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When “nonprofit” means “highly profitable”

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Illinois

* AP…

Seven of the 10 most profitable U.S. hospitals are nonprofits, according to new research, including one in Urbana, Illinois, where hospital tax exemptions are headed for a contentious court battle that soon could determine whether medical facilities are paying their fair share of taxes.

The “Top 10″ list accompanies a study published Monday in the journal Health Affairs. The analysis is based on federal data from 2013 on nearly 3,000 hospitals. The authors measured profits using net income from patient care services, disregarding other income such as investments, donations and tuition. Researchers say the measure reflects how hospitals fare from their core work, without income from other activities.

The research comes as cities in New Jersey, Michigan and Wisconsin also wage battles over hospital tax breaks. Officials are scraping for revenue and pressuring hospitals to either pay up or justify their tax-exempt status. […]

But money-making hospitals also include nonprofits such as the Carle Foundation Hospital in Illinois, where a state appeals court in January ruled a state law allowing hospitals to avoid taxes is unconstitutional. The Illinois Supreme Court is expected to review the decision, on appeal by Carle Foundation Hospital.

* More…

Less than two months after Carle Foundation Hospital was removed once again from local property tax rolls, a new study has named it one of the 10 most profitable hospitals in America. […]

The 328-bed Carle earned profits of $163.5 million, or $2,080-per-patient, according to the study. […]

Urbana mayor Laurel Prussing said the study highlights the need for reform at both the state and federal level.

“They’re just overcharging people,” she said of Carle. “They cost more than the Mayo Clinic.”

Wow.

posted by Rich Miller
Monday, May 2, 16 @ 3:48 pm

Comments

Healthcare fraud is YUGE.

Comment by Beaner Monday, May 2, 16 @ 3:52 pm
I think this article rings true:

http://www.foxnews.com/opinion/2016/04/20/stossel-have-lung-cancer-medical-care-ive-received-is-excellent-but-customer-service-stinks.html

Comment by A Modest Proposal Monday, May 2, 16 @ 3:54 pm
“…They cost more than the Mayo Clinic.” Wow, indeed! The Mayo Clinic has over 60,000 employees if I’m not mistaken. Carle must be gouging like crazy!

Comment by The Muse Monday, May 2, 16 @ 4:07 pm
In the non-profit world, it’s called “margin” not profit. It doesn’t get divided up between shareholders or staff. Generally speaking, in years when a margin is generated, that forms the base funding for an endowment or for construction programs. In short, it is generally re-invested right back into the operations of the non-profit.

There is a famous saying in certain non-profit circles: “No margin means no mission.”

Comment by 47th Ward Monday, May 2, 16 @ 4:08 pm
IMHO if you are making a “margin” (as 47th calls it) then you should pay tax on that “margin.”

Perhaps they should look at their charges if they are charging patients more than $2,000 more than they need to.

Comment by Demoralized Monday, May 2, 16 @ 4:36 pm
http://www.eri-nonprofit-salaries.com/?FuseAction=NPO.Summary&EIN=371119538&BMF=1&Cobrandid=0&Syndicate=No

990s are there. More to it then the numbers of course, but I’ve always been a big fan of real numbers. Program service revenue is the main source of income. Of course, there are four sibling corporations as well.

Comment by Earnest Monday, May 2, 16 @ 4:41 pm
Hospitals tend to pay ver well, even for lower level tech positions, plus benefits etc. penny wise pount foolish is this fight. we want good paying jobs, and then we can gain benefit from sales and income tax. let them be tax free they proive a lot of wconomic support

Comment by Ghost Monday, May 2, 16 @ 4:59 pm
until there is some leveling among hospitals and which take in great numbers of poor patients, or not (hello U. of C. imbalance) this to me is a non issue. health care is a necessity and most hospitals that are not for profit are doing an amazing job of care, especially for the poor.

now the tax status of religious institutions, that would interest me. and by that I mean the building where people attend religious services. those buildings etc. are tax exempt including in very high income areas where there are certainly not poor people showing up at the door for services. this is not true of hospitals, which take all manner of people in health crisis.

Comment by Amalia Monday, May 2, 16 @ 5:09 pm
It’s an extremely profitable business model:
“Your money or your life.”
Usually proceeded by:
“Stick ‘em up.”

Comment by Sue Monday, May 2, 16 @ 6:24 pm
Sorry - 6:24 was me.

Comment by TinyDancer(FKA Sue) Monday, May 2, 16 @ 6:25 pm
Current law allows Carle to write off the difference between what Medicare says it is willing to pay and what Carle wants to change as “charity.” Charity is taken off tax assessments. So the residents of Urbana (where the majority of Carle is physically located) have seen their property tax spike in order to cover what Carle used to pay in property taxes. This is not a matter of Carle “paying well to lower level tech positions” but the Illinois legislature passing a law that allowed Carle to write off their expenses in this way.

Comment by Another Prof Monday, May 2, 16 @ 6:25 pm
I need to go nonprofit. Thanks

Comment by illinois manufacturer Monday, May 2, 16 @ 6:31 pm
Many (not all) modern nonprofit hospitals are simply a large business that do a little charity on the side. Provena-Covenant (now Presence) hospital in Urbana was spending exactly .7% of its revenues on charity care when it lost its exemption in the Illinois Supreme Court case that resulted in the passage of the new law referenced by Another Prof @6:25 pm.

Studies have shown that for-profit hospitals basically provide equal quality of care, and also lose money on poor patients. For-profits call these losses “bad debt” while nonprofits call it “charity care.” The difference is that for-profits also pay taxes.

Microsoft Corporation, Google and other large companies give millions of dollars to charity every year, yet we would never think of giving these organizations tax exemption. Hospitals are exempt only because in the late 1800’s, “hospitals” were actually homeless shelters where the poor went to die. They were staffed by volunteers and most were religiously-affiliated. That all changed dramatically after WWII, and even more dramatically in the 1980’s when hospitals became part of large vertically-integrated health care providers. Yet we still treat them like they were run by nuns. The nuns are gone.

Hospitals need to be subject to tax generally. If a local community then decides to abate taxes for some reason (like communities often abate taxes for for-profit employers that move there), that’s their business. Having both federal and state laws that exempt hospitals from tax simply because they are a hospital is poor public policy.

Comment by jdcolombo Monday, May 2, 16 @ 6:46 pm
the hospitals got greedy–now everybody that walks in the door has insurance but they have to concoct some new definition of charity to keep the tax break that was granted for care given to the uninsured.

Not a big fan of prussing, but she’s right about this

Comment by anon Monday, May 2, 16 @ 10:40 pm
“Not run by nuns”. Two of the largest and most unethical hospital chains of which I am aware are religious based.

I’m in favor of taxing them.

Comment by Logic not emotion Tuesday, May 3, 16 @ 8:00 am