Have Nonprofit Hospitals Lost Their Mission?

NY Times: Nonprofit Hospitals Are Too Profitable

An excerpt:

Seven of the 10 most profitable hospitals in America are nonprofit hospitals

It’s time to rethink the concept of nonprofit hospitals. Tax exemption is a gift provided by the community and should be treated as such. Hospitals’ community benefit should be defined more explicitly in terms of tangible medical benefits for local residents…

The average chief executive’s package at nonprofit hospitals is worth $3.5 million annually. (According to I.R.S. regulations, “No part of their net earnings is allowed to inure to the benefit of any private shareholder or individual.”) From 2005 to 2015, average chief executive compensation in nonprofit hospitals increased by 93 percent. Over that same period, pediatricians saw a 15 percent salary increase. Nurses got 3 percent…

Additionally, hospitals should not be allowed to declare Medicaid “losses” as a community benefit. While it’s true that Medicaid typically pays less than private insurance companies, Medicaid plays a crucial role for private insurance markets by acting as a high-risk pool for patients with severe illness and disability…These large medical centers also enthusiastically accept taxpayer money for research…

Particularly in communities with a shortage of health care resources, tax exemption can make sense. In medically saturated areas, where profits and executive compensation approach Wall Street levels, tax exemption should raise eyebrows.

My take: This opinion piece makes a strong argument that many nonprofit hospitals do not deserve to be exempt from taxes. At a minimum, more transparency regarding tangible benefits is needed to assure that hospitals earn this exemption.

AJC: Georgia hospital disclosures show disparities, seven-figure salaries  According to the AJC, the Children’s Healthcare of Atlanta’s CEO made 1.9 million last year. By comparison, the Northside CEO made 4.9 million. Other tidbits: Piedmont’s chief philanthropy officer was compensated 1.2 million.

Related blog posts:

“The problem with internet quotes is that you can’t always depend on their accuracy” ~Abraham Lincoln, 1864.

4 thoughts on “Have Nonprofit Hospitals Lost Their Mission?

  1. Pingback: NY Times: America can afford a world-class health system. Why don’t we have one? | gutsandgrowth

  2. Pingback: “Health Insurance Is Broken” | gutsandgrowth

  3. Pingback: Heroes, Villains and ‘Perverse’ Incentives. Story of Big Hospitals vs. Big Pharma | gutsandgrowth

  4. Pingback: Worse Outcomes After Hospital Mergers | gutsandgrowth

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