The bargain that closed St. Vincent’s
The political nexus of nonprofits and real estate
It was just another lazy summer afternoon last month when Idrissa Camara, a 53-year-old father of three, agreed to stay late at his job as a private armed security guard protecting the federal offices at 201 Varick St. in Manhattan. A little after 5 p.m., Kevin Downing, a 68-year-old veteran and former federal employee, walked through the metal detectors in the lobby and shot Camara in the head.
Downing, who had been at war with the federal government after he was allegedly fired for being a whistleblower several years ago, then shot himself in the head and died at the scene. Camara, meanwhile, was transported to Lenox Health Greenwich Village, just a mile uptown, at the site of what had been, up until 2010, St. Vincent’s, a Level 1 trauma hospital capable of handling gunshot wounds. Camara was declared dead at 5:55 p.m.
There’s an official blue sign just a block away from Lenox Health Greenwich Village (until recently called Lenox Hill HealthPlex) that uses the upper-case “H” symbol and the word “hospital” to direct the public to the facility. Yet when it opened last summer the management of the Lenox Hill facility, part of the North Shore-Long Island Jewish Health System, were clear that it was not a hospital and would not be the place to handle trauma like a gunshot wound.
If someone was brought to the site with such a grievous injury, The New York Times reported, “the doctors at the Healthplex would do everything that would be done in a hospital” and “then transfer the patient by ambulance to the nearest appropriate hospital,” which “for trauma patients” would be Bellevue Hospital Center, nearly 2 miles farther uptown.
It is impossible to know whether Camara, a family man who loved his work, could have been saved had St. Vincent’s Hospital still been open.
A big loss
Since before the Civil War, through the scourge of HIV/AIDS and during the two World Trade Center terror attacks, St. Vincent’s had served the Greenwich Village neighborhood with distinction.
Camara’s tragic scenario had been raised as a hypothetical years before it happened by community members caught in a bitter battle that raged right up until the hospital closed in April 2010. For months up until the nonprofit hospital’s board of trustees pulled the plug, community members hit the streets and went to court in an effort to save St. Vincent’s. The facility had a long-standing reputation for serving the poor effectively and with compassion. It was also a teaching hospital.
Even today, five years after the closure, passions still run high in the West Village, where the rest of the St. Vincent’s site is now being redeveloped into hundreds of luxury apartments. “A great obstetrics division as well as an ER – it was a full-service hospital,” said Mike Quinn, who grew up in the neighborhood on Charles Street. “It is a big loss. It is a big hole in terms of city services when it comes to hospital services you need.”
“You really don’t have a medical facility that is close by,” agreed Elizabeth Warren, a retail worker who has lived in the West Village for 10 years. “It’s more empty luxury apartments nobody can afford.”
The fate of St. Vincent’s was ultimately decided at the political nexus where the city’s worlds of nonprofit philanthropy and powerful real estate development converge. There is so much cross-pollination between the two spheres that it can be hard to delineate the two.
Nonprofits need the philanthropy provided by developers, who in exchange garner naming rights and influence in how the nonprofits operate – all as a way of ‘giving back.’ Nonprofits also count on the political clout of their real estate patrons, who shower politicians at every level with tens of millions of dollars.
By some estimates the real estate industry provides 10 percent of all the campaign cash donated in the Empire State, which is funneled through limited liability companies to mask the source of the funds. Best case, this symbiotic relationship advances the city’s civic agenda and the public interest; in the worst case, nonprofits are co-opted by commercial development interests that use the cover of their good deeds to advance their business agenda. The reality is likely a messy amalgam of both.
Two tales of one hospital
In the case of St. Vincent’s, there are two widely disparate narratives: The powers that be did the best they could to advance the public interest in difficult times, or the city’s rich and powerful figured out how to make money off closing the neighborhood hospital.
There is strong evidence that the nonprofit Catholic hospital was, in part, a victim of its own generosity and willingness to take all patients regardless of their ability to pay, a core value of the Sisters of Charity, the religious order that started the hospital. With over $1 billion in debt, the venerable institution was poorly positioned to withstand the Great Recession.
At the same time, the state was coming to the conclusion – via the Berger Commission – that it had too many hospitals with some of the weakest balance sheets in the country. The late Dr. Richard Daines, who was the commissioner of the state Department of Health, told The Associated Press in 2010 that St. Vincent’s had about $2 million in debt for every one of its hospital beds, at a time when governments at every level were cutting back. State regulators estimated St. Vincent’s was losing $5 million to $10 million a month.
This, of course, begs the question: Where was the regulatory oversight that could have stanched the bleeding out of such an important community institution?
Back in 2007, emerging from its first bankruptcy, St. Vincent’s went public with a “hail Mary” rescue plan which called for the building of a new hospital across the street from the existing facility. The ambitious plan relied on funding generated by a $1 billion residential development to be built on the campus by the Rudin family. Before the Great Recession, the plan and its players seemed well matched. The Rudins had been riding to the rescue of New York City sites for decades, even as their real estate business became increasingly more successful.
According to Forbes, the Rudins are the 61st-richest family in the nation and can trace their fortune back to 1905. Today William Rudin chairs the Association for a Better New York, a nonprofit founded by his father in 1971 as a civic-minded response to the fiscal crisis when New York City was on the verge of bankruptcy.
When Gov. Andrew Cuomo formed a panel to advise him on the search for the next Metropolitan Transportation Authority chairman and CEO, he named Rudin to the search committee. Rudin’s bio included chairing the board of the Battery Conservancy, as well as memberships on the boards of the Metropolitan Museum of Art, the Real Estate Board of New York and New York University.
By January 2010 the optimism around the Rudin redevelopment plan had faded. The hospital’s leadership announced that its fiscal condition was deteriorating rapidly. A handful of potential rescue scenarios surfaced, including one from Continuum Health Partners, which owned St. Luke’s Roosevelt Hospital and Beth Israel Medical Center. Under the proposal, St. Vincent’s would be closed but a health care center with some walk-in emergency capability would be established instead. It would no longer receive 911 ambulance runs. Continuum would assume St. Vincent’s massive debt load and, in exchange, get the hospital’s valuable real estate.
In just a matter of days, local elected officials, led by then-City Council Speaker Christine Quinn, blasted the proposal because it would leave the West Side from Park Row to 59th Street without a full-service emergency medical facility. “Every minute an ambulance has to travel longer to reach a hospital is another minute with a life in jeopardy,” warned Quinn.
Continuum quickly withdrew its bid and Gov. David Paterson announced the formation of a committee to help keep St. Vincent’s open. But the panel would not have long. By April 2010 St. Vincent’s was back seeking protection in federal bankruptcy court.
Attorney Yetta Kurland led the neighborhood legal battle to keep St. Vincent’s open. Kurland says that even though St. Vincent’s was organized as a nonprofit charity, its leadership was cut off from the very community it served, which desperately wanted to save it.
“On April 6 in 2010, without any kind of public notice, against all the open-meeting laws and rules that are supposed to be involved in 501(c)(3) happenings, the board of trustees secretly voted to shut down St. Vincent’s hospital,” Kurland told New York Nonprofit Media in an interview. “That was on April 6. By April 30 the hospital had been shut down.”
Kurland says that even though the hospital was a nonprofit 501(c)(3) charity, its leadership made millions of dollars even as the hospital was saying it was hundreds of millions in debt for years of uncompensated charity care. “We saw the year before the bankruptcy a golf outing for $278,000, professional fundraising fees that they spent almost $4 million for, undisclosed other unknown expenses for over $104 million, management consultants of over $17 million, over half a million dollars for lobbying,” Kurland said.
“What’s supposed to happen is a closure plan is submitted to the Department of Health and it outlines how patients are going to be taken care of, how patient records are handled, how all of the services that are happening in the hospital will still be provided to the community in other ways because you just can’t shut down a hospital,” Kurland said. “That’s black-letter law. That’s part of the public health law.”
In an in-depth story published in America-The National Catholic Review not long after the closure, Jane Iannucelli of the Sisters of Charity, a St. Vincent’s board member, faulted the state’s Department of Health for the closure. “I think the easiest way to explain why … St. Vincent’s is closing its doors tomorrow is that the state Department of Health said there is no need for an acute care hospital in Greenwich Village,” Iannucelli told the publication. “And while St. Vincent’s had many problems, they were on their way to being fixed. But with the Department of Health saying there’s no need for an acute care hospital here, the board had no choice but accept a vote to close.”
Former St. Vincent’s Chief Operating Officer Arthur Webb was quoted in The Villager as conceding that St. Vincent’s had “consultants coming out the eyeballs” and on a “general basis, St. Vincent’s wasn’t well run for decades. This is a classic case where history hindered progress.”
The bigger picture
The St. Vincent’s saga was playing out as Wall Street was coming under increasing attack for self-dealing and a lack of transparency. As a consequence, under the Dodd-Frank Act, the U.S. Securities and Exchange Commission has promulgated rules that require publicly traded corporations to disclose what their CEOs are getting and the median compensation for the rest of the company’s employees.
Critics of the nonprofit sector point to the case of William Rapfogel, the former executive director of the Metropolitan Council on Jewish Poverty, as an example of the need for more stringent oversight. Rapfogel was convicted last year for his role in a scheme that bilked the social services nonprofit of $9 million since 1992. Rapfogel and his fellow conspirators used overpayment to the nonprofit’s insurance company as a way to steal from the nonprofit. In turn, the insurance company made tens of thousands of dollars in political contributions.
In New York City and around the nation, nonprofits employ thousands of people and make land-use decisions that have major impacts on surrounding neighborhoods that have nowhere near the clout and influence that these charity behemoths have. The top executives leading these 501(c)(3)s often make high six figures and sometimes more than $1 million a year. But does that nonprofit designation guarantee the people at the top are always acting in the public interest?
Jim Sheehan is the chief of the Charities Bureau under Attorney General Eric Schneiderman. His office is charged with keeping an eye on the 80,000 charities licensed by the state of New York. “Transparency is critical. That’s what was driving the passage of the Nonprofit Revitalization Act,” Sheehan told New York Nonprofit Media, referring to the reform law championed by Schneiderman and signed into law by Cuomo in 2013. “You have to have effective audits by third parties, and the board members on these nonprofits must be independent.”
Former attorney general and governor Eliot Spitzer told New York Nonprofit Media that nonprofits need much more scrutiny than they have received in the past. “It took awhile for me to figure this out,” Spitzer said, “but the real unused jurisdiction of the attorney general is in the realm on the nonprofits.”
“In the private sector,” Spitzer continued, “shareholders do have a window into how a company operates through proxy statement and filings like a 10-K. You can file shareholder motions. For nonprofits there are no shareholders. As a contributor, once you’ve given money you’re done. Nobody knows what goes on inside them. We need a much more robust governing structure for nonprofits.”
Six months after the closure of St. Vincent’s, the impact on other Manhattan hospitals was seismic. Dr. Lewis Goldfrank, Bellevue Hospital’s chief of emergency medicine, said the closure of St. Vincent’s had been “a significant disaster” for emergency care. “We are seeing people in rapid succession continuously in every space we’ve got and trying to achieve excellence in the face of substantial chaos a good part of the day and night,” Goldfrank told the Daily News at the time.
Emergency room admissions at Bellevue spiked by 25 percent and resulted in an unsettling increase in patients assaulting medical staff and threatening other patients lying too close to them, according to Goldfrank. Similar upticks in ER traffic were reported by other Manhattan hospitals.
By March of 2012, Quinn was hailing a grand bargain struck by the City Council, the Bloomberg administration and Rudin development. As part of the deal to clear the way for Rudin’s hundreds of luxury units and town houses, the neighborhood got a new elementary school, a 15,000-square-foot park, an AIDS memorial and commitments for additional historic preservation – but no hospital. At the St. Vincent’s site there would be the freestanding emergency room where Camara died last month. The project was also scaled down from its initial design.
The issue would haunt Quinn in her bid for the Democratic mayoral nomination, when her critics went wall to wall with negatives ads linking her ultimate support of the St. Vincent’s redevelopment plan to the nearly $30,000 she got from a half-dozen Rudin executives in campaign contributions. As The New York Times reported at the time, Quinn did lobby to reduce the scale of the project and was successful in doing so. Quinn supporters have made the case that the former speaker got the best deal for the neighborhood, which was in her council district.
“The thing we were never able to get to was how to hold these people responsible,” said Kurland, who remains convinced that St. Vincent’s was targeted for redevelopment all along because the property had become so valuable. “And in terms of avoiding this kind of stuff, where was the oversight?”