No this isn't a trick question. What I am talking about are nonprofit hospitals. Today the Chicago Tribune featured an informative piece about "nonprofit" hospitals. (An interesting side note this article comes days after the Wall Street Journal also featured an article about this issue on Friday, April 4, 2008.) The battle concerns what percentage of charity should a nonprofit hospital have to do for their community.
While many may say that this isn't a big problem, until you consider that over 60 percent of hospitals in the United States are nonprofit hospitals. Also, according to the American Hospital Directory (AHD),
[Nonprofits hospitals] are faring even better than their for-profit counterparts: 77% of the 2,033 U.S. nonprofit hospitals are in the black, while just 61% of for-profit hospitals are profitable...
What
this boils down to is: Who is really hurt by all of this? Consider the example of SSM Healthcare, a Catholic-run organization
that operates 20 hospitals and makes a profit, partly because it has
tax-exempt status, is closing St. Francis hospital in Blue Island
because it is too much of a financial drain on its profits. This is not just an Illinois problem.
"Not-for-profit systems all around the country are closing unprofitable inner-city hospitals while building Taj Majals in wealthy white suburbs," said Joe Novak, a hospital critic who regularly raps the non-profit industry on his blog, WhereTheMoneyGoes.com. "Systems like SSM argue this hospital or that one is losing money—we have to shut it. Carry that logic out and the argument becomes not-for-profit systems only want to operate hospitals that make a profit."
This means that hospitals that were truly established for the good of the less wealthy communities have a shortage of charitable healthcare institutions, while many fully insured have plenty.
The Trib article reports that this growing concern is gaining national attention,
A proposal by Sen. Charles Grassley (R- Iowa) would require that non-profit hospitals spend at least 5 percent of their budgets on charity care. Analysts say many U.S. hospital operators ... would not meet that target, based on criteria provided by Grassley. Hospitals falling short would lose federal tax exemptions.
In Illinois, Lisa Madigan would like to see similar legislation. She "is pushing for ways to require hospitals to provide a specific percentage of revenue as charity care, or information on the discounts hospitals provide for some patients."
To give you an example Northwestern Memorial Hospital, the largest hospital in Chicago, spent less than two percent ($241.8 million) of its annual revenue ($1.3 billion) in 2007 and a fraction of what they received in tax breaks. And if this doesn't seem that odd then add on the $16.4 million payout their former CEO received in 2006. (I obviously am working for the wrong nonprofit.) Under the proposed federal legislation Northwestern would lose it's tax benefits, totally more than $50 million (not including the tax benefits it receives on its investments.)
All of this makes me wonder if the millions of dollars in tax breaks going to these hospitals would be better going into resources to fund universal healthcare plans. (Of course hospitals typically are against this type of legislation.)
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