Jeffrey Katzenberg, who chairs the MPTF Foundation board, said Wednesday, “We give ourselves a failing grade” in handling the hospital closure.
The Motion Picture & Television Fund acknowledged today that it had done a poor job of explaining the reasons why it is closing the long-term care facility and hospital at its Woodland Hills retirement home, but insisted it had no choice in a difficult economic climate.
Jeffrey Katzenberg, the Dreamworks Animation chief who chairs the MPTF Foundation board, said of the organization’s public communications over the past three weeks: “We give ourselves a failing grade. This has not been communicated well.”
Several hours after the audio conference, about 50 family members and union activists held a candle-light vigil outside the MPTF’s front gate urging the board to reverse its decision and keep the long-term care facility and hospital open.
“This is not a done deal,” Hans Johnson, an organizer with the Service Employees International Union told the crowd. “When we show up, when we let our lights shine, we can reverse what they say is an irreversible decision.” (At left, Hans Johnson. Photos by Andrew Gumbel.)
Relatives of the residents facing eviction have retained the fearsome Los Angeles litigation firm Girardi & Keese, which has previously won settlements from Merck over problems with its best-selling anti-inflammatory drug Vioxx, and was also instrumental in the suit against Pacific Gas & Electric depicted in the film Erin Brockovich.
Protesters reported that a rumor went round the MPTF campus last weekend that Brockovich herself was about to show up. Security guards closed all but one gate and brandished 8 x 10 photographs of the legal activist so they could prevent her from gaining access to the threatened home. She never showed.
Speakers at the vigil expressed anger, not relief, at the explanations MPTF officials gave at the audio conference. “They’re just trying to confuse you,” retirement home worker and activist Myra Torres said in an impassioned speech. She said the executives were treating their charges like pets more than humans. “Why did they continue to accept residents if they knew the closures were coming?” she asked. “These are people who sold their homes, or who spent their lives paying contributions, so they could live here.” (At left Paul Kissner.)
The MPTF assembled a group of industry heavy-hitters including Katzenberg, MPTF chief executive David Tillman and MPTF corporate board chairman Frank Mancuso, for an audio news conference.
The news conference came a day after TheWrap ran a two-part investigative series on the closures, and apparent inconsistencies between the Fund’s public statements and its official financial documents.
Katzenberg said the home faced a “triple storm”: a decline in Medi-Cal payments triggered by California’s budget crisis, a decline in the Fund’s investment portfolio in the wake of the collapse on Wall Street and an anticipated drop-off in charitable giving to the home.
But the MPTF officials gave only superficial answers when asked why they had announced the closures without warning.
They did not explain why a document prepared by the Camden Group analyzing the MPTF’s financial situation and laying out the case for closure had been kept confidential, and why they had not even waited to see if the Hollywood community could raise funds to make up an anticipated multi-million dollar shortfall for 2008 and 2009.
David Tillman, the fund’s chief executive, said the home had been facing $20 million deficits since 2004 – around $10 million from operating the hospital and long-term care facility and another $10 million from the rest of the MPTF’s activities. Only when pushed by a reporter did Tillman acknowledge he was not including charitable donations or investment income in this calculation.
Taking all revenues into account, the home was in fact in the black at least up to the end of 2007. What happened after that remains less than completely clear.
Steve Valentine of the Camden Group, the consulting firm behind the confidential report, gave perhaps the fullest account of the financial picture as it now stands. He said Medi-Cal payments, which account for more than 80 per cent of funding of the long-term care facility and hospital, were down 10 per cent since the middle of last year, while Medicare payments were up only around 1 per cent.
The cost of providing care at the home, meanwhile, was projected to increase somewhere between 6 and 10 per cent a year.
Katzenberg said the value of the fund’s investment portfolio was down 25 per cent since last summer (he has previously put the figure at 30 per cent). He also said he was expecting lower returns from his pre-Oscar Night Before gala and other MPTF fundraisers because of the dismal economic climate.
But the board members did not give clear answers as to why the closures were announced without warning. Mancuso said the board had explored every option, including trimming costs and considering some sort of lease arrangement whereby another operator would build a long-term care facility on MPTF land.
“No stones were left unturned through the entire process,” he said.
But one unturned stone was the lack of notification of a crisis to the families of residents, the workers, the guilds, the studios and the broader Hollywood community.
Katzenberg said at one point the board was so focused on the decision-making it forgot to pay proper attention to its communications strategy. But at another point he said it was not appropriate to open the decision-making process up to anyone outside the board.
“These are complex decisions,” he said. “They involve many different variables… We have done a number of things over past three years to attempt to address these, to mitigate them… We have had extraordinary fundraising efforts that have been made. I don’t know that there is a right or a wrong time when you can come to a decision about this.”
Katzenberg described the board as a “very dedicated group of industry people and leaders who have spent may many days and weeks invested in this”. “That’s what boards and leadership do,” he said. “They have to take leadership, they have to assess these things… This is not a decision you can simply open up to several hundred people to their input and debate. You can’t run an enterprise that way.”
The crisis appears to have hit some sort of crunch last summer, when the Camden Group came in to do its assessment. The group’s report was completed in October and has been kept confidential ever since.
When Tillman was asked about the timing of the announced he said it was not a reaction to any one event or series of events.
“One of the obligations of the board and senior management is not to look at performance on year to year basis but on trends and a vision of where we are going to be five or more years out,” he said.
The closures come just one year after the MPTF was in the black and he had himself been awarded a 20 per cent pay rise, for an annual salary just under $600,000.
The board members and officials described the decision as “agonizing.” Mark Fleischer, a board member whose own mother left the long-term care facility last week for another home, said he was in a state of “agonized peace” after reading the Camden Group report and endorsing the closure decision.
Also: Read the MPTF Statement About TheWrap’s Allegations and TheWrap’s Response. Read Part I: MPTF residents despondent; six have died since closure announced
Tax returns, audits contradict stated reasons for hospital shuttering and Part II: As Elderly Are Displaced, MPTF CEO Makes $600,000