Wednesday, June 01, 2005

More Fall-Out From Start of Congressional Hearings on Not-For-Profit Hospitals

The beginning congressional investigations of not-for-profit hospitals' tax exemptions are raising interest in the business practices of these institutions.
A New York Sun editorial and related news article reported that some of the questions put to the small sample of hospitals being investigated were about compensation perks given to top executives, including country club memberships: and about offshore investments and relationships with for-profit entities. The editorial provided some more information about the generous compensation given to hospital executives: four New York-Presbyterian executives (three of whom are physicians) got more than $1 million in total compensation in 2003, and several others got nearly that much. The hospital also had 3 surgeons who earned more than $1 million.
Newspapers in other states have been prompted to look into the operations of local hospitals named in the investigation. The Cleveland Plain Dealer reported data about high "list prices" charged by the Cleveland Clinic. The San Francisco examiner reported complaints about the dominance of local health care markets by Sutter Health, and allegations about the system's inflated prices and poor quality.
There thus seems to be a growing awareness that some large not-for-profit hospitals have not always been managed in ways compatible with their missions. Again, I hope that these investigations can distinguish between the importance of these institutions' underlying missions and how some current leaders may have veered from their responsibilities to uphold them. Furthermore, I hope the committees' recognize that the hospitals operate within a larger health care system, and are subject to pressures from other large organizations within the system that also have been acting at odds with physicians' core values. Although these pressures should not excuse hospital leaders' failure to uphold their missions, the hospitals (and physicians) must develop defenses against them.
The New York Sun editorial concluded, "the Congress - and the taxpayers footing the bills for the subsidy [effectively provided by not-for-profit status] - are entitled to ask and to rethink the question of whom these institutions exist to serve." Furthermore, "Senator Grassley and Frist and Chairman Thomas of the House Ways and Means Committee will have to be careful not to wreck the crown jewel of the American health-care system. But it's not only Congress that could cripple America's hospitals with clumsy or heavy-handed oversight. The doctors, administrators, and hospital trustees themselves could ruin things by forgetting that, through Medicare, Medicaid, and tax exemptions, the American taxpayers are the ones who are paying."

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