There were several comments on my blog post and also on the Boston.com story about the sale of Caritas Christi to Cerberus Capital Management that expressed skepticism about the wisdom of the sale and the transformation of this non-profit hospital system to a for-profit one.
Some legal background. The transaction is governed by Mass. General Laws Chapter 180, Section 8A. That section provides, in relevant part:
Prior to a sale, notice is required to be given to the Attorney General, not less than 90 days prior to a sale or other disposition of the assets or operations to a for-profit entity;
The AG is required to investigate the transaction, and consider any relevant factors, including whether:
-- Due care was followed in the process;
-- Conflict of interest was avoided;
-- Fair value is being received; and
-- The proposed transaction is in the public interest;
There will be at least one public hearing, preceded by public notice. Prior to the hearing, copies of all the transaction documents will be made available upon request;
Any charitable fund resulting from the transaction shall be subject to AG and Court approval. A public hearing in connection with the AG review of the governance of the charitable fund is also required; and
Following the transaction, a monitor will be in place to monitor community health access and the levels of free care provided by the entity for three years.
Pretend you are testifying as a citizen in the public hearings. What standard would you want to be applied to these issues? Assume for the moment that the first three tests have been met (due care, conflict of interest, and fair value), what theory or facts do you want to be used to determine if the transaction is in the public interest? And, if a charitable fund results from the transaction, how large should it be; for what purposes would you want it to be used; and how would you want it to be governed?
And before you answer, read Steve Syre's column in today's Boston Globe.