EXCLUSIVE: The chairman of the Motion Picture & Television Fund Foundation Jeffrey Katzenberg and I have had a conversation in response to the huge outcry from the Hollywood community over last week’s unexpected announcement about the closure of the acute care hospital and long-term care nursing home because they are losing $10 million a year. Katzenberg wanted to make sure I had a better understanding of the situation, so I’m passing along the gist of his anwers to my questions. But the ground rules were that I agree not to quote him directly:

Katzenberg was distressed and upset at how badly the announcement of the closures was handled and communicated (the PR flack who handled it, 42West partner Allan Mayer, was fired over it). Because what wasn’t emphasized enough to the showbiz community was that MPTF was eliminating one very small part of what this enterprise delivers to Hollywood. The board understands that MPTF has a responsibility to deliver on its promise of unwavering commitment to the entertainment industry. And yet, as much as the directors would love to be able to live a world where no one is left behind, the board had to decide to save the vast majority at the expense of the few. The MPTF services 75,000 patients a year. It has enlarged the home in Woodland Hills, created the Saban and Stark centers, and made a huge investment in expanding many aspects of service to the showbiz community. But the sickest patients in those acute care and long-term care beds were putting all those enterprises into jeopardy and maybe bankruptcy.

Katzenberg expressed dismay that the message delivered last week had been so badly communicated that it has made most people right now assume that the MPTF and the home are either closing or in great jeopardy. True, it’s an enormous enterprise with a $110 million budget, $20 million of which is social services. But the fact is that almost all the MPTF facilities and services are not going away. Just the opposite. he board’s goal for the MPTF is to get its endowment back to a place where it is a self-sustaining enterprise, for which individual big donors, or the “Night Before” anual Oscar fundraiser are added bonuses.

Katzenberg said the board knew the closures were coming for a number of years but that everyone chose not to deal with it for all the right compassionate reasons. Instead, people wanted just to carry on and ignore the situation. But then the MPFT reached the point where it was simply not possible to continue to do nothing.

The main problem is that the facility is almost 60 years old and in no way, shape or form up to the demands for first-class medical care needed by acute care patients today. The MPTF was doing what it could to keep it together by patching together old equipment or occasionally buying new equipment. But the facility was still considered ancient by today’s medical standards. And it would be phenomenally expensive to bring the facilities up to pay because the last part of a patient’s life involves the most care and attention and complicated medical needs. And MPTF doesn’t have the resources to give that.

Katzenberg emphasized that he thought the hospital and its administrators and staff had done an amazing job compensating for the deficiencies with their personal touch. But MPTF simply doesn’t provide what UCLA, Cedars, and St Joseph’s do because those hospitals have all spent anywhere from $300 million to $1 billion to rebuild in the last decade. And the MPFT knows that when it accepts the responsibility for caring for showbiz people, then it had better be able to deliver a state-of-the-art service for them. But the facility just can’t keep up. And the attempt to keep up has placed the MPTF in a terrible situation where the $10 million loss a year is draining the endowment so such an extent that the entire MPTF services and facilities are now precipitously on the edge.

Katzenberg said the other reason why this situation accelerated into such a crisis that the board had to act immediately was because the endowment, just like everybody else’s endowment, is down 30% in value because of the Wall Street crash. So this combination of the endowment losing significant value in 2008, combined with the mounting losses and the fact that the facility was not up to standards for state-of-the-art care for the patients, forced the board to act. And it had to act quickly if it was going to ensure the future of every service and facility provided by the motion picture home.

So the board was left with one of those horrible Solomon-like situatuons where there is no right and no wrong. But Frank Mancuso (chairman of the MPTF’s Corporate Board Of Directors), Casey Wasserman (board member and MPTF scion) and Katzenberg had made a commitment to one another, and to the rest of their colleagues when they started to wrestle with this, that their first responsibility was to make sure that they could put the Motion Picture Home and the MPTF on a course that would ensure their future and provide services for the showbiz community in perpetuity.

Katzenberg acknowledged that, because of the acute care hospital and long term nursing care closures, the MPTF will be putting more emphasis on its community and social ervices. Several thousand clients want to stay in their own homes and use MPTF assistance and facilities. The board expects there is going to become a bigger and bigger demand for this and the directors need to make sure the MPTF is able to deliver.

Katzenberg also acknowledged that his own personal focus is on social services, like situations where people in the showbiz community need financial assistance because of a momentary emergency. Two years ago, the MPTF was receiving on average about 20 calls a week for various kinds of urgent assistance, and usually 50% of the requests qualified. But during the recent writers strike, the MPTF was receiving 200 calls on average, and some 80% qualified. So the demands on the MPTF are for a safety net that is greater and wider than just a retirement home and just a hospital. Katzenberg pledged to make sure this place of last resort doesn’t disappear on his watch.

Katzenberg said that the MPTF in 2008 made 95% to 98% of its fundraising numbers in 2008 because most of it takes place in the first 2/3s of the year. But the board can forsee that fundraising in 2009 is going to be a serious problem. The directors are counting on Hollywood to continue being a phenomenally generous community.

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