Are There Conflicts on the Allina Board?
Report cites Piper Jaffray Debt Swaps Have Cost Allina $92 Million While its Executives Sat on Allina Board
Contact: Rick Fuentes
(o) 651-414-2863
(c) 612-741-0662
rick.fuentes@mnnurses.org
Barbara Brady
(Minneapolis) - September 14, 2016 - The Minnesota Nurses Association today called on the Allina Board of Directors to come clean on all the conflicts of interest that exist within its board of directors. A report published Monday revealed that Piper Jaffray drained tens of millions of dollars from Allina and other Minnesota not-for-profit organizations with debt swaps over the past several years.
Two of the highest-ranking Piper executives have served on the Allina Board, including when Piper financed Allina debt swaps that could total $255.8 million over the life of the agreement.
“Allina's board has a duty to the community to be transparent," said MNA Executive Director Rose Roach. "As a nonprofit, Allina is subject to ethics laws and Minnesota healthcare laws. These findings should trouble everyone in Minnesota. The public and healthcare consumers deserve answers. If Piper Jaffray has a significant financial relationship as this report indicates, it's time for the board to come clean. MNA is calling Allina Board members who have conflicts of interest to resign immediately."
The report, Time to Pay the Piper, reveals that Allina and other Minnesota nonprofits have been stuck paying 3-6 percent interest on debt.
"Former Piper CEO and Chairman Tad Piper and current CFO Debbra Schoneman should come clean, including having Schoneman resign from the board immediately," said Roach.
From the report:
Allina Health announced in 2014 that it needed to cut $100 million from its budget. One of the first steps it took was to close the seventh floor of United Hospital, which had been used to treat epilepsy patients.
Allina Health currently has five interest rate swap agreements linked to bonds with a total outstanding balance of $350 million. Piper Jaffray was one of the underwriters for all of the bond issuances associated with these swaps.
Under the swap agreements, Allina pays the banks an average fixed rate of 4.1 percent on the debt, and the banks pay Allina a variable rate that has been below 1.0 percent since 2009. In 2015, the average rate paid by the banks to Allina was 0.28 percent. Through 2015, interest rate swap agreements have cost Allina more than $92 million -- more than $80 million in net swap payments and $12.6 million in termination penalties.
The net payments on interest rate swaps are costing Allina $12.5 million a year and are expected to cost Allina another $175 million over the remaining life of these deals, until 2028. If Allina were to refinance the underlying debt in order to reduce costs, it would have to pay termination fees of more than $90 million.
Another Allina Board member is Abir Sen, CEO of Gravie.
Gravie is a health insurance designer whose website states, “Gravie is reinventing health benefits, making them easier and more affordable for employers and employees.”
On the Gravie website, the company states, “Dropping group insurance gives your employees access to government tax credits...Some of your employees are likely eligible for tax credits, but they can only apply for these credits if they aren’t offered a traditional plan. If you’re providing a group plan, you might actually be doing some of your employees a disservice.”
“Gravie’s business model is a blatant takeover of the administration of healthcare benefits from the company and is aligned with the Allina strategy and treatment of the nurses during this contract negotiation,” Roach said. “Considering the outrageous position of Allina during negotiations, the public and nurses deserve to know if Gravie is a vendor or consultant to Allina.”
The full report is at http://bit.ly/2c81sQ1
###
|
|
About MNA:
With more than 20,000 members in Minnesota, Iowa, and Wisconsin, MNA is the leading organization for registered nurses in the Midwest and is among the oldest and largest representatives of RNs for collective bargaining in the nation. Established in 1905, MNA is a multi-purpose organization that fosters high standards for nursing education and practice, and works to advance the profession through legislative activity. MNA is an affiliate of National Nurses United.
|
|
About NNU:
National Nurses United, with close to 185,000 members in every state, is the largest union and professional association of registered nurses in U.S. history.
NNU was founded in 2009 unifying three of the most active, progressive organizations in the U.S.—and the major voices of unionized nurses—in the California Nurses Association/National Nurses Organizing Committee, United American Nurses, and Massachusetts Nurses Association. |
|
