Not-for-Profit Care Begets Profits

July 29, 2024

Why Many Nonprofit (wink, wink) Hospitals Are Rolling in Money
The Washington Post
July 22, 2024
By Elisabeth Rosenthal

One owns a for-profit insurer, a venture capital company, and for-profit hospitals in Italy and Kazakhstan; it has just acquired its fourth for-profit hospital in Ireland. Another owns one of the largest for-profit hospitals in London, is partnering to build a massive training facility for a professional basketball team, and has launched and financed 80 for-profit start-ups. Another partners with a wellness spa where rooms cost $4,000 a night and co-invests with “leading private equity firms.”

Do these sound like charities?

These diversified businesses are, in fact, some of the country’s largest nonprofit hospital systems. And they have somehow managed to keep myriad for-profit enterprises under their nonprofit umbrella — a status that means they pay little or no taxes, float bonds at preferred rates and gain numerous other financial advantages. Through legal maneuvering, regulatory neglect and a large dollop of lobbying, they have remained tax-exempt charities.

To be sure, many hospitals’ major source of income is still likely to be pricey patient care. Because they are nonprofit and therefore by definition can’t show that thing called “profit,” excess earnings are called “operating surpluses.”

The truth is that a number of not-for-profit hospitals have become wealthy diversified business organizations. Seven of the ten most highly paid nonprofit CEOs in the United States run hospitals and are paid millions, sometimes tens of millions, of dollars annually.

Today’s big hospital systems do miraculous, lifesaving stuff, but they are not channeling Mother Teresa.

 

A California Medical Group Treats Only Homeless Patients – And Makes Money Doing It
KFF Health News
July 19, 2024
By Angela Hart

“The biggest population of homeless people in this country is here in Southern California,” said Sachin Jain, CEO of SCAN Group, a Medicare Advantage insurance plan. Jain’s organization created Healthcare in Action, a medical group that sends practitioners into California’s streets solely to care for homeless people.

Street medicine in most of the country is practiced as a charitable endeavor. “It’s really innovative and entrepreneurial to take all this energy and grit to try and improve things for a population that is too often ignored,” said Mark Duggan, a professor of economics at Stanford University. “Financial incentives matter massively in health care. It’s everything.”

Healthcare in Action and SCAN’s Medicare Advantage generate revenue in multiple ways: billions of dollars in Medicaid money, charitable donations from some hospitals and insurers, partnering with cities and hospitals to provide services, and enrolling low-income, older people in SCAN’s Medicaid and Medicare programs.

Jim Withers, who coined the term “street medicine,” cautioned against a model with financial motives. “I do worry about the corporatization of street medicine and capitalism invading what we’ve been building, largely as a social justice mission outside of the traditional health care system. But nobody owns the streets, and we have to figure out how to play nice together.”

 

Comment by: Don McCanne

One of the beauties of a well-designed single payer system is that everyone can receive the health care that they need, and it is automatically paid for through an equitable financing pool that is affordable for everyone.

Sadly, even though we have the most expensive healthcare system, many are not adequately covered and are dependent on charitable sources, whether or not the government is a source of that charity. Even though we could have fixed that through adoption of single payer, we did not.

Instead, we allow business interests to divert even more of our healthcare dollars to their own interests. Examples above of so-called charity care include allowing nominally non-profit hospitals to divert public health care dollars to profit-making ventures, fattening their coffers & salaries … or converting the social justice mission of street medicine into a business opportunity to divert public funds to passive investors.

Rather than avoiding “channeling Mother Teresa,” we can “play nice together” by advocating for the establishment of a single payer system which would provide comprehensive, affordable health care for all of us. What is stopping us?