L+M and its offshore investing
Why does Lawrence +Memorial Hospital have $35 million stashed offshore, in hedge funds in Grand Cayman?
How many in the community know that there is a separate corporation from the hospital, a nonprofit dedicated to support the activities of L+M, with many of the same board members and executives in charge, which reported $63 million in assets on its 2010 tax return?
I didn't until this week.
I tried to learn more about both the $35 million in Grand Cayman offshore money and the affiliated fundraising corporation assets, which included another $6 million invested in Central or South America, according to its 2010 tax return, but I hit a wall.
It was back in September when I first asked about a persistent rumor that the hospital had $20 million parked in investments in the Caribbean country.
The long answer, that included extensive conversations with L+M spokesman Michael O'Farrell and Chief Financial Officer Lou Inzana, was that L+M's connection to Grand Cayman is an insurance company the hospital started there, to avoid Connecticut insurance rules. Only $120,000 is invested in Grand Cayman as part of that insurance company, Inzana told me.
"L+M hasn't moved $20 million offshore, Inzana assured me," I wrote then, convinced the hospital had put to rest the rumor about millions invested in Grand Cayman.
No one called to correct it.
So imagine my surprise this week when I found, poking around the hospital's tax returns, amid the turmoil of a strike and lockout of employees, that L+M reported more than $33.8 million in investments in Central or South America on its 2010 tax return.
O'Farrell, when I called to ask again about offshore money, responded that the hospital has money invested in hedge funds in Grand Cayman, $35.5 million as reported on its 2012 tax return.
O'Farrell said this week that he recalled that I asked in September only about the hospital's business in Grand Cayman, not millions invested there, and that they responded with answers about the insurance company. He said the $35 million is not related to the insurance company, and that's why they didn't talk about it when I asked about Grand Cayman.
Even this week, the hospital wasn't very forthcoming about either the money invested in Grand Cayman or the money held by the fundraising corporation.
I submitted a lot of questions about the hospital's significant assets: how old they are, where the money came from, how it is spent, why so much is invested outside the United States, whether there are restrictions on money that was donated and the amount of the most current investment balances.
I got no specific answers to those questions, even though it seems especially relevant now, since the hospital is spending so much on the lockout, hiring costly replacement workers and paying their expenses.
The hospital also did not respond to specific questions about the cost of the lockout. A union spokesman said the union is still investigating how much the L+M lockout might be costing.
O'Farrell said I could come in to the hospital and they would talk at length about the hospital's investments, once the labor problems are over. He also named the professional banks and advisers that work with the hospital on its investments, including the offshore money.
He did agree that there seems to be good news to report on hospital accounts, that the hospital, after years of strong support and generosity from the community, appears to be on a sound financial footing.
"The hospital maintains a balanced portfolio that includes quality investments and has produced quality results - allowing it to maintain a strong financial position," he wrote in an email response to my questions.
"Given the changing landscape, the community should have confidence in the financial position the Hospital is in based on its sound investment strategy."
Indeed, O'Farrell said the hospital is more than halfway through a $30 million campaign to raise money for its new cancer facility.
The community must hope that the generosity continues and that the hospital maintains its strong financial footing well beyond the current labor turmoil.
This is the opinion of David Collins.