Atlanta's Northside Hospital is embroiled in a legal battle that centers around a basic question: is Northside's business also the public's business?
Northside Hospital in Atlanta is a public facility owned by the Hospital Authority of Fulton County. The authority leases the hospital to Northside Hospital Inc., a nonprofit organization created by the authority to operate the Northside system.
In a case that will be argued this week before the Georgia Court of Appeals, Northside Hospital is arguing that its activities are private matters, not the public's business.
Northside and the AJC have been at odds over this issue for several years. In 2013, Northside told the AJC it was not subject to the Open Records Act in response to a request for documents. At the time, the AJC was reporting on executive compensation plans for CEOs at metro Atlanta's nonprofit hospitals for a story that ran in 2014.
Credit: Carrie Teegardin
Credit: Carrie Teegardin
The pending legal case arose when attorney E. Kendrick Smith, a partner in the Atlanta office of the Jones Day law firm, requested information from Northside under the state's sunshine law. He was asking for documents related to Northside's "$100 million acquisition" of four physician practices. The request came after
about big jumps in bills for patients that resulted from Northside's acquistion of two of these practices, which are oncology groups.
Northside refused to hand over the records to Smith, saying that Northside is a private company that isn't subject to the Open Records Act and that, even if the law did apply to it, the records were "trade secrets." Northside also wanted to know who Smith was working for, assuming he was representing a competitor. Smith refused to say, arguing that nobody seeking public records has to justify why they're asking.
Fulton County Superior Court Judge Gail Tusan ruled this year that since the Authority wasn't directly involved in acquiring the physician groups, the related records weren't subject to the Open Records Act. When the judge announced the decision, attorneys representing Northside and the physicians' groups were overjoyed.
“Northside Hospital believes its position in this matter is legal and proper, as the trial court decision makes clear," Northside spokesman Lee Echols told the AJC in an email. "The goal of the appellant is to gain access to business information that is protected from disclosure, and Northside Hospital will continue its efforts to ensure that protection."
The decision raised questions for the public: can Northside operate in secret? Could other government entities set up non-profits to run their operations and thereby avoid being transparent?
Healthcare trends prompted many public hospital authorities across Georgia to convert to this business model. The WellStar Health System is a non-profit organization, but it runs publicly-owned hospitals in Cobb, Douglas and Paulding counties. Even Grady Memorial Hospital, Atlanta's healthcare safety net, is now run by a non-profit organization created by Grady.
A Georgia court ruling in 1995 established that non-profits carrying out the duties of a public hospital authority are subject to the Georgia Open Records Act. For years, The Atlanta Journal-Constitution has obtained records from hospitals around the state through requests made under the state's "sunshine law."
The Georgia Press Association, The Georgia First Amendment Foundation and The Atlanta Journal-Constitution decided not to sit on the sidelines as the case moved to the Georgia Court of Appeals.
Attorney David Hudson filed an amicus brief in the appeal, on behalf of the newspaper, the press association and the foundation. Hudson argued that the Georgia Court of Appeals should make it clear that Northside Hospital can't operate in the dark.
Hudson's brief said Northside Hospital is clearly subject to the Open Records Act, based on previous court rulings. He criticized Northside for turning down a previous AJC request for records, which sought to find out whether Northside's CEO bonus program was based on how well the hospital was serving patients or how well the system was doing from a business perspective. At the time, Northside had reported paying its CEO total compensation worth $5.3 million.
"Without the access afforded by the Open Records Act, the public that these entities are supposed to serve is left in the dark," Hudson wrote. "Are they in business to provide quality and affordable healthcare to the public, as the law requires, or are they incentivized simply to maximize revenue? Should not the public have the right to know when it is the public's assets -- and its health -- at stake?"
Even though Northside Hospital Inc. operates valuable public assets and carries out the authority's obligations to serve the public, Northside distances itself from its public partner.
“As a private, not-for-profit organization, Northside Hospital receives no public or taxpayer money," Echols, of Northside, told the AJC. "We provide hundreds of millions of dollars in health care for those who cannot pay, and our medical professionals are second to none in their skill and compassion. It is our obligation to protect privileged information for them as well as for our patients.”
While Northside won the first round in this battle, Hudson argues that the Court of Appeals needs to make sure the public wins the next round. "It cannot and should not be possible for a government agency to insulate itself from public scrutiny by spinning off a private entity and transferring its assets, duties and public functions to that entity," he wrote.
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