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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

#51

Post by mcpackieh »

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.

It would be nice if medical residents would unionize and force hospitals to stop using long hours (sometimes 24 hour or longer shifts) to haze them with sleep deprivation. This sleep deprivation results in medical errors that injure/kill patients, and also mades medical residents more likely to have car crashes when driving home after their shift.

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

#52

Post by dragonwriter »

tsunamifury wrote: post #42
dragonwriter wrote: post #25

Earlier quoted context omitted.

> 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.

How does that not make sense. That’s what it is. Non profit has no charity requirements

> How does that not make sense. That’s what it is.

No, its not.

Nonprofits can retain unlimited surplus income. They are called nonprofit or not-for-profit because they don't return profits (either directly or through a claim on assets) to some set lf stakeholders.

The upthread post invented a false rule based on a wrong (if popular) interpretation of a name, and then invented a conspiracy theory about people gaming that rule which doesn't exist in the first place.

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

#53

Post by tssva »

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…

HCA operates 168 hospitals and is ranked #66 on the Fortune 500. Tenet operates 65 hospitals. These are the 2 largest for profit hospital operators in the US. There are others.

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

#54

Post by yieldcrv »

bombcar wrote: post #47
tsunamifury wrote: post #42

Earlier quoted context omitted.

How does that not make sense. That’s what it is. Non profit has no charity requirements

Most people think of non-profits as charities but there are various types, some more common than others, such as "mutual-benefit nonprofit corporation".

the non profit world uses those terms ambiguously

it took me a while to parse when I was learning and setting up my own

I paid estate and non profit lawyers to give me relevant case law and journals to understand. Really powerful stuff to learn before you need it.

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

#55

Post by harimau777 »

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.

Disclaimer at the start: I'm asking this because I want to understand more about the situation that you are presenting, not as an indirect way to "um actually" you.

How would margins be defining in this case? When I hear that the margins at gas at a gas station are x%, I understand that they are basically talking about how much I pay per gallon minus how much the gas station paid per gallon. However, it feels like defining margins in a health system would be much more complex. Is it just lookin at the raw materials (e.g. how much do medications, bandages, and scalpels cost the hospital)? Depreciation on expensive equipment like MRIs? Does pay factor in and if so is it just the salaries of people who actually do the work like managers, nurses, and doctors or also the compensation for people like CEOs?

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

#56

Post by bombcar »

ffgjgf1 wrote: post #41
tyree731 wrote: post #4

So CEO compensation there is excessive for sure. That said, charity care is probably better measured vs a hospital’s net income absent any such care. My understanding is these hospitals are squeezed on both sides of the healthcare system by insurance and health equipment and drug providers, so they don’t have a lot of net income to spare for charity care.

How do you calculate net income when they can just increase costs (CEO pay amongst infinite other things) to decrease it?

You could somehow come up with a "standard accepted income" for given professions (these are totally from the arse, of course, but the idea holds) like CEO, 1 million, surgeon, 500k, general practitioner, 250k, nurse 60k, whatever. How you come to those numbers is left to the reader. You'd also generate 'baseline' for other expenses.

Then you compare given hospitals to those numbers and where they exceed them, that is counted as "income" - if they're paying the CEO 2m vs the 1m expected, that's 1m of income.

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

#57

Post by bombcar »

yieldcrv wrote: post #49
bombcar wrote: post #44

Earlier quoted context omitted.

Certain types non-profits cannot "show profit" even if it's just to build their rainy-day fund, or they're limited in how big that can be.

which types would that be? operating foundations have a stricter regulation that could fit that, based on where their money comes from that year

I believe https://en.wikipedia.org/wiki/501(c)_organization#501(c)(6) are an example, but the "maximum on held-over funds" may be a state-level requirement.

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

#58

Post by prasadjoglekar »

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.

Both. The govt gives them a break on taxes. They also pay the hospital thru Medicare and Medicaid.

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

#59

Post by csharpminor »

CEO salaries should be understood in relationship to the resources that they control. For example, this CEO chose to spend $85M on travel nurses to counter the union strike happening at a hospital in their network. Presumably the CEO thinks that this gamble is worth it in forcing the union’s hand.

That may be a terrible decision, but it shows the extent of resources a CEO of a $6bn organization commands. This is one choice out of tens to hundreds of 8-figure choices that this “super manager” will make in a year.

If you’re on the board of an organization like that, settling for a second-best CEO to save a 7-figure sum just doesn’t make sense.

I raise this for two reasons:

1) I find that people have no concept of how to consider whether or not executive pay is reasonable. One of my neighbors was outraged that our Mayor makes $450k. “Could she really be working 6x harder than me?” But our mayor oversees thousands of employees and makes decisions that influence hundreds of millions of dollars of spending. I’d consider her quite underpaid in proportion to what she manages.

2) Shaming organizations into lowering exec comp probably won’t work: there’s a strong economic incentive to pay competitively. Just bend the income tax contribution curve so that individuals who make more continue to pay more.

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

#60

Post by Aurornis »

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…

> 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.

Expanding operations reduces scarcity.

More clinics reduces wait times and puts downward pressure on prices. Supply and demand.

I don't even understand what you're arguing for. Do you want them to limit the number of clinics and take profits instead of expanding?

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