Hospital Group's Link To Company Is Criticized
At time when many nonprofit hospitals are struggling, large group owned by those hospitals is spending tens of millions of dollars to shore up its investment in for-profit electronic company in which some of group's officials own stock; some hospital executives, told of arrangement, criticize it as conflict of interest; last year, hospital group, Novation, and hospitals that own it backed electronic commerce company, Neoforma, with about $70 million in subsidies, stock purchases and loans; Neoforma, Web site where Novation hospitals and others can buy supplies, has never turned a profit and has reported losses of $500 million since it was founded in 1996; Novation and its affiliates own 61 percent of Neoforma, and 10 officials who play a role in overseeing Novation also own or have owned stock in company; photo; graph shows declining share price of Neoforma following its initial public offering (article in series Medicine's Middlemen) (L)