Death and Profits

When Hugh Westbrook pioneered hospice care, his organization saw to the needs of the dying. Fifteen years later nothing has changed -- except the politics and the profit margins.

State Rep. Mike Abrams and Hugh Westbrook have been friends for twelve years. "He lives just two minutes from me," Abrams eagerly offers. "It's stating the obvious to say that he is a successful businessman, but to me he has just been a very committed friend. And from my vantage point, we share the same political and social values and we both believe that the best way to impact those is through the system. First and foremost, though, we're friends.

"I'm a Hugh Westbrook fan and I'm a big Carole Shields fan, his wife," Abrams continues. "I helped to get her on the Dade Public Health Trust [which oversees Jackson Memorial Hospital] and introduced her to people. I think she's been an incredible asset."

According to the House Journal, the official record of proceedings in the Florida Legislature, a 35-word amendment was added to 1989's House Bill 950, which concerned rural health care: "Notwithstanding statute 400.601(2), any hospice operating in corporate form exclusively as a hospice, incorporated on or before July 1, 1978, may be transferred to a for-profit or not-for-profit entity, and may transfer the license to that entity." Mike Abrams offered the amendment, which was accepted, passed during a special session, and signed into law by Gov. Bob Martinez.

Only three hospices in the State of Florida were incorporated before the July 1, 1978, cut-off date: Westbrook's Hospice Inc., which was formed on June 13, 1978; and one program each in Orange and Pinellas counties. There was never any doubt, though, regarding the intended beneficiary of the measure. "We asked for it for us," Westbrook readily acknowledges, "so that we could merge our local hospices here into our national company. And our national company was for-profit."

The legislation was introduced quietly and without fanfare. In fact, the directors of the hospices in Orange and Pinellas counties were not aware the law was being changed. "We were surprised by it," says Mary Labyak, executive director of the hospice in Pinellas County, which remains nonprofit. "It makes me a little concerned about the future of hospice. I think it made a lot of us wonder where hospice was going."

"In Orlando we didn't even realize it had been done until after the law had been passed," adds Brenda Horn, executive director of Orange County's nonprofit hospice program. "We were not consulted about it at all." But if she had been consulted, she would have opposed the change. "I agree with the hospice licensing law the way it was originally written A that hospices in the State of Florida should be run as nonprofits," Horn argues. "It's a philosophical difference. I think it's important that the dollars that are received by hospice programs -- and the majority of them are tax dollars from Medicare and Medicaid -- that those dollars be put back into those programs in those local communities rather than be given to private investors and shareholders."

If Westbrook believes that having one for-profit hospice in the state is a good idea, why not just open up the law to allow any nonprofit hospice to become for-profit? Or for that matter, allow outside for-profit companies to come in and compete? "If it ain't broke, don't fix it," he responds.

"The Florida hospice licensing law has worked very well. There have not been abuses. There have not been rip-off artists getting into it."

The legislation Representative Abrams introduced for his friend also happens to work very well as a barrier to potential competitors in the spectacularly lucrative South Florida market. Today Westbrook enjoys a legal monopoly that guarantees his company will be the only for-profit hospice operating in Dade and Broward counties. Says Abrams today: "If that's what we did and there are others that would care to change it, then okay A there is nothing wrong with leveling the playing field. But nobody has come to me to change that. We could certainly look at it if someone was interested."

Having accomplished his goal, Westbrook made his move on Hospice Inc., the South Florida nonprofit he founded. He told the board of directors (from which he had recently resigned) that his company was no longer interested in managing the hospice programs in Dade and Broward. "We made it clear to the nonprofit people here that the future really wasn't going to be with us," he recalls. "We were interested in building [new for-profit hospices]. Management was not the business we were in."

He made an offer to the board members: sell him the nonprofit company or look for another firm to run the business. In June 1990, the board consented and sold the Dade and Broward hospice programs. Price: $4.5 million.

But it was not Westbrook's for-profit company, HCI, that purchased the hospices. It was Westbrook and Esther Colliflower personally. Westbrook explains that he and Colliflower did not control a majority of HCI's privately held stock at the time. As a result the nonprofit's board members A the people Westbrook had invited to serve on that board A didn't want to entrust the hospices to HCI. "So we bought it," Westbrook says flatly. "The two of us."

About a year and a half later Westbrook regained control of his for-profit business after buying out several investors. He and Colliflower then decided to sell the former nonprofit hospices to their own company, HCI. An independent appraiser was brought in to determine how much Westbrook and Colliflower should pay themselves. The value was set at ten million dollars.

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