Hospitals see benefits of corporate name game

What is in a name? For some hospitals, perhaps millions of dollars.

A growing number of hospitals are offering corporations naming rights to their facilities in exchange for large donations as a means of raising money to fund construction projects. Experts say the phenomenon could be indicative of the unusual fund-raising tactics that hospitals have turned to as they face increasing financial pressures.

"It's the marriage of money and need," said Lawrence McAndrews, president and CEO of the National Assn. of Children's Hospitals and Related Institutions. "If you get a contribution [for naming rights] toward construction of a building and then you are able to offer more than you would have been able to otherwise, then that would be an attractive offer."

Already several hospitals have sold corporate naming rights. There is Hasbro Children's Hospital at Rhode Island Hospital, Morgan Stanley Children's Hospital of New York-Presbyterian, The Bristol-Myers Squibb Children's Hospital at Robert Wood Johnson University Hospital in New Jersey, and Mattel Children's Hospital at the University of California, Los Angeles.

The next to join the pack may be Children's Hospital of Pittsburgh, which is building a 263-bed campus in Lawrenceville, Pa. A spokesman said the hospital's fund-raising arm was exploring the possibility of accepting a philanthropic gift in exchange for naming rights, but wouldn't give details. At least one published report said the deal could be worth $20 million, a significant chunk of the project's $473 million price tag. The potential bidders are unknown.

Corporate hospital names might raise some eyebrows because they represent word associations that aren't readily apparent. Certainly, hospitals have sold naming rights to individuals for years, and corporate naming rights is a relatively new step. But analysts say corporate deals have the potential to raise marketing problems or even ethical concerns if the corporation associating itself with the hospital engages in practices that are contrary to the hospital's mission.

"If you pick a bad partner, then you can suffer bad publicity," McAndrews said. "As a steward of an asset, a good partnership has got to be made. There may be certain lines of work counter to the health of children that you may want to avoid."

Because of the potential for such problems, McAndrews said such deals do pose some risk for hospitals. "But I guess just like any investment, you have to be compensated for the risk."

He believes that corporations could see some benefit in associating their name with a hospital because of its standing in the community. "It's not unlike any other situation in which there is co-branding," he said.

McAndrews said he had no reason to believe that the phenomenon was limited to children's hospitals. Rick Wade, spokesman for the American Hospital Assn., said such deals likely extended to the greater hospital community, though he could not provide any examples.

Wade said hospitals had been incorporating the names of major individual donors for years, and the current trend simply could reflect a shift away from individual donations toward more corporate gifts.

"It's exactly the same thing except that instead of seeing the name of prominent individual, you see the name of a corporation," he said.

Comparisons also can be made to the rash of sports facilities across the country getting names such as Qualcomm Stadium and The Pepsi Center. But Wade said that what hospitals are doing is different from what happens when sports arenas or other similar venues sell their names.

"When you see it for stadiums and things like that, they're simply selling the rights to stick the name up there," Wade said. "But for a hospital, whoever puts their name up there, that means they've made a huge donation that might have made the facility possible."

Wade said the deals might reflect how hospitals are increasingly turning to creative measures to cope with mounting financial strain. And he predicted that other similar tactics could surface.

"You'll see all kinds of things emerge. And there will probably be some things that disturb some people.

"But both the hospital and the donor have to remember that these things stay in the community for a while, and you want everything you do to be a source of pride," he said. "That is a tall order, but that's the challenge that is before the people who do fund-raising."