Mountain View Voice

News - June 24, 2011

Hospital defends bookkeeping

Civil grand jury says district, corporation 'operate as one unit'

by Nick Veronin

El Camino Hospital officially responded to a Santa Clara County Civil Grand Jury report criticizing the health care organization for not clearly separating the money it receives from tax payers and the money it generates as a non-profit corporation.

In a statement released June 16, the hospital district said it has "preliminarily reviewed" the report, which found that the hospital district and the non-profit organization formed by the district "(appear) to operate as one unit," intermingling funds in such a way "that one cannot delineate how taxpayer contributions are spent."

"It's important to note that we disagree with several of the report's statements," El Camino spokeswoman Chris Ernst said. She made a point of distinguishing district operations from hospital operations. "Every tax dollar that comes from the district comes back to the district."

Ernst acknowledged that the hospital's financial structure is "complex."

"We feel that we're already very transparent as an organization," she said.

El Camino defended its bookkeeping practices while also saying the hospital "respects the role of the Civil Grand Jury and will give due consideration to the findings and recommendations in the report."

The grand jury, which passed and adopted the report on May 19, recommended that El Camino "account for tax revenues on a line-item basis, so that taxpayers can follow the money to determine monies are properly spent."

According to the report, the grand jury was unable to determine where the hospital derived the funds used to purchase the Community Hospital of Los Gatos in 2009 and sponsor the San Jose Sharks' playoff games this year.

The authors of the report acknowledged El Camino's insistence that funds from the corporate arm of the hospital, not the district arm, were used in both financial endeavors. However, they added, "There is no way to confirm that."

The hospital district's official response did not go into great detail defending the purchase of the Los Gatos campus and did not make any mention of its sponsorship of the Sharks' playoff run.

Responding to the suggestion that district funds might have been used to purchase the Community Hospital of Los Gatos, Ernst pointed to an independent staff report conducted by Santa Clary County's Local Agency Formation Commission. That report found that no district funds were used in the acquisition of the Los Gatos campus.

Another grand jury report, also passed and adopted on May 19, found that "SCC LAFCO takes a passive approach in its oversight of special districts" and that "SCC LAFCO commissioners are not fulfilling their oversight duties to taxpayers by adopting a broader view of their policy-making policy."

Ernst said the district did not directly respond to questions raised about El Camino's sponsorship of the Sharks because, "It didn't warrant a response. We have an operating budget for the corporation. That's where the marketing dollars come from."

"The ECHD is a vigilant steward of the public money it receives," the district statement said. "The ECHD Board ensures that district funds are expended for the benefit of the district and the people served by the district."

Ernst would not speculate as to what the district would ultimately do in response to the grand jury's report. "If there's a way that we could make things more clear, that's what we're committed to doing," she said.

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