonprofit organization whose mission and purpose closely aligns with that of the original receiving organization.”
Printz and O’Keefe wrote that while they support the part of the proposal to create a new nonprofit foundation, they question the gift to the UM Foundation because they said that the “UM Foundation’s mission is not in line with CMC’s mission, which would trigger the Cy Pres Doctrine.”
“Cy Pres protects donors’ original objective," they wrote. "CMC’s mission is to serve the underserved population in western Montana, CMC’s geographical reach, ‘from day one’,” they wrote. “For this reason, we encourage you to direct the CMC Board of Directors to place ALL sale assets into the newly created foundation, allowing that new Board to make grants from the full sale amount for the benefit of the many communities throughout western Montana served by CMC which is in line with original donors’ to CMC intent.”
Charles Page, a retired doctor from Stevensville, expressed outrage at how the donations of unused vacation days he made to CMC over the years would now be used by the UM Foundation.
“For 14 years, I worked in a senior administrative capacity for CMC, initially as director of its rehabilitation center, and for the four final years in various roles including community services, marketing, and strategic planning,” he wrote. “Throughout my employment I donated to CMC's Foundation as a means of supporting the mission of the organization. My donations were in the form of unused vacation days, which I believe amounted to a substantial dollar total and so noted in the CMC Foundation financial records at the time. In light of the potential sale and conversion of CMC to a 'for-profit' corporation, which was never the intent under which those donations were made, I wish to have the total amount of my donations over the years given back to me in the form of a check from the CMC Foundation prior to any sale which would result in CMC no longer being a "not-for-profit" entity under Montana or federal law.”
Other comments were in favor of the proposed use of the charitable assets.
“The $10 million dollar gift to the University will in a major way strengthen the connectivity of health care education and health care delivery in the geographic western Montana,” wrote Nelson Weller, who said he was a 1958 alum of UM. “The education and the employment of students in the health care field will be enhanced in a major way with this funding. Furthermore, an additional $500,000 is to be allocated to the new Missoula College, which will continue to develop a solid health care educational program. As a financial contributor to my University via the University of Montana Foundation, I can attest to the soundness of the fiduciary responsibility of the Foundation.”