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Nonprofit hospitals skimp on charity while CEOs reap millions, report finds

arstechnica.com

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Re: Nonprofit hospitals skimp on charity while CEOs reap millions, report finds

#21

Post by ceejayoz »

s1artibartfast wrote: post #18
ceejayoz wrote: post #12

Earlier quoted context omitted.

Non-profits don't have to avoid profit. The difference is what they do with any profits; they can't distribute it as dividends to owners/shareholders.

I think the point is the same, and somewhat interesting. Do most hopspital non-profits channel their profit into growth or price discounts. In my opinion, it is fairly common for non-profits to adopt growth as a goal in of itself, and try to extract as much value as possible from customers to further it

It's an important distinction.

Non-profits are not obligated to hide/spend their profits. They're allowed to accumulate fabulous wealth if they want (see, for example, Harvard's $50B endowment).

Non-profits, in theory, serve a societal/community purpose rather than existing to make a profit for their shareholders. You're not wrong that some of these lose sight of these purposes in favor of a bunch of MBAs telling them "growth! growth! growth!" (and the CEO salaries that come from such growth), but it's not because the IRS requires them to.

The problem isn't tax law; it's the "everything must always grow or it's a failure" economy we've set up.

Re: Nonprofit hospitals skimp on charity while CEOs reap millions, report finds

#22

Post by linuxftw »

ceejayoz wrote: post #14
linuxftw wrote: post #13

There is some kind of cartel in the health care industry. They are absolutely not going to pay nurses more, and they are absolutely going to keep staffing at the minimum level. There is some kind of gentleman's agreement to not compete for labor. If everyone is paying 'market rate' and they all seem to know exactly what that rate is, there is collusion.

Labor's finally waking up to this; the nurses at my area's second-largest hospital just unionized last year and won a hard-fought contract this week.

That's great news. I know quite a few nurses where I live, and they are being fed the anti-union propaganda from their employers. The hospital industry around here is getting nervous, they have been quite comfortable for a while. Unfortunately, the nurses don't seem to want the union, even though it will practically double their wages overnight.

Re: Nonprofit hospitals skimp on charity while CEOs reap millions, report finds

#23

Post by felipemnoa »

s1artibartfast wrote: post #16
jonathan-adly wrote: post #7

The article is a bit misleading in that it uses revenue. Typical margins in a health-system is slim. 3-6%. So, actual 1-2% charity care of revenue is quite significant. The thesis is correct that a health-system CEO shouldn’t make $17m/yr. It’s a non-profit largely funded by tax payers and maintains its market share by government regulations. Just the charity care component is a bit misleading.

>It’s a non-profit largely funded by tax payers. Is it actually government funded, or does it sell services which the government pays for? I dont know if it is Baader–Meinhof phenomenon, but it seems like I increasingly see funded used to describe revenue for services rendered. It seems like a bit of a bait and switch, because the word funded often carries come connotation of ownership, obligation, or charity.

>>Is it actually government funded,

Maybe indirectly. As a charity they get lots of benefits that allows them to save money.

Re: Nonprofit hospitals skimp on charity while CEOs reap millions, report finds

#25

Post by dragonwriter »

Workaccount2 wrote: post #5

Hospitals are all non-profit so they can reap tax benefits. In order to avoid profit but still maintain growth, they shovel all their profits into network expansion. New hospitals, clinics, outpatient centers, wellness centers, all that in order to avoid lowering costs for patients. This is why it seems each locale is packed with care all from one central hospital. They have to keep growing to maintain "non-profit" s…

> Hospitals are all non-profit so they can reap tax benefits. In order to avoid profit but still maintain growth, they shovel all their profits into network expansion.

That doesn't make any sense; it seems to be based on the premise that “non-profit” means the firm can't make surplus income, but it just means they are structured so as not to return profits to investors or some other party.

Re: Nonprofit hospitals skimp on charity while CEOs reap millions, report finds

#26

Post by [deleted] »

Workaccount2 wrote: post #5

Hospitals are all non-profit so they can reap tax benefits. In order to avoid profit but still maintain growth, they shovel all their profits into network expansion. New hospitals, clinics, outpatient centers, wellness centers, all that in order to avoid lowering costs for patients. This is why it seems each locale is packed with care all from one central hospital. They have to keep growing to maintain "non-profit" s…

[deleted]

Re: Nonprofit hospitals skimp on charity while CEOs reap millions, report finds

#27

Post by ceejayoz »

linuxftw wrote: post #22
ceejayoz wrote: post #14

Earlier quoted context omitted.

Labor's finally waking up to this; the nurses at my area's second-largest hospital just unionized last year and won a hard-fought contract this week.

That's great news. I know quite a few nurses where I live, and they are being fed the anti-union propaganda from their employers. The hospital industry around here is getting nervous, they have been quite comfortable for a while. Unfortunately, the nurses don't seem to want the union, even though it will practically double their wages overnight.

Oh yeah, the hospital's anti-union posters were quite something; just transparently bullshit/misleading. Stuff like "your union can't promise you a raise!" - well, neither is the hospital.

Re: Nonprofit hospitals skimp on charity while CEOs reap millions, report finds

#28

Post by dragonwriter »

ceejayoz wrote: post #21
s1artibartfast wrote: post #18

Earlier quoted context omitted.

I think the point is the same, and somewhat interesting. Do most hopspital non-profits channel their profit into growth or price discounts. In my opinion, it is fairly common for non-profits to adopt growth as a goal in of itself, and try to extract as much value as possible from customers to further it

It's an important distinction. Non-profits are not obligated to hide/spend their profits. They're allowed to accumulate fabulous wealth if they want (see, for example, Harvard's $50B endowment). Non-profits, in theory, serve a societal/community purpose rather than existing to make a profit for their shareholders. You're not wrong that some of these lose sight of these purposes in favor of a bunch of MBAs telling the…

> Non-profits, in theory, serve a societal/community purpose

True of charities and certain other classes of non-profits, not true of other non-profits unless “societal/community purpose” is reduced to a meaningless phrase covering every possible purpose besides returning profits, including enabling a group of sppnsoring firms to earn bigger profits.

Re: Nonprofit hospitals skimp on charity while CEOs reap millions, report finds

#29

Post by jackfoxy »

Think of nonprofit not as another term for benevolent or charitable organization (which is what people instinctively think), but as an alternative tax accounting scheme. Excess revenue gets funneled to the insiders at the top so that at tax year end there is no profit. Presumably these insiders are paying income tax.

I once knew a guy who worked in the field of providing services to non-profits, and he described to me the lavish retreats provided to people in the industry, the first-class air travel and five-star hotels provided for travel. He called it the charitable industrial complex.

Take a hard look at the tooth to tail ratio of the organization the next time you make a charitable contribution.

Re: Nonprofit hospitals skimp on charity while CEOs reap millions, report finds

#30

Post by anon291 »

cowmix wrote: post #3

FWIW.. my mother's childhood friend is a nun who (successfully) ran a hospital in the Buffalo NY area for years up until the late 90s/early 2000s. She was replaced by a series of "civilian" CEOs after that. AFAIK, the quality of care OR the finances of the place didn't improve one iota.

This is exactly it. Many charity hospitals were started by religious orders sworn to poverty. Things change the moment the laity step in. Lay ceos want to make money. Nuns cannot.
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