Lee Health’s Board of Directors voted to change articles of incorporation for Lee Health AND TO TRANSFER ALL ASSETS to this new entity. Per the March 14, 2024 board special meeting minutes (bolding is my editing).
Motion: Motion to approve the draft Articles of Incorporation and Bylaws, as presented, for the formation of Lee Health System, Inc., a new Florida not-for-profit corporation to serve as the entity to which Lee Health would transfer assets and liabilities if conversion occurs as authorized by Chapter 2000-439, Laws of Florida, as amended by Chapter 2023-326, Laws of Florida, and authorize, subject to final legal review and approval by Board and System Counsel, filing of said Articles of Incorporation and Bylaws, along with such other actions as necessary to effectuate formation of said Florida not-for-profit corporation and submission to the IRS for a determination of tax exempt status.
This was a board workshop and hence there was no public input at this March 14th meeting. I don’t see an update on the Lee Health website giving this piece of rather relevant news so I guess I am here to deliver it.
Before this thing gets slam-dunked into the County commissioners court for the next phase called the “Negotiation Phase” I want to once again raise the point that Lee Health prior to conversion is the Public’s Property. This is about to change.
I wish to ask the citizens of Lee county- do you have any idea what you presently own?
The citizens of Lee County own and operate Lee Health through a publicly elected Board of Directors. The Board's primary function is to carry out the mission of Lee Health. Among the Board's duties are: Adopt an annual budget and provide for an annual financial audit.
Another question that follows is, does the elected board of directors know what Lee Health’s assets are? Unless they have a 20 year track record on all of Lee Health’s business meetings including the Lee Health Foundation, I can’t imagine that anyone does. Which is why this past Saturday evening I started a petition asking the citizen’s off Lee county to ask the Lee Health Board of Directors to vote to arrange a full actuarial accounting of the Public’s assets before they dissolve the Public’s charter. The board and the media will want a head count of interest, so if you want to know or you want to provide more public input, click the link containing the word petition (above) and have your voice heard.
Speaking of Accounting….
This week, I slogged through the entire 89 pages of Lee Health’s last financial report. The report as generated and signed off tells us there is a lot to the story we don’t know. From the introduction section of the report, the independent auditing company BDO states “ The financial statements of Lee Memorial Health System Foundation, Inc. were not audited in accordance with Government Auditing Standards”. Who is Lee Memorial Health System Foundation? Well, this is the entity that receives all donations given for the purposes of helping Lee Health achieve its goals for the community health care needs.
From its website: Lee Health Foundation raises philanthropic dollars on behalf of Lee Health to establish, expand and enhance innovative, lifesaving and preventative programs. The Foundation provides financial support for all five Lee Health hospitals including Golisano Children’s Hospital as well as many service areas including Lee Health Cancer Institute, Lee Health Coconut Point, The Rehabilitation Hospital, Lee Health Heart Institute, Community Health Clinics and Golisano Children’s Health Center in Naples. Over the last year, the Foundation has distributed more than $27 million to support Lee Health’s mission.
Is this the public’s property given its mission is to support Lee Health? Certainly it is a significant source of capital resource. With its philanthropy, generous individuals and trusts often have stated specific purposes and use for donations. How will the change of governance affect future and present philanthropic donations? If Lee changes its governance to a private charter (as so presently voted), will they learn some of their donations will not be available (restriction clauses of trusts for example)?
There is wayyy too much information in this report to bore everyone with but there are some interesting tidbits.
In Lee's measurement of charity accounting, they report the lion’s share of benefit came from cost of unpaid Medicaid and Medicare services and other government programs. The number is literally 69% of the total charity provided. How does that work? Unpaid Medicare and Medicare services???
They have 1.4 billion dollars in investments. This is 40% of their total reported assets. This is basically money invested in stocks, treasuries and other passive income vehicles. Is the public giving this away in this transaction?
Total annual operating revenues in 2022 were 2.8 billion dollars. That is still 15 times smaller than the average revenues of the US top 500 companies. Nonetheless- That gives you an idea how large the Lee Health organization is.
From the description of reporting section: “Certain of these operations have been placed in sub agencies for administrative purposes. Sub agencies are created by resolution of LMHS’s Board of Directors under authorization granted by its enabling act. The sub agencies are not incorporated under the corporation lows of Florida. LMHS has also formed various legal agencies that enable it to participate in business relationships that provide investment opportunities and increase the provision of health care services throughout the community. This looks like cloaked language for “Lee Health created workarounds to do business in the shadows and away from clear public disclosure”. Further, the board of directors voted for these things. This is a clear reason the board needs a full, open and honest accounting of the public’s assets before they permanently dissolve the charter.
Lee started the Bonita Community Health Center with a 50% interest. Within a few years, they become the sole owner. From listening to the board deliberate at the August 2023 meeting regarding a land purchase in Lehigh Acres and reviewing their Pine Island facility structure, this is a common scenario for Lee’s way of “partnering” with other health care providers. Take 1/2 ownership and later take it all.
From the report they are 43% present owners of LeeSar (a private held company) as well as 51% owners of a non hospital ambulatory surgical center interests apparently with an orthopedic group holding 49% interest.
They have several other business interests including: Best Care Assurance (basically an insurance product for Medicaid business), Best Care Collaborative LLC (a Medicare Accountable Care Organization), Best Care Partners Inc. ( a network of doctors and providers ) serving to tee up insurance contracts, 100% owner of a formally stand alone radiology group with various locations, a sole member(owner) of Community Healthcare Innovations, LLC which goes on to own two investment holding companies whose goals are to participate in more joint ventures, investment ventures AND to house all of Lee Health’s wholly owned ambulatory surgery centers.
You Get The Idea
So for me this begs the question and clearly this is going to require lawyers and accountants. Given the publicly enabled special district and charter health care system presently known as Lee Health, combined with the various obscure business and investment holdings that have occurred in this structure, how much of it belongs to the public? Is it truly in the public’s interest to just sweep all this accumulated wealth into a new private “non-profit” entity? Does the present Board of Directors really think they know all they need to know to move forward? The more I educate myself, the more paralyzed I feel.
To my non-local readership, this piece may seem irrelevant but I would like to suggest this local situation is a reflection of decades of United States and world health care government policy. The struggle we are having meeting health care needs especially regarding physician and nursing supply shortages are directly linked to policies promoting socialized health care. The Lee Health System is 2/3rds dependent upon Federal, State and Managed care dollars. This explains a lot for why Lee is going to change its structure partly to seek yet more public funding (building residency training programs).
Most of Europe and certainly the United Kingdom and Canada are in fully socialized health care models. This quandary Lee Health finds itself in is largely due to its dependency on government payment and coercive payment policies. In the notes to Consolidated Financial Statements of this report commercial insurance and self pay accounted for only 1/3 of all the system’s receivables.
It is way past time to promote privatization of healthcare services. Locally, it appears to me the public is about to get robbed. As to the rest of socialized health care countries, that has already happened.
On a final note- CHEERS!
AS I understand it, what we now call Lee Health was created by the Florida Legislature (in 1968, I think). I am no lawyer, but it seems to me that it would take another act of the legislature to dissolve Lee Health.
FYI
"Doc", I sent this on to all 5 Lee County Commissioners.