Table Of Contents:
Acknowledgments xiii(2)
The Authors xv(4)
Foreword xix(4)
Introduction xxiii

1 Fiduciary Obligations 1(12)

Duty of Obedience to Charitable Purpose 2(4)

Step 1: Find Out Whether You Can Convert Your Hospital at All 2(2)

Step 2: Determine How You Can Spend the Charity's Money 4(2)

Duty of Loyalty 6(3)

Duty of Due Care 9(3)

Conclusion 12(1)

2 Strategic Planning 13(22)

Step 1: Get the Board Involved Early 15(1)

Step 2: Identify the Legally Permissible Options 16(4)

Determine Restrictions 16(1)

Avoid Common Errors 16(4)

Step 3: Assemble the Right Team of Experts to Work with Your Management, Identify the Problems, and Recommend Solutions 20(2)

Step 4: Shape Your Options to Meet Your Goals and Work with Your Community 22(10)

Meeting Your Goals 23(1)

Engaging the Community 24(8)

Step 5: Give Yourself Enough Time to Make a Reasoned Decision 32(1)

Conclusion 32(3)

3 Planning for the Post-Conversion Charity 35(18)

Goal 1: Educate the Affected Community and Involve It in the Decision-Making Process 36(1)

Goal 2: Create a Structure for the Post-Conversion Charity That Is Consistent with Your State Law 37(3)

Goal 3: Create a Charitable-Spending Plan for Your Post-Conversion Foundation 40(4)

The Historical-Services Option 41(2)

The Charitable-Component Option 43(1)

The Supporting-Organization Option 44(1)

Goal 4: Establish an Investment and Management Structure for the Conversion Proceeds 44(7)

Step 1: Setting Your Investment Goals 45(1)

Step 2: Selecting an Investment Adviser 46(3)

Step 3: Establishing Written Investment Guidelines That Include Diversification 49(1)

Step 4: Monitoring Investment Performance 50(1)

Step 5: Negotiating Terms to Protect the Charity from Loss or Excessive Fees 50(1)

Conclusion 51(2)

4 Selling Your Hospital 53(30)

The Sale Process 54(2)

Getting the Right Advice at the Right Price 56(4)

Marketing and Valuation Experts 57(2)

Negotiating Expert Fees 59(1)

Avoiding Conflicts of Interest 60(2)

Obtaining a Formal Valuation 62(3)

Necessity 62(1)

Timing 63(1)

Source and Cost 64(1)

Understanding Valuation Advice 65(5)

Fairness Opinions and Valuation Opinions 65(2)

Valuation Methodologies 67(3)

Marketing Your Hospital 70(6)

Soliciting Interest by Buyers 71(1)

Getting the Bidding Started 71(1)

Auction Sales: Optimizing the Possibility of Obtaining Fair Market Value 72(1)

Single-Bidder Sales:"Shopping the Deal" and Protecting the Price 73(2)

Choosing the "Best" Offer 75(1)

Documenting the Agreement 76(4)

Letter of Intent 76(1)

Definitive Agreement 77

Conclusion 80(3)

5 Joint Ventures 83(38)

Keys to a Successful Joint-Venture Agreement 86(1)

The Typical Joint-Venture Model 87(5)

Advantages 88(1)

Risks 89(3)

Policy Analysis 92(1)

Investment Analysis 93(4)

What Percentage of Your Assets Will You Invest? 93(1)

Will Your Returns Equal the Value of the Assets You Invested? 94(2)

Could You Do Better Elsewhere? 96(1)

Process 97(3)

Understand the Issues 97(1)

Get Fair Market Value 98(1)

Make Sure the Deal Documents Protect You 99(1)

Protecting Yourself and Your Hospital 100(5)

Understand the Limitations of Your Expert(s) 100(2)

Let the Market Work for You 102(1)

Pursue Your Values, Not Someone Else's 103(1)

Evaluate Comparable Proposals 103(1)

Be Wary About Using Selection Criteria Other Than Price 104(1)

Structuring the Transaction 105(15)

Letter of Intent 106(1)

Contribution and Sale Agreement 107(1)

Operating Agreement 108(9)

The "Put" 117(3)

Conclusion 120(1)

Legal Protections for Directors and Trustees--and the Consequences for Failing to Use Them 121(26)

Legal Protections 122(13)

Business Judgment and Careful Conduct Rules 123(3)

Delegation, Reliance, and Other Safe Harbors 126(2)

Directors' and Officers' Liability Insurance 128(3)

Indemnification 131(4)

Legal Consequences 135(10)

Charitable-Trust Civil Actions 136(7)

Internal Revenue Service 143(2)

Conclusion 145(2)

Appendix A: Glossary 147(4)

Appendix B: The Law of Fiduciary Duties Affecting Directors and Trustees of Nonprofit Hospitals 151(42)

Duty of Obedience to Charitable Purpose 151(15)

Defining the Trust 152(5)

Adapting the Trust to Changing Times and 157(3)

Circumstances 157(3)

Restrictions on the Use of Conversion Proceeds 160(6)

Duty of Loyalty 166(15)

General Standards 168(2)

Trust-Law Standard 170(1)

Corporate-Law Standard 171(4)

California Standard 175(3)

Real-Life Examples 178(3)

Duty of Due Care 181(12)

Standard of Care 182(2)

The Standards in Practice: Good Faith, Reasonable Inquiry, Due Diligence 184(5)

Process Protections 189(4)
Index 193