November 21, 2001
Dennis Eagan
Department of Justice
Office of the Attorney General
1515 Clay Street
Oakland, CA 95461-1413
(510) 622-2113
Re: Daniel Freeman Hospitals
Dear Mr. Eagan:
We appreciate the opportunity to discuss our concerns with you involving Tenet Healthcare’s purchase of Daniel Freeman Memorial and Marina Hospitals.
As you requested, we have enclosed 1996 and 1997 revised OSHPD information to help you determine an accurate portrayal of charity care delivered to the community. For comparison purposes, we have provided the charity care information reported in the audited financials, original OSHPD filings, and revised OSHPD filings in both charges and costs and have separated the amounts reported by hospital.
We suggest that the revised OSHPD numbers be used, but that Tenet be allowed to reduce its commitment if it is established that charity care was over-reported. We believe that the OSHPD numbers are the most reliable resource available to the Attorney General at this time.
We also recommend that a condition be placed on any subsequent sale of the Marina property that allows the community to receive any amount over and above what Tenet is paying for the property, as reflected in the Houlihan Lokey report to the Attorney General.
We look forward to continuing to work with your office on this critically important transaction. Please let us know if we can provide any other resources to assist you in your information-gathering.
Sincerely,
Harry Snyder Barbara Gorham Leslie Bennett
Consumers Union Consumers Union Consumers Union
West Coast Regional Office West Coast Regional Office West Coast Regional Office
cc: Tricia Wynne
Daniel Freeman Hospitals
Annual Charity Care
Financial Statements Compared to OSHPD Filings
Measured in Cost (1)
1996 - 2000
|
Fiscal Year |
|
Financial Statement(2) |
|
Original OSHPD(3) |
|
Revised OSHPD (4) (5) |
|
|
2000 |
|
$ 2,736,344 |
|
$ 3,882,635 |
|
revisions not made |
|
|
1999 |
|
$ 1,157,146 |
|
$ 1,507,953 |
|
$5,619,199 |
|
|
1998 |
|
$ 1,835,919 |
|
$ 2,157,075 |
|
$6,462,074 |
|
|
1997 |
|
$ 2,511,066 |
|
$ 2,685,327 |
|
$8,321,218 |
|
|
1996 |
|
$ 2,313,137 |
|
$ 2,632,875 |
|
$9,218,099 |
|
|
Average for 96 & 97 |
|
$ 2,412,102 |
|
$ 2,659,101 |
|
$ 8,769,659 |
|
(1) Cost calculated using OSHPD cost-to-charge ratio from OSHPD filings: (Total Operating Expenses – Other Operating Revenue) / Gross Patient Revenue.
(2) Daniel Freeman Hospitals Health Impact Analysis, August 24, 2001, at 21. The Lewin Group concluded in its report that “[a]n under-reporting of traditional charity care charges in the audited financial reports was found and corrected in the OSHPD reports.” The Lewin Group Report, November 1, 2001 at 46.
(3) Daniel Freeman Hospitals Health Impact Analysis, August 24, 2001, at 21.
(4) OSHPD revisions for FY 2000 due by January 31, 2002.
(5) Revised OSHPD filing by individual hospital in cost, using cost-to-charge ratio above:
|
Fiscal Year |
|
Marina Hospital |
|
Memorial Hospital |
|
|
2000 |
|
$1,273,007 |
|
revisions not made |
|
|
1999 |
|
$631,858 |
|
$4,987,341 |
|
|
1998 |
|
$884,033 |
|
$5,578,041 |
|
|
1997 |
|
$615,780 |
|
$7,705,438 |
|
|
1996 |
|
$1,184,095 |
|
$8,034,004 |
|
|
Average for 96 & 96 |
|
$899,938 |
|
$7,869,721 |
|
Daniel Freeman Hospitals
Annual Charity Care
Financial Statements Compared to OSHPD Filings
Measured in Charge(1)
1996 - 2000
|
Fiscal Year |
|
Financial Statement(2) |
|
Original OSHPD(3) |
|
Revised OSHPD (4) (5) |
|
|
2000 |
|
$ 8,632,000 |
|
$ 12,225,570 |
|
revisions not made |
|
|
1999 |
|
$ 3,648,000 |
|
$ 4,718,555 |
|
$17,790,880 |
|
|
1998 |
|
$ 5,238,000 |
|
$ 6,133,384 |
|
$18,458,029 |
|
|
1997 |
|
$ 6,981,000 |
|
$ 7,467,800 |
|
$23,492,511 |
|
|
1996 |
|
$ 6,084,000 |
|
$ 6,702,817 |
|
$24,612,049 |
|
|
Average for 96 & 97 |
|
$ 6,532,500 |
|
$7,085,309 |
|
$24,052,280 |
|
(1) As reported in the annual financial statements and to OSHPD.
(2) Daniel Freeman Hospitals Health Impact Analysis, August 24, 2001, at 21.
(3) Id.
(4) OSHPD revisions for FY 2000 due by January 31, 2002.
(5) Revised OSHPD filing by individual hospital in charges:
|
Fiscal Year |
|
Marina Hospital |
|
Memorial Hospital |
|
|
2000 |
|
$3,948,534 |
|
revisions not made |
|
|
1999 |
|
$1,932,879 |
|
$15,858,001 |
|
|
1998 |
|
$2,488,832 |
|
$15,969,197 |
|
|
1997 |
|
$1,583,390 |
|
$21,909,121 |
|
|
1996 |
|
$2,762,705 |
|
$21,849,344 |
|
|
Average for 96 & 97 |
|
$2,173,048 |
|
$21,879,232 |
|