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Is a For-Profit Structure a Viable Alternative for Catholic Health Care Ministry?

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Is a For-Profit Structure a Viable Alternative for Catholic Health Care Ministry? PROCEEDINGS OF THE SYMPOSIUM Is a For-Profit Structure a Viable Alternative for Catholic Health Care Ministry? Center for Religiously Affiliated Nonprofit Corporations Center for Health & Pharmaceutical Law & Policy In collaboration with John A. Ryan Institute for Catholic Social Thought Terrence J. Murphy Institute for Catholic Thought, Law and Public Policy Veritas Institute Kathleen M. Boozang, J.D., LL.M., Editor \\jciprod01\productn\S\SHP\1-1\title101.txt unknown Seq: 1 25-FEB-13 10:51 PROCEEDINGS OF THE SYMPOSIUM Is a For-Profit Structure a Viable Alternative for Catholic Health Care Ministry? March 26-27, 2012 Seton Hall University School of Law Newark, NJ Hosted by Center for Religiously Affiliated Nonprofit Corporations Center for Health & Pharmaceutical Law & Policy In collaboration with John A. Ryan Institute for Catholic Social Thought Terrence J. Murphy Institute for Catholic Thought, Law and Public Policy Veritas Institute Published by Seton Hall University School of Law Editor, Kathleen M. Boozang, J.D., LL.M., Professor of Law Associate Editor, Michael J. Ricciardelli, J.D. Assistant Editor, Gregory S. Corcoran, J.D. \\jciprod01\productn\S\SHP\1-1\toc101.txt unknown Seq: 2 25-FEB-13 10:51 Table of Contents THE SYMPOSIUM STORY .......................................... v Advisors Donors I. INTRODUCTION Kathleen M. Boozang, J.D., LL.M., Professor of Law, Associate Dean for Academic Advancement and Director, Center for Religiously Affiliated Nonprofit Corporations, Seton Hall Law School; Sister Melanie DiPietro, S.C., J.D., J.C.D., Distinguished Practitioner-in-Residence and Director, Center for Religiously Affiliated Nonprofit Corporations, Seton Hall Law School .............................................................. 1 II. SYMPOSIUM OVERVIEW ........................................ 7 Structure of the Symposium Dialogue The Presentations Focus on a Select Number of Themes, Models and Perspectives III. IDENTIFYING ESSENTIAL PRINCIPLES FOR CATHOLIC HEALTH CARE T. Dean Maines, M.S., President, Veritas Institute of the Opus College of Business, University of St. Thomas; Michael J. Naughton, M.B.A., Ph.D., Director, John A. Ryan Institute for Catholic Social Thought and Alan W. Moss Endowed Chair in Catholic Social Thought, University of St. Thomas ............................................................. 11 IV. EXAMPLES OF FOR-PROFIT HEALTH CARE MODELS Leo P. Brideau, FACHE, President and Chief Executive Officer, Ascension Health Care Network; Keith B. Pitts, Vice Chairman, Vanguard Health Systems; David T. Vandewater, M.S., President and Chief Executive Officer, Ardent Health Services ............................. 27 V. FOR-PROFIT VS. NONPROFIT: DOES CORPORATE FORM MATTER? Nonprofit and For-Profit Enterprises: A Side-by-Side Comparison of the Law Timothy P. Glynn, J.D., Miriam T. Rooney Professor of Law, Seton Hall Law School; Thomas (Tim) Greaney, J.D., Chester A. Myers Professor of Law and Co-Director, Center for Health Law Studies, St. Louis University School of Law ....................................................... 55 For-Profit v. Nonprofit: Does Corporate Form Matter? The Question of For-Profit Eligibility for Religious Exemptions Under Conscience Statutes and the First Amendment Angela Carmella, M.T.S., J.D., John Courtney Murray Professor of Law, Seton Hall Law School ............................................... 75 \\jciprod01\productn\S\SHP\1-1\toc101.txt unknown Seq: 3 25-FEB-13 10:51 For-Profit vs. Nonprofit: Financial Operations and Performance Moderated by Sister Melanie DiPietro, S.C., J.D., J.C.D., Distinguished Practitioner-in-Residence and Director, Center for Religiously Affiliated Nonprofit Corporations, Seton Hall Law School; Arnold T. Stenberg, Jr., C.P.A., Executive Vice President and Chief Administrative Officer, All Children’s Hospital & Health System; David M. Cyganowski, M.B.A., Managing Director, Kaufman Hall & Associates . 89 Rating Agency Metrics for For-Profit and Nonprofit Health Care Corporations Adam Kates, M.B.A., J.D., Director, Fitch Ratings; James LeBuhn, Senior Director, Fitch Ratings; Megan Neuburger, M.P.A., Senior Director, Fitch Ratings .............................................................. 101 VI. RELATING THE CATHOLIC TRADITION OF HEALTH CARE TO LEGAL AND FINANCIAL STRUCTURES Health Care: Public Good or Private Good? John V. Jacobi, J.D., Dorothea Dix Professor of Health Law & Policy and Faculty Director, Center for Health & Pharmaceutical Law & Policy, Seton Hall Law School ............................................... 111 Ministry and Catholic Identity: Are They the Same? Sister Doris Gottemoeller, R.S.M., M.A., Ph.D., Senior Vice President, Mission and Values Integration, Catholic Health Partners .............. 119 Is a For-Profit Structure a Viable Alternative for Catholic Health Care Ministry? Canonical Commentary: Tools for Exploring the Question Sister Sharon Holland, IHM, J.C.D., Department Head (Ret.), Congregation for Institutes of Consecrated Life and Societies of Apostolic Life ....................................................... 129 Is the For-Profit Structure a Viable Alternative for Catholic Health Care Ministry? A Practitioner’s Response to the Canonical Commentary: How it Works in Current Legal Structures Sister Melanie DiPietro, S.C., J.D., J.C.D., Distinguished Practitioner-in- Residence and Director, Center for Religiously Affiliated Nonprofit Corporations, Seton Hall Law School ................................. 137 Animating a Catholic Health Care System, Managerial Organizations, and Communion with the Church T. Dean Maines, M.S., President, Veritas Institute of the Opus College of Business, University of St. Thomas .................................... 149 Animating Catholic Health Care: Communion with the Church Robert G. Kennedy, M.B.A., Ph.D., Co-Director, Catholic Studies, Terrence J. Murphy Institute for Catholic Thought, Law and Public Policy, University of St. Thomas....................................... 157 \\jciprod01\productn\S\SHP\1-1\toc101.txt unknown Seq: 4 25-FEB-13 10:51 APPENDIX Pre-conference Questionnaires About Corporate Structure with Responses from Ascension Health Care Network, Vanguard Health Systems and Ardent Health Services .............................................................. 165 BIOGRAPHIES ...................................................... 199 We thank the participants in this Symposium for modifying their presentations for publication herein. \\jciprod01\productn\S\SHP\1-1\stry101.txt unknown Seq: 5 25-FEB-13 10:51 The Symposium Story In September 2010, Robert Galloway, Jerry Mansmann and David Vandewater visited the Seton Center for Religiously Affili- ated Nonprofit Corporations and the Center for Health & Pharma- ceutical Law & Policy at Seton Hall University School of Law in Newark, New Jersey, and requested a study of the issues relevant to the potential use of a for-profit structure in the context of Catholic hospitals. The recommendation of the Seton Center as a resource to study this question grew out of previous professional relationships. Sister Melanie DiPietro and Mr. Mansmann represented Catholic hospitals when they were practicing law together, and Mr. Galloway was employed by several Catholic health care systems and later be- came an independent consultant. Mr. Galloway remembered that in 1994, when a for-profit transaction was an interest of a client, Sister Melanie wrote a proposal suggesting that the compatibility of a for-profit structure with ministry should be studied. Mr. Galloway, thus, recommended that the Center now study the question. Sister Melanie, on behalf of the Seton Center, and Professor Kathleen M. Boozang, on behalf of the Center for Health & Phar- maceutical Law & Policy, agreed to do the study if there was ade- quate funding equally coming from nonprofit and for-profit contributors. Further, the Centers retained all rights to choose presenters and to develop the program of the Symposium. The Centers developed a proposal, which was sent to Catholic health care systems, other nonprofits and for-profit organizations. All donors have respected the independence of the Centers. The University of St. Thomas’ John A. Ryan Institute for Catholic Social Thought; the Murphy Institute for Catholic Thought, Law and Policy; and the Veritas Institute of the Opus College of Busi- ness made a contribution to the Symposium and agreed to collabo- rate in the planning and in the presentations. Sister Melanie ultimately selected the presenters after independent research and recommendations from advisors and presenters. \\jciprod01\productn\S\SHP\1-1\stry101.txt unknown Seq: 6 25-FEB-13 10:51 The Symposium contributors and advisors are listed below and recognized for their financial and/or intellectual contributions to the Symposium: Contributors Alvarez & Marsal, New York City Anonymous Individual Ardent Health Services Bass, Berry & Sims, PLC, Nashville Cardinal Health, Dublin, Ohio Catholic Health Partners, Cincinnati Dignity Health (formerly known as Catholic Healthcare West), San Francisco Ernst & Young LLP, Nashville Saint Peter’s Healthcare System, New Brunswick, New Jersey Seton Hall University School of Law SSM Health Care, St. Louis, Missouri The University of St. Thomas: • John A. Ryan Institute for Catholic Social Thought • Terrence J. Murphy Institute for Catholic Thought, Law and Policy • Veritas Institute of the Opus College of Business Advisors: Business Michael Connelly, President & CEO, Catholic Healthcare Partners Derek Covert, General
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