"Anger over costly projects as nursing home is set to shut"
Los Angeles Times
Families of residents at the motion picture fund's facility are angered over the approval of such costly plans as new offices and a gym.
By Richard Verrier
February 11, 2009
As residents of the nursing home operated by the Motion Picture & Television Fund are being forced to find new facilities, their family members are outraged that the fund's board previously authorized expensive new executive offices and other construction projects, including a state-of-the-art gym and aquatic center, at a time of deepening financial woes.
The concerns have come to light in recent days as residents' families have pressed management at the fund to explain its decision to shut down the hospital and nursing care facility in Woodland Hills, ordering the relocation of about 100 elderly residents to retirement homes around Los Angeles.
Family members believe that closing the facility by the end of the year violates the implicit promise the fund made to care for infirm entertainment industry workers, many of whom have been traumatized by the news.
"My father is in complete denial," said Brandy Alexander-Kern. She moved her 87-year-old father, a retired stage manager and director, into the home only a few months ago. "He keeps looking at me and asking me, 'You're not going to let them take me out of here are you?' " she said.
Fanning the flames is disclosure that the fund's chief executive received a 41% pay raise from 2005 to 2007, a period when the fund acknowledged its growing financial problems with the hospital and nursing home. The facilities for the last several years have generated an annual deficit of $10 million, which the fund said imperiled the future of its finances.
Fund officials reject the criticism and say that the building projects and executive compensation levels are separate and did not draw upon or affect resources dedicated to the operation of the hospital and nursing home.
"If we didn't do this now, the entire endowment would have been wiped out in four to five years," said Frank Mancuso, who heads the fund's corporate board.
But some family members believe that the fund's board has misplaced its priorities, leading it to emphasize bricks-and-mortar projects at the expense of fundamental care to those most in need.
"They were pouring all this money into creating a super-luxurious gym and health center and very opulent administration offices at a time when money was needed to sustain the nursing home and hospital," said Richard Stellar, a marketing communications consultant whose 91-year-old mother is in the motion picture home.
Stellar and other family members say they are skeptical that the fund is confronted with a financial crisis. The fund's tax filing for 2007, the latest available, shows that the overall organization had a surplus of $10 million, down from $17 million in 2006. In the same period, the fund's net assets grew to $133.8 million from $118.6 million, according to the tax return.
David Tillman, chief executive of the fund, said the fund's surplus masked underlying losses at the long-term care facility.
The bleak financial picture of the fund was underlined in a report to the board in October by consulting firm Camden Group, which warned it was not generating enough revenue to cover a growing shortfall that would exceed $20 million in 2008.
"Despite significant financial improvements made over the past few years, these underlying costs will continue to increase, and the ability to generate additional income is extremely limited," the firm's report said. "As a result, the current losses will grow in future years."
The report attributed losses largely to the fact that government insurance reimbursements have not kept pace with rising medical costs, which has resulted in many hospital closures in California in recent years.
About 85% of the home's patients are covered through Medi-Cal, the state's healthcare program for the poor.
"This has been one of those horrible Solomon's choices," said Jeffrey Katzenberg, chairman of the foundation's fundraising board and chief executive of DreamWorks Animation. "This is a place I adopted and care deeply about. . . . I can't sit on the watch as the ship goes down and do nothing about it," he said of the fund's financial position.
Such explanations, however, have done little to quell an uproar among many of the residents and their families, who, in a long shot bid to keep the facility open, have hired the high-profile litigation firm of Girardi & Keese to fight the board's decision.
Although the fund has vowed to help place residents in other facilities and expand home-based services, many family members dispute the organization's claims that they will be able to find comparable care elsewhere.
Family members recently wrote a letter to board members, urging them to reconsider.
"Common sense dictates that some residents will die from shock, sadness, depression and a lack of continuity in medical treatment," the letter said. "We believe that you need to look beyond the numbers to the human lives that are being affected today and will be affected in the future."
The closures, which will cost 290 workers their jobs, will not affect about 185 residents of the fund's independent- and assisted-living facilities and six area health centers that serve some 60,000 industry workers and their families.
The 50-year-old hospital, which draws only five to seven patients a day, has struggled to compete with larger, more modern facilities. In the past, the fund could make up the shortfall through investment income and philanthropy. But the deep recession has sharply cut into income from both sources.
This year, for example, the fund projects it will raise $19 million from donations, down from $24 million in 2008, which was down from $35 million in 2007, said Ken Scherer, CEO of the organization's fundraising board.
"This place has always relied on the largess of guys and ladies who made millions. There are fewer of those today," Scherer said.
Family members have grilled board members about why the charity gave substantial pay raises to its top executives even as losses mounted at the motion picture home.
Tillman earned nearly $600,000 in 2007, up 18% from the previous year. Chief Financial Officer Frank Guarrera received a 14% bump in pay in 2007, bringing his total compensation to $411,153. In total, the fund spent $13.6 million on management fees in 2007, in addition to $6.6 million on professional and consulting fees.
Board members noted that Tillman was not granted a pay increase in 2008 or in 2009, and that his pay was not out of line with that of comparable executives in his field.
"The board has the greatest respect for Dr. Tillman," Mancuso said.
Residents have also questioned the fund's allocation of resources.
In 2007, the fund opened the Saban Center for Health and Wellness, which includes a state-of-the-art gym, the Jodie Foster Aquatic Pavilion, physical therapy services and new administrative offices.
"How is it possible that they could build the Saban center with the huge office and aquatic center if they knew they had no money for long-term care?" asked Andy Suser, whose 94-year-old mother lives in the home.
The Saban Center cost about $20 million, which was mostly covered by donations that were allocated for the project and could not be diverted, Tillman said.
For now, the biggest concern is how the residents will cope with the relocation.
Scott Wainess is trying to find a way to keep his parents together. His 86-year-old mom is in the nursing home, while his father resides in the home's assisted-living community.
"I think it's going to kill my mom," he said. "I honestly do."