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Gary Yates

On the Role of Health Foundations in Caring for California's Poor

March 29, 1998|Kay Mills | Kay Mills is the author of "Something Better for My Children: The History and People of Head Start."

Health-care foundations with more than $9.3 billion in assets are operating nationwide as a result of the sale or conversion of nonprofit hospitals and health-care plans into for-profit businesses--and California has led the way. But not without controversy. What happens to health care for the poor when hospitals or health-care plans concentrate on people more readily able to pay for treatment or insurance?

State law requires that the assets built up by nonprofits, which receive favorable tax treatment, be used for charitable purposes, so most conversions result in the establishment of foundations. Three of the largest such foundations are in California: the California Health Care Foundation and the California Endowment, created when Blue Cross of California converted to a for-profit business, and the California Wellness Foundation, set up when the Health Net plan converted in 1992.

While these conversions were occurring, Congress changed the welfare laws and shifted more responsibility onto state and local governments, which now serve more poor people. California Wellness Foundation President Gary L. Yates insists that foundations cannot--and should not--take the place of sustained government commitment, but that they can play a role. In addition to helping community clinics make needed changes in the post-welfare era, the foundation also may be expanding the definition of wellness. For example, one set of grants goes to organizations helping young people use computers. "We think that's an important health intervention, because we're helping them to have better employment, better wage jobs, therefore better benefit packages," Yates said. The foundation also targets grant money for teen-pregnancy prevention and efforts to reduce gun violence, the leading cause of death of Californians under age 20.

Yates, 54, came to the foundation after many years at Children's Hospital, where he focused on adolescent medicine. He also taught at University of Southern California Medical School, training doctors, psychologists, social workers and others about working with adolescents. Earlier, he taught in Hawaii at a high school for young people with academic or behavioral problems. His wife, Ann, teaches first grade in Irvine. They have five sons, ranging in age from 22 to 15. A government major with a degree from American University as well as a master's degree in counseling psychology, he still enjoys reading history.

It's often difficult for a foundation head to attend an event without being approached by people with hope for a grant in their eyes. "I think that it's part of the job," Yates says. "I understand it because I was on the other side of the grant-making world for a long time. For 20-plus years I wrote grants to foundations. It's just part of what you do. But anywhere I go, I make sure I carry my cards."


Question: The controversy over the sale of Queen of Angels Hospital has spotlighted foundations formed when nonprofit health-care organizations are sold or converted to for-profits. Aren't poor people the losers in these conversions?

Answer: I certainly don't think poor people are the losers in conversions of the type that we are part of--the conversion of a health insurance plan to for-profit from nonprofit. The vast bulk of our grant-making goes to disadvantaged communities. I don't think you could say that about the vast amount of people who were covered under Health Net when it was a not-for-profit HMO. Most of us, in order to get covered that way, have to have a pretty well-paying job with a good benefit package. So the poor benefit dramatically from the work that gets done.

Q: You make a distinction between hospital sales and HMO conversions?

A: There is a big distinction. What I think people are pointing to is that hospitals like Queen of Angels provide a great deal of care for people who do not have the ability to pay. Who is going to pick up that indigent care? The attorney general in this state has taken a strong stance that a foundation that will be created from such a sale is going to put a lot of its grant-making into funding the types of care done by the nonprofit hospital.

Q: What percentage of the Wellness Foundation grants go for direct services for the indigent, and if it's not 100%, why not?

A: The conversion order for the foundation said that every year at least 50% had to go for direct services, and we've met that. I can't say it's all for indigent because that wasn't part of the order.

Q: OK, low income.

A: It doesn't say that either. But that's where our grant-making has focused. Most of the recipients of the direct services provided through our grants have either been low-income or indigent folks. And we've usually exceeded that amount. Last year, it was 70%.

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