Adventist assailed over asset-taking

Adding to a chorus of critics, former Laguna Beach Mayor Paul Freeman is accusing Adventist Health of unethically — if not illegally — acquiring the assets of the South Coast Medical Center Foundation and pressuring board members to go along.

Freeman made his accusation public at Tuesday’s City Council meeting, echoing concerns of other community members.

“I am here to lend my voice to concerns reported in local newspapers about the disposition of assets owned by the recently dissolved local hospital foundation,” Freeman said.

Adventist Health, which announced plans to sell the medical center in September, dissolved the foundation Nov. 15 and announced the takeover of foundation assets. Foundation board member Susan Morrison publicly denounced the action at the Nov. 21 council meeting.

The Foundation assets included the medical office building adjacent to the hospital, which the Foundation purchased in 2002 with a $1.9 million down payment.

Other assets include individual donations, including some that were restricted for specific purposes, according to Morrison.

Adventist officials warned that such criticisms could delay or even halt the hospital’s sale, which Adventist is currently negotiating with St. Joseph’s Health System.

“It would be a shame if some public statements, although they may mean well, have the unintended consequences of delaying or endangering the transfer of South Coast Medical Center to a qualified buyer,” Adventist spokeswoman Alicia Gonzales said Wednesday.

“We appreciate the engagement of the community and the Laguna Beach City Council thus far in the South Coast Medical Center sale process; however, many of the current rumors and hearsay simply are not accurate,” she said.

Adventist’s statements have not assuaged former board members such as Morrison.

“I feel more strongly than ever,” Morrison said Wednesday by telephone from Austria. “My position has actually extended beyond South Coast Medical Center. I want the [state] attorney general to investigate all Adventist Health practices at all of their hospitals.”

The assets referred to by Freeman and Morrison include the Medical Center West office building and the adjacent parking lot, bought by the foundation in 2002.

The down payment was made with funds donated for restricted use.

Gonzalez said the community will have ample opportunity to voice concerns to the attorney general.

“Once South Coast is sold, the attorney general will examine all of the unrestricted assets and liabilities of South Coast,” Gonzalez said. “South Coast will be required to use its unrestricted assets to pay off its debts.

“The California attorney general takes full jurisdiction over the remaining assets and how those assets will be used, making sure the assets are best used in the way that helps the community.”

Freeman said he felt compelled to call public attention to Adventist’s assumption of foundation assets and did so without sharing what he was planning to say at the council meeting with anyone.

Councilwoman Elizabeth Pearson, the former foundation executive director, left Council Chambers when Freeman began to speak.

“I had thought about coming here before, given my knowledge of undue pressure brought to bear on former hospital foundation board members, whose belief that Adventist executives would make good on their threats to close the hospital if they didn’t play along, put them in a position they never deserved to be in, given their years of devotion and faithful service to that institution,” Freeman said.

“I was compelled to come here, after reading contrasting quotes from local donors, asking that restricted local gifts remain local, and Adventist corporate and legal representatives saying that’s up to the state attorney general’s office. In other words, the Adventist position is that it’s up to others to decide if the assets they’ve taken from the community foundation they’ve just dissolved should be returned and put back to work as intended, in the community.”

Foundation funds for the down payment on the medical building were specified for the establishment of a cancer center, which has not taken place, leading Morrison to believe that the building has been “hijacked” by Adventist.

Adventist claims to have lost $44,735,000 since taking over the hospital in 1998.

Morrison said the losses could be accounted for by the $500,000 monthly fees paid to Adventist, which about equals the stated annual losses, and the salaries paid center officials.

Funds for the down payment on the medical office building were specified for the establishment of a cancer center, which has not taken place.

Although Adventist’s actions may be legal, they are “outrageous,” Freeman said.

“Equally outrageous would be if the executives who sang from this songbook are allowed near the hospital once it changes hands,” Freeman said.

Hospital Chief Executive Bruce Christian has said he would like to stay on at the facility after it is sold.

“Laguna Beach and the other cities served by the hospital are fortunate that the St. Joseph system stepped up,” Freeman said.

“They have the financial capacity and management know-how to reposition a tired institution for long term success.”

BARBARA DIAMOND can be reached at (949) 494-4321 or coastlinepilot@latimes.com.