Hollywood pulls the plug on hospital for retired stars

Charity's 60-year-old nursing home faces closure over $10m losses per year

Back in the days when film studios were run like family businesses and Hollywood was just another small town, the movie industry's founding fathers created an organisation to look after employees who'd fallen on hard times.

The Motion Picture Relief Fund, launched by Charlie Chaplin, Douglas Fairbanks and other luminaries, began in 1921 with a coin box where backlot workers would deposit spare change. It grew into one of America's most star-studded charities, with a $120m turnover, and a quaintly reassuring motto: "We take care of our own."

Lately, however, the organisation – now the Motion Picture & Television Fund (MPTF) – has been dragged into a fierce controversy, in which famous board members, including Steven Spielberg, Warren Beatty, Michael Douglas and Kevin Spacey, are charged with a lamentable failure to take care of their own.

The dispute revolves around a decision to close down the MPTF's historic "country home", a hospital and nursing facility on Mulholland Drive in Woodland Hills. For 60 years, ageing actors, entertainers and film industry workers have come to this once-leafy part of the San Fernando Valley to live out their final years.

Citing a $10m (£7.2m) annual operating loss, and saying that the facility was threatening the entire charity's solvency, the MPTF recently decided close down the home, putting 290 employees out of work, and leaving its 100 long-term residents facing an uncertain future.

"We studied the problem for three years," Ken Scherer, the organisation's president, told reporters.

"We found that we had an operating deficit of $10m a year [and decided that] the best thing to do was to take some of those dollars and invest them in programmes that would reach more people."

The move caused outrage among friends and family of residents and prompted fierce criticism of the fund's starry board members. And, just like every good American controversy, it now looks almost certain to end up in court

More than 200 protesters, including John Schneider of Dukes of Hazzard fame, picketed the MPTF's nearby headquarters shortly after the closure was announced in January.

A further protest was held outside the organisation's "night before" party on the eve of last month's Oscars, where a crowd blew raspberries at guests such as Tom Cruise, Jennifer Aniston, Cameron Diaz, Leonardo DiCaprio and Reese Witherspoon. Their ire was stoked by revelations about the financial management of the charity.

Dr David Tillman, the MPTF's chief executive, was recently shown to earn a $600,000 salary. He received a 20 per cent pay increase months before announcing the decision to boot out its elderly residents. The chief financial officer, Frank Guarrera, earns more than $400,000.

Fiercest criticism, however, has been reserved for Jeffrey Katzenberg, the film mogul in charge of DreamWorks, who serves as the chairman, and therefore figurehead, of the MPTF Foundation.

Katzenberg gave interviews blaming the recent closure on a lack of funds. However, the MPTF's most recent audited accounts (which admittedly cover the years prior to the recent financial crisis) show the organisation operating at a healthy surplus. "What bothers many people in the industry is that there's this group on the board, Katzenberg, Spielberg and their like, who earn hundreds of millions of dollars a year, yet none of them have come to the rescue," says the Hollywood historian Marc Wanamaker. "$10m a year is nothing to these people, and it would take nothing to create an endowment to offset the losses. The money would be tax deductible."

Six residents of the country home have died since their effective evictions were announced. Families of other residents have launched a lawsuit through the Los Angeles-based law firm Girardi & Keese seeking an injunction to halt the closure.

Whatever its outcome, they say the facility represents a historic Hollywood institution worth preserving. It was built on 48 acres of citrus farm purchased in 1940 by the actor Jean Hersholt, who was the MPTF's president for 18 years. Guests at its opening ceremony included Mary Pickford, Shirley Temple, and a young Ronald Reagan.

Residents over the years have ranged from the Oscar-winning actress Norma Shearer and renowned producer Stanley Kramer to Star Trek star DeForest Kelley, as well as Dick Wilson, who for 30 years played Mr Whipple, the "face" of Charmin toilet paper.