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INSIDERS: Trustees’ Dual Interests: Several on North Shore-LIJ Board Also Supply Services, Hold Leases

February 6, 2008

By Elizabeth Moore, Newsday, Melville, N.Y.

Feb. 6–The vice chairman of the North Shore-Long Island Jewish Health System may be its biggest landlord, but other trustees have companies that also have done business with the health system over the years, records show.

Each year, the system’s tax returns, which by law are available to the public on request, list a dozen or more trustees who also have business relationships with the health system.

The list has included senior executives of the health system’s investment bankers, as well as its lawyers, insurers, employee benefit brokers and the paying agent for its bonds.

It has included Dr. Peter Walker, medical director at North Shore University Hospital, whose private company has a lucrative exclusive contract to provide anesthesia at 11 system hospitals; Morton Bass, whose wife, Sandra Atlas Bass, is a major donor and also rents a building to the health system; and John King, whose Holtsville food-service company won a five-year exclusive contract with the system while he served on the board’s executive committee.

The health system tries to avoid doing business with companies in which its trustees have an interest, according to Ralph Nappi, president of the North Shore-Long Island Jewish Health System Foundation, which works with trustees to raise funds for the system.

In a Jan. 28 memo to trustees, Nappi criticized as “unfair” a Newsday story that day that detailed vice chairman William Mack’s ties to a former defense plant renting space to the health system. Nappi did not respond to requests for an interview.

Common interests

William McGinly, president of the Association for Healthcare Philanthropy, based in Falls Church, Va., said it’s often a challenge for wealthy board members at community-based nonprofits to avoid doing business with the organizations they serve — and it is common for those doing business with a nonprofit to want to give their time and money to support it.

So the mere fact that nonprofit board members have a contract should not be considered a sign they are using their inside track to help themselves, McGinly said. “Ninety-nine-point-nine percent of people who have a conflict of interest — as long as it’s stated — they are not going to benefit from serving on a board,” he said.

The key, McGinly said, is full disclosure. “We need sunshine on these issues, and we need transparency,” he said.

Among the relationships reported to the IRS are:

Walker, the health system’s salaried vice president for anesthesia services, is the founder, longtime chairman and partner in a private, for-profit company that provides anesthesia services at 10 of North Shore’s 15 hospitals and an affiliate.

Walker started North American Partners in Anaesthesia at North Shore in 1986, and the 11 health system hospitals account for most of the 19 entities NAPA serves. The company says it generates $500 million in annual billings.

Walker did not respond to a request for comment last week, but health system spokesman Terry Lynam said the exclusive contract with the Harvard-trained physician’s highly regarded practice has assured the system of reliable access to top-quality care. Walker was asked to join the board in 2003, in recognition of his expertise, Lynam said.

Holtsville businessman John King, a former chairman of Hospice Care Network, was added to the North Shore-LIJ board in 1999, and the following year the health system’s tax return reported that J. Kings Food Service Professionals was supplying perishable food to hospitals in the system.

King told the Long Island Business News in a 2006 interview that he came to see “hospitals and the thousands of people they feed each day as a potentially massive customer base,” and so “wrote in a three-year strategy aimed at growing health-care customers from 5 percent to about 20 percent of J. King’s total business.”

King designated himself as his company’s chief customer officer for health care. “You knock on the right doors,” the paper quoted him as saying.

In February 2004, while King was serving on the executive committee, North Shore selected his company over a rival’s for a five-year, $25-million contract to become the primary food supplier to the health system. He resigned from the board a year later.

King did not return a call last week for comment. Lynam said King’s food service contract was approved after competitive bidding, and that he disclosed his ties and recused himself from the vote. King was replaced as the system’s food supplier after it rebid the contract late last year, but retains a contract to provide food in emergencies, Lynam said. King also was hired to design, build and equip three cafes in health system hospitals.

Trustees Jeffrey and Lyn Jurick were the longtime principals of Fala Direct Marketing, based in Melville, and starting in 2002, the year Lyn Jurick became a member of the health system board’s executive committee, the system’s tax return noted that Fala provided direct-mailing services to the system.

Lyn Jurick, founder of the Ronald McDonald House of Long Island, did not return a message left at her home in Boca Raton, Fla.; Lynam said Fala has done little business with the health system in recent years.

Longtime trustee Morton Bass is married to Sandra Atlas Bass, a North Shore benefactor whose name graces the main Manhasset campus of the health system — and whose limited-liability corporation owns a building collecting rent from North Shore.

Lynam said Sandra Atlas Bass’ 60,000-square-foot building at 1554 Northern Blvd., the onetime Manhasset Hospital building inherited from her father, Sol Atlas, was leased to Long Island Jewish, with a new 35-year lease term starting in 1988, while she was a trustee at then-competitor North Shore University Hospital. Only after the 1997 health system merger did she and her husband become landlords to their own health system board. Lynam declined to say what it pays to rent the building.

Among longtime trustees were Richard Don Monti and Joseph Monti, executives of the Crest Hollow Country Club in Woodbury, which has catered as many as 10 functions a year for the system.

Joseph Monti was also one of the health system’s leading benefactors before he died in September, establishing the Don Monti Memorial Research Foundation in memory of his late son, which raised more than $30 million for cancer research. Richard Don Monti did not return a call.

Holding the line

For those already doing business with a hospital, McGinly said it is often natural to become supporters as well, which poses a different ethical problem for a hospital.

“There is a line,” McGinly said. “We don’t believe it’s fair to put undue pressure on someone to make a contribution because they are doing business with the hospital, but it’s perfectly acceptable for that person to support the hospital, so you may have a linen service that may buy a table at a gala.”

There are legitimate reasons for business people to donate money and serve on boards without seeking a penny of direct commercial benefit, McGinly said.

“What is the benefit to them? … They are faces in the paper, making a difference,” he said. “If you’re doing good things and you sell cars in my community, maybe I’ll consider your dealership.”

OF INTEREST

North Shore-Long Island Jewish Health System, which comprises 15 hospitals, is the third-largest, nonprofit, secular health care system

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Copyright (c) 2008, Newsday, Melville, N.Y.

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