By Diana Samuels
Daily News Staff Report
Posted: 06/17/2011 12:33:32 AM PDT
Updated: 06/17/2011 12:49:03 AM PDT
A Santa Clara County civil grand jury report released Thursday slams Mountain View's El Camino Hospital for a lack of transparency about how it spends taxpayer money.
While El Camino is a private nonprofit corporation, it receives between $5 million and $9 million per year from a 1 percent property tax, according to hospital spokeswoman Chris Ernst. In addition, voters passed a $148 million bond measure for hospital facilities in 2003.
The taxpayer money is administered by the El Camino Hospital District, an oversight group made up of a publicly elected board of directors.
The grand jury report said that the finances of the public district and the private corporation are "intermingled to the extent that one cannot delineate how taxpayer contributions are spent."
"The Grand Jury concluded that the District considers itself one unit with the Corporation, but at the same time uses the Corporation to shield the district from some requirements of being a public agency," the report said.
The report noted nearly all of the same people serve on the board of directors for both the corporation and the district. The grand jury recommended the hospital appoint an independent manager who is responsible only for the district's finances or change the makeup of the two boards to decrease overlap.
Ernst said El Camino is already considering adding more members to the corporation board, which would differentiate the two groups.
The report called attention to El Camino's purchase of the Community Hospital in Los Gatos in 2009. Since Los Gatos is outside of the tax district's boundaries, no public money should have been spent on the acquisition; the hospital maintains that none was.
Because there was "so little detail and transparency" in the financial information provided, the grand jury was unable to tell where the funds to purchase the Los Gatos hospital came from, according to the report.
El Camino also did not inform the Santa Clara County Local Agency Formation Commission about the Los Gatos purchase, the report said. If the district had been involved in the purchase, it would have needed the commission's approval, which may not have been forthcoming since there are already several other hospitals in the area, according to the report.
El Camino's claim that the corporation -- and not the district -- purchased the Community Hospital "seems more a matter of convenience to avoid (the commission) and its probable disapproval of the purchase," the report said.
Ernst maintained that the district and hospital corporation are "separate and distinct," and "the two never intermingle." Still, she acknowledged that the perception might be different.
"There were some interesting things that they raised that we can definitely do better at in regards to clarity," Ernst said. "At the end of the day, what they want to know and what people want to know is, 'If I give a tax dollar, where does it go?'"
She said the Los Gatos hospital purchase did not involve taxpayer money and did not fall under the commission's jurisdiction.
"The corporation, not using district funds for any of the purchase or operations, didn't believe that it was necessary (to notify the commission)," she said. "But is it worth discussing and re-looking at? Absolutely."
Ultimately, the grand jury questioned whether the tax district is even needed, since the hospital is "so successful financially" that it bought the Los Gatos facility.
The tax money helps pay for valuable community programs, such as school nurses and a Rotacare Free Clinic, Ernst said.
"People within the community who receive those funds, I think, would have a very different opinion," she said. "Where would people who use those benefits go if those dollars and resources went away?"
Email Diana Samuels at dsamuels@dailynewsgroup.com.
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