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Cardinals claim rights in hospital dispute

NCR Staff
St. Louis

In a rare public clash between members of the U.S. hierarchy and a university president, three of the nation’s most powerful cardinals have charged into a dispute in St. Louis over the proposed sale of a Catholic hospital to a publicly traded for-profit company.

The outcome has potentially broad implications for U.S. institutions with Catholic roots.

Cardinals James Hickey of Washington, Bernard Law of Boston and John O’Connor of New York have joined St. Louis Archbishop Justin F. Rigali in condemning St. Louis University’s board of trustees and its president, Jesuit Fr. Lawrence Biondi, for a decision to sell St. Louis University Hospital to Tenet Healthcare Corp.

Tenet, based in Santa Barbara, Calif., is the nation’s second-largest for-profit health care system, after Columbia\HCA Healthcare Corp.

Among questions the St. Louis issue has pushed to the surface is what power a bishop has over an independent, largely lay board of a Catholic institution that refuses his directives. Another question is who controls the designation “Catholic.”

St. Louis University is one of hundreds of U.S. Catholic institutions where ownership has been transferred from a religious order to an independent board without going through a formal process of “alienation” -- that is, permission from the Vatican to sell or transfer church property. Is such an institution now subject to church law, as Rigali has argued, or is it exempt, as Biondi contends?

In statements issued in recent days, prelates have leaned hard on Biondi, warning of canonical improprieties and hinting strongly at possible Vatican intervention in the dispute.

Hickey, Law, O’Connor and Rigali all have close ties to Vatican officials. Rigali worked in Rome for 25 years before being assigned to the archdiocese of St. Louis in 1994.

Rigali, in a public statement on Oct. 17, said the 303-bed St. Louis University Hospital will “cease to be a Catholic hospital” if the proposed sale to Tenet goes through.

Hickey’s statement reiterated an earlier warning from Rigali that Vatican approval was required for such a major transfer of church property. O’Connor supported Rigali’s argument that the hospital is church property, regardless of its present legal status as a civil corporation or its ownership by an independent board

Hickey wrote, “It is my hope that this gravely flawed decision will be overturned by the joint action of the Holy See and the superior general of the Jesuits.”

Law issued a similar statement a week earlier, citing a “fundamental difference” between Catholic and for-profit health care institutions. Law said the dispute raises the question of whether the board of trustees has canonical authority for its decision. “Perhaps the intervention of the father general of the Society of Jesus and the Holy See can reverse this lamentable action,” he said.

Sources around the country say the situation in St. Louis is a flash point for unresolved issues of Catholic identity and control that date to the late 1960s and 1970s, when many religious orders transferred institutions to independent boards.

Under civil law, Biondi is within legal rights to sell the hospital, but members of the hierarchy are challenging his actions under canon law. O’Connor said the U.S. Supreme Court has ruled in support of the church’s right to insist that canon law be followed in such matters.

Rigali warned in his statement that the goal of preserving Catholic identity of institutions “cannot be realized if we continually yield institutions that are historically Catholic and have been perceived as such by the community, to for-profit corporations.” Others argue, however, that members of the hierarchy cannot alone determine whether independently owned institutions like St. Louis University and its hospital are entitled to call themselves Catholic.

Despite the strong pressure, Biondi remained firm in his intention to proceed with the sale, according to John Kerr, associate vice president for university public relations. “We’re moving ahead in our letter of commitment with Tenet Healthcare as we announced on Oct. 4,” he said. “I’m sure Fr. Biondi and Archbishop Rigali will continue to discuss intricacies of the proposal so that the archbishop is fully advised of all the issues he’s concerned about.”

Final terms of the sale are to be worked out over the next 60 days. Missouri Attorney Jay Nixon will review the proposed sale, as required in transfers of not-for-profit institutions to for-profit.

The dispute came to a head on Oct. 4, when St. Louis University’s 52-member board of trustees voted to sell the hospital to Tenet for about $300 million, ignoring Rigali’s strong objections. Biondi had assured the board and the public that terms of the agreement with Tenet would allow the hospital to continue to carry out its Jesuit and Catholic mission.

The board chose Tenet’s bid over a competing joint offer of $200 million from two St. Louis-based Catholic health care systems.

In correspondence with Biondi, Rigali had expressed strong support for accepting the lower offer from the Catholic groups over the one from Tenet. The letters were given to university trustees on the day of the vote. Rigali was not invited to address the board.

Rigali reacted swiftly and negatively after learning from Biondi of the board’s decision. “In making the decision to sell the hospital to a secular for-profit company, Fr. Biondi has acted without my support and, to this point, without the approval of the Holy See,” Rigali said Oct. 4.

Rigali has expressed concern that sale to a for-profit group would compromise Catholic identity, care for the poor and ultimately have a negative influence on Catholic health care nationally.

Rigali reiterated his adamant opposition after a 90-minute meeting Oct. 10 with Biondi, archdiocesan and university officials.

Sr. Alice Gallin, former executive director of the Association of Catholic Colleges and Universities, said the understanding has been that educational institutions operated by religious orders were not church property. The source of that understanding, she said, is a thesis put forth by Msgr. John McGrath, a canon lawyer from The Catholic University of America, in the mid-1960s. McGrath argued that such institutions are held in public trust and are outside church law. Recently, however, that understanding is undergoing new challenges from the hierarchy, Gallin said.

She has recently written a book tracing the history of the conflict, Independence and the New Partnership in Catholic Higher Education (University of Notre Dame Press, 1996).

In the late 1960s and early 1970s, the decade or so that followed the Second Vatican Council, few Catholic leaders, including the pope, had problems with such transfers, Gallin said. In more recent years, the thinking of church officials has shifted, she said, and “this question is being raised again.”

Although Rigali has avoided warnings about the Catholic identity of St. Louis University as a whole, Law moved into that territory. “The action of the board of trustees jeopardizes the commitment of the university to its Catholic identity,” he said.

Previously, a number of U.S. Catholic universities or religious orders have sold or merged holdings, including hospitals, schools and broadcast operations, without asking permission or encountering interference from local bishops or the Vatican. In other cases, however, bishops have intervened successfully to prevent such transactions with for-profit groups.

The record is mixed, said Fred Caesar, director of public affairs for Catholic Health Association. “There is no cookie cutter formula. Every situation is unique.”

One recent transaction similar to the one proposed in St. Louis -- the sale of an Omaha, Nebr. hospital with ties to Creighton University’s medical school to a for-profit group -- went forward with the blessing of Archbishop Daniel Sheehan, now retired, according to Dr. Richard O’Brien, Creighton’s vice president for health sciences.

Creighton’s teaching hospital was sold in 1984 to a for-profit group and now is owned by Tenet. In the early 1990s, Creighton sued American Medical International, owner of the hospital at that time, in an effort to regain some control. As a result of the lawsuits, Creighton bought 26 percent of the hospital in 1994.

O’Brien said Biondi had sought information about Tenet from officials at Creighton and had received a positive report. O’Brien said the hospital’s Catholic mission has “flourished” under Tenet, the owner since 1995.

O’Brien told NCR that the university’s health education programs had expanded dramatically as a result of the hospital’s sale to a for-profit group. “It’s been a really good move for us,” he said.

Fr. Michael Gutgsell, chancellor of the Omaha archdiocese, had no argument with that. “The administration of Tenet understands and is sensitive to the Catholic mission and moral teaching that the university is committed to and that the tradition of the hospital comes out of,” he said.

Still, he said, more examples and more history would be needed to know whether unions between Catholic and for-profit hospitals can work.

Bill Cox, president of the Catholic Health Association, said, however, that under for-profit ownership, St. Joseph Hospital in Omaha has increased prices and reduced care for the indigent.

The Catholic Health Association, based in St. Louis, represents more than 1,200 Catholic-sponsored hospitals and nursing homes. The association rejects publicly traded for-profit hospitals as members.

St. Joseph Sr. Jean deBlois, vice president for mission services at Catholic Health Association, rejects the notion that Tenet could run a hospital over the long term and retain Catholic identity.

“It won’t and it can’t,” she said, because of the contradiction between Catholic values and the primary interest of shareholders: to maximize profits. “One of the fundamental values of our tradition is that response to human need is a service, not a commodity to be bought and sold,” she said.

She warned that the sale of St. Louis University Hospital to Tenet could mark “the beginning of the end” of health care under Catholic sponsorship in the United States. “It’s a terribly ominous prospect for Catholic health care,” she said.

Biondi has stressed that, under terms of the sale, the Tenet-owned hospital will be under contract to follow ethical and religious directives of U.S. Catholic bishops for Catholic health care organizations. The directives require a commitment to pastoral care and prohibit abortions, euthanasia, sterilizations, in vitro fertilization and artificial insemination.

After the sale, the university would appoint five members of a 10-member hospital governing board, a key point for the university’s trustees. Tenet would appoint the other five. Tenet has also promised to continue the hospital’s efforts to care for the poor.

The losing $200 million bid was offered jointly by two Catholic health care corporations in St. Louis: SSM Healthcare, sponsored by the Franciscan Sisters of Mary, and Unity Health system, a division of the Sisters of Mercy Health System.

Biondi said the extra $100 million from the sale to Tenet would go to programs and research at the university’s medical school.

St. Louis University is one of four U.S. Catholic universities with medical schools. The others are Georgetown in Washington, Loyola in Chicago and Creighton in Omaha. All four have also owned or been affiliated with teaching hospitals.

A fifth Catholic medical school is New York Medical College in Valhalla New York, which has strong ties to the New York archdiocese and affiliations with 29 hospitals throughout the New York area.

National Catholic Reporter, October 24, 1997