The National Nurse-Led Care Consortium, which has been part of Public Health Management Corp. since 2001, wants to leave the Philadelphia organization, alleging that PHMC's escalating management fee and other problems have jeopardized the consortium's ability to fulfill its mission of supporting community care led by nurses.
The management fee PHMC charges the National Nurse-Led Care Consortium (NNCC) has soared to $403,800 for the year ended June 30 from $196,800 four years earlier, while the consortium's overall revenue climbed just 27 percent, according to a lawsuit filed Monday in Philadelphia Common Pleas Court seeking to break that deal.
"It starts impacting the work we can do," Nancy De Leon Link, the consortium's chief executive, said Tuesday. "The more overhead we're paying, the less nurses we can hire to serve our constituents and our clients. That's why the board really felt strongly that for us to have a sustainable future, we really need to be on our own and have less cost."
The lawsuit also alleges that PHMC "was making very questionable fiscal decisions," such as spending "$4 million in a no-bid process to build a child-care facility that serves defendant's staff at its primary business address, even though similar facilities in Philadelphia are built for half that cost."
After the consortium notified PHMC that it wanted to withdraw as an affiliate, PHMC "abruptly transferred our controller without any prior discussion in the midst of fiscal year closure of federal, city and state grants, thus putting NNCC at risk of fiscal mismanagement," according to a letter attached to the complaint.
The consortium is based at PHMC's headquarters at 15th and Market Streets in Center City and had $10.9 million in revenue in the year ended June 30, 2016.
PHMC rejected the allegations. "NNCC is a wholly controlled subsidiary of PHMC," it said in a statement, "and we are therefore obligated to make decisions in the best interest of NNCC's charitable mission and the vulnerable communities we collectively serve."
"PHMC takes seriously its obligations to act in compliance with all laws and regulations, the highest standards of business ethics and practices and its charitable mission to help build healthy communities," it said.
PHMC, which had $230 million in revenue in the year ended June 30, has made more than 20 acquisitions since 1985, the organization's CEO, Richard Cohen, said last month during an interview on the planned acquisition of the bankrupt Wordsworth Academy. That was before the acquisition of Treatment Research Institute, announced July 18.
Cohen described PHMC's acquisition strategy as an effort to "wrap services around people."
Not all targets have stuck around. Among those who have left PHMC are La Comunidad Hispana in Kennett Square, Caring People Alliance in Philadelphia, and Clarifi, also in Philadelphia.
In the case of Clarifi, which separated from PHMC in June 2016 after three years, the "board and senior management determined it to be in the best interests of Clarifi to resume oversight over the organization's accounting, human resources, and technology functions," Clarifi said.
The arrangement with Caring People Alliance lasted less than a year and resulted in a 2015 lawsuit by PHMC alleging that Caring People's departure cost it at least $81 million in revenue.