April 05, 2008
Nonprofit hospitals as profit machines
The Wall Street Journal story, "Nonprofit hospitals, once for the poor, strike it rich," should be required reading for anyone who wants to understand the current hospital industry.
Excerpts from the story:
• one nonprofit hospital system has a treasure chest of $7.4 billion - more than many large, publicly traded companies;
• the CEO of Northwestern Memorial Hospital in Chicago recently received a $16.4 million payout while the hospital spent $20.8 million on charity care - less than 2% of its revenues and a fraction of what it received in tax breaks;
• one nonprofit hospital system counts the salaries of its employees as a "community benefit" - including the $1.8 million in CEO compensation;
•"Nonprofit is a misnomer - it's nontaxable," says the president of a small for-profit hospital in a poor neighborhood on Chicago's west side. "When you're making hundred of millions of dollars a year, how can you call yourself a not-for-profit?"
How much does a CEO of a publically traded hospital make a year? I am curious about the salaries of some of the CEO's of the Hospitals here in my area. Do you have any idea?
Posted by: Sylvia Sander at April 5, 2008 02:49 PMModern Healthcare magazine does an annual story on healthcare execs' salaries. Their most recent story (July 30, 2007) listed total dollar compensation of the top-ten highest compensated execs of acute care hospital companies. Those annual figures were:
$35m
$14m
$13m
$6.4m
$4.9m
$2.2m
$2m
$1.5m
$1.1m
$377,000
Some local newspapers in this country report on hospital execs' compensation. You should try your local newspaper.
I also noted the WSJ story on my blog at http://www.gooznews.com, and got some interesting pushback from readers. Chief complaints: picking on the few dozen high surplus non-profits and their high-paid CEOs ignores the substantial financial troubles of the non-profits lower down the food chain; and non-profits face all the same pressure in terms of raising capital that for-profits face, so financial stability is crucial to raising long-term money via the bond market.
Valid complaints, but I agree the lack of charity care at non-profits that make a lot of money is scandalous.
Posted by: Merrill Goozner at April 6, 2008 08:52 PMMy policy on comments
I'm adopting the policy of a blog I admire: “Comments are great;
obnoxious comments get deleted. Deal.” I also won’t post profanity, product pitches, or anything from anyone
who doesn’t list what appears to be an actual e-mail address.