Hospitals and Doctors - Nonprofit Hospital Revenues Soar: CEOs Profit

The April 4 WSJ contains a front-center page article entitled “Nonprofit Hospitals, Once for the Poor, Strike It Rich.”

And so they have. Revenues of the top 50 non-for-profits increased 8-fold, from $544.7 million in 2001 to $4.27 billion in 2006. Twenty five of the nonprofits earned more than $250 million.

The CEOs of major nonprofit hospitals did well too.

Best Paid CEOs

1. Gary Mecklenburg, Northwestern Memorial Hospital , $16.4 million, 2006

2. Floyd Loop, Cleveland Clinic, $7.5 million, 2006

3. Mark Neaman, Evanston Northwestern, $5.4 million, 2006

4. Lloyd, Dean, Catholic Healthcare West, $5.3 million, 2006

5. Phillip Incarnati, McLaren Healthcare, $5.2 million, 2006

6. Joseph Trunflo, AHS Hospital, $5.0 million, 2005

7. Alan Bransi, Promedica, $4.3 million, 2005

8. Herbert Pardes, New York Presbyterian, $3.5 million, 2006

9. Jeffrey Romoff, University of Pittsburgh Medical Center, $3.3 million, 2006

10. Douglas French, Ascension Health, $3.3 million, 2004

Reasons given for the hospital profit boom and high CEO pay are:

• Gradual increase in Medicare reimbursements

• Mergers with minimization of competition

• Demanding upfront payments from patients

• Hiking costs for procedures and services several times their actual cost

• Focusing on high-end procedures

• Selling patient debts to collection agencies

• Issuing tax-free bonds and investing proceeds in high yield securities

The questions raised in article are:

Do these nonprofit hospitals’ profits make sense when costs are perceived to be out of control?

Are nonprofits giving enough back to communities in charities and other programs to justify their tax-exempt status?

Is the term “nonprofit” a misnomer?

Should it be replaced by “nontaxable”?

Should nonprofits be taxed?

I await your opinion.