New York-Presbyterian Hospital has raised as much as $200 million in a good year, with the help of a gilded board stacked with Wall Street luminaries.Now the hospital is growing queasy.
"Some very important people may hesitate, some others may delay and some others are not affected," says Herbert Pardes, New-York Presbyterian's Chief Executive. "We will still raise money. I am not sure we will raise as much as before." He added, "We will try as hard as we can -- it is critical to the hospital."
The tremors from Wall Street's crisis are being felt up and down Bedpan Alley, as the area on New York's East Side where many of the city's medical centers are located is known.
New York hospitals have traditionally attracted financiers and captains of industry to their boards. Trustees could be counted on to shell out millions to build wings, departments, even buildings. In return, they enjoyed the social cachet that membership on a New York hospital board offers -- equal in some cases to the snob appeal of serving on the board of a top museum or the opera.
Now these facilities, which include some of the country's leading academic medical centers, are battening down for a storm. The loss of Wall Street jobs is expected to cause severe deficits in the state budget. That could mean cuts in Medicaid payments, hurting the hospitals' bottom lines.
Stock-market gyrations also have eroded hospital investments, causing multimillion-dollar losses. And the financial fracas threatens the gifts and pledges these hospitals came to depend on during the flush years when Wall Street boasted munificent salaries and bonuses.
New York-Presbysterian's board and donor lists include a Who's Who of finance: The hospital board chairman is John Mack, Chairman and CEO of Morgan Stanley. Serving alongside him were Richard Fuld, CEO of Lehman, now reorganizing under bankruptcy protection. Another board member is John Thain, CEO of Merrill Lynch, which last week sold itself to Bank of America. The hospital's chairman emeritus is Maurice "Hank" Greenberg, former chairman and CEO of AIG, the insurance titan effectively taken over by the government.
Last week, Dr. Pardes says, he refrained from phoning to ask for contributions out of deference to some donors. "There are some people I know are having a hard time now and I wanted to be sensitive to them, so there are some people I will not call," he says.
Mt. Sinai Medical Center, also on the East Side, has a board of financial and business hotshots that have stood by it through other crises. Sinai's board includes financier Henry Kravis and James Tisch, president and chief executive of Loews Corp.
But last week, when Mt. Sinai's fund-raising czar spoke to potential donors, he was asked about the possibility of deferring gifts. "In talking to some of our best donors over the last couple of weeks, no one is deferring," says Mark Kostegan, senior vice president for development. "They are asking, 'If I need to, could I? I want to know if this option is available.'"
Across town in Greenwich Village, St. Vincent's Catholic Medical Centers has been planning to build a new hospital to replace its aging facility, which administrators say is beyond repair. Now the hospital's CEO is wondering how he will raise the $150 million he had targeted for this year. St. Vincent's, which prides itself on its work on behalf of the uninsured, now fears an even greater influx: Officials predict that thousands who have lost jobs will be without coverage when their benefits run out.
"We are concerned because Wall Street and all who make up Wall Street have been so important to the philanthropic engine of New York, particularly hospitals," says Henry Amoroso, St. Vincent's president and CEO. "Some other hospitals can maybe rethink their capital campaigns, maybe change their direction and focus a bit, but for a place like St. Vincent's it can hit us particularly hard because we don't have that ability to delay."
Kenneth Raske, chief of the local hospital trade association, says he woke up in the middle of the night Sunday, after news of the fall of the Lehman and the sale of Merrill Lynch broke, and began drafting a memo to members to warn them of the coming upheavals.
"The current economic crisis could pose a chilling effect on philanthropic giving in the short run," says Mr. Raske, whose Greater New York Hospital Association represents 250 hospitals and medical centers in New York as well as New Jersey, Connecticut and Rhode Island.
By: Lucette Lagnado
Wall Street Journal; September 22, 2008
