Today's Wall Street Journal headlines with a writeup on "profits" at not-for-profit hospitals around the country:
Nonprofit hospitals, originally set up to serve the poor, have transformed themselves into profit machines. And as the money rolls in, the large tax breaks they receive are drawing fire.Riding gains from investment portfolios and enjoying the pricing power that came from a decade of mergers, many nonprofit hospitals have seen earnings soar in recent years. The combined net income of the 50 largest nonprofit hospitals jumped nearly eight-fold to $4.27 billion between 2001 and 2006, according to a Wall Street Journal analysis of data from the American Hospital Directory.
The article, which is available online only to WSJ subscribers, specifically calls out Ascension Health for amassing a sizable reserve:
One nonprofit hospital system, Ascension Health, has a treasure chest of $7.4 billion - - more than many large, publicly traded companies.
Ascension runs a number of hospitals and hospital systems in New York, including St. Mary's Hospital in Amsterdam, Our Lady of Lourdes Memorial Hospital in Binghamton, Mount St. Mary's Hospital and Health Center in Lewiston, NY, and Seton Health in Troy.
The only other New York hospital mentioned in the article is New York-Presbyterian, cited for paying its CEO Herbert Pardes 3.5 million in total accrued compensation in 2006.
Ascension runs 65 hospitals, so its $7.4 billion investment reserve amounts to about $113 million per hospital. That is certainly an impressive amount, but I have a hard time finding the problem with it. It also seems unnecessarily inflammatory to me to refer to reserves as a "treasure chest" and to hospitals in general as "profit machines."
Update 9:43: William Van Slyke, Vice President of Corporate Communications and Public Relations at the Healthcare Association of New York State, responded to the WSJ article in a Supraspinatus exclusive:
This is clearly not the New York experience. High costs, including medical malpractice insurance, and low reimbursement rates from both public and private payers continue to conspire to challenge our hospitals, the majority of which operate at a loss or barely break even.Also, New York's hospitals each year provide more than $1.6 billion in care to those who cannot pay. We also have in New York one of the most comprehensive and progressive indigent care laws in the nation. So, New York's hospitals remain a model when it comes to providing community benefit.