[RN Power Ohio]

Nonprofit hospitals and the tricks they use to make money

Posted by Chris Seper April 07, 2008 04:35AM

Categories: Business, Impact
Flash presentation: Nonprofit's profits
The Wall Street Journal bore down Friday on the practices of the nation's nonprofit hospitals, including the Cleveland Clinic. Its findings: many nonprofit hospitals manipulate the idea of "charity care," have squeezed more profits out of their systems by ducking the uninsured and have been "hiking list prices for procedures and services to several times their actual cost; selling patients' debts to collection companies; focusing on expensive procedures; and issuing tax-exempt bonds and investing the proceeds in higher-yielding securities."
It reported the Clinic continued to pay former CEO Floyd Loop more than $1 million a year for two years after he retired in April 2005 -- all of that in deferred compensation and vacation pay and the rest was for consulting services. The Journal lists Loop's 2006 pay at $7.5 million.
From 2001 to 2006, the Clinic moved from losing money to posting profits of $229 million.
But others hospitals looked dastardly, including one galling example of cynical bookkeeping.

One nonprofit hospital system, St. Louis-based BJC HealthCare, counts the salaries of its employees as a community benefit. BJC, which runs 14 hospitals in Missouri and Illinois, says on its Web site that it provided more than $1.8 billion in benefits to various communities in 2004. Its payroll, including its CEO's $1.8 million compensation, accounted for $937 million of that figure, while charity care represented $35 million, according to BJC. "The impact that any organization that's job-producing and buying goods has on a community is of benefit to that community," says BJC HealthCare spokeswoman June Fowler. However, she says BJC won't count its payroll as a community benefit in the future because of new standards adopted by the IRS.

Other hospitals, according to the Journal, claimed patients' unpaid bills as part of their community benefit. The newspaper also claimed that some hospitals do less in charity care than they get in tax breaks.
http://blog.cleveland.com/medical/20...and_the_t.html

[ocankhe]

When one thinks of non profit it is easy to assume that they are not in business to make money. In actuality they need to make money (profit) in order to stay in business. They just don't have to pay taxes nor distribute those profits to the owners(dividends to shareholders). However, the amount of profits they make can at times be unconscionable especially if the make an excess profit by exploiting labor, giving poor quality of care, and doing only charitable work on paper instead of reality.

[Ruffles 1]

I agree with the above statements. Nonprofit hospitals get away with a lot, poor quality care and make the staff cut our hours, while the CEO's and so on get all the Profit and earn big salaries. Spend hours in unnecessary meetings which produce nothing . Wasteful spending is ruining healthcare.

[bollweevil]

This is appalling. I had no idea the pay the top dogs are getting while staff can't even get a raise each year. They will answer someday to that higher authority, yes?

[oramar]

I have read several other articles along this line. I do think the day is coming when some of this shananagens is going to be clamped down on. Healthcare consumers are grumbling, local and state goverments are being cheated out of revenue and insurance companies are being abused.(though Lord knows that insurance companies are perfectly capable of their own tricks)

[suni]

*I think it may be like that for large non profits but I work in a smal non profit and it is a great placce

[Indy]

Well I believe that the insurance companies started to develop their bag of tricks in response to billing practices in healthcare, and the two are caught in a pretty vicious cycle now if you ask me.