It Pays To Be A Non-Profit Hospital

At least two of the blogs we read have posted articles relating to a Wall Street Journal feature about how non-profit hospitals in America are doing pretty darn well on the money front. Schwitzer Health News Blog and GoozNews have both written about this eye-opening story, and I had to go read it for myself.

Non-profit hospitals, which account for about 60% of hospitals in the US, get tax breaks that their for-profit cousins don’t. In return, they’re supposed to provide care for the indigent and poor, and give back to their communities in the form of charity care. But the “community benefit” part of the deal seems to be pretty loosely enforced and interpreted. In St. Louis, the BJC Health Care hospital system counts employee salaries as part of its community benefit. Of the $1.8 billion that it reported as community benefit expenses in 2004, $937 million was employee salaries, and only $35 million was charity care.

The women’s hospital at Northwestern Memorial Hospital in Chicago has a lobby with marble accents, 42 inch flat screen TVs in the birthing rooms, and 10,000 square feet of gardens on the roof. And yet they get a tax break for being a non-profit organization.

A Rocky Mountain News article from two years ago details the salaries and perks for non-profit hospital CEOs in the Denver, Colorado area. Four of them made over $1 million in salary in 2003. I’m sure those numbers have increased over the last five years, but they pale in comparison to the CEO of Northwestern Memorial, whose total accrued compensation in 2006 was over $16 million. The Wall Street Journal article identified ten CEOs of non-profit hospitals who earn more than $3 million/year – I guess our CEOs in Colorado are living on the poor side.

All of this – with tax breaks – while 47 million Americans have no health insurance, and health insurance premiums have climbed by 78% since 2001. We all know that health care is expensive. I’d just like to think that it’s because the hospital just got a new MRI machine – not a marble sculpture for the entryway and a BMW for the CEO.

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