profit hospital

Non-profit hospital tax breaks attacked by Grassley, again

Wed, 11 Jun 2008 06:59:56 -0400

Well, folks, if you thought Sen. Chuck Grassley (R-Iowa) was ready to take a breather on the subject of non-profit hospital tax breaks, think again. This week, the Senator used a hearing on incentives for lowering the rates of the uninsured and under-insured in the U.S. to bring the topic up again. At the hearing, which was held by the Senate Finance Committee, Grassley had a 53-year-old leukemia patient testify about her experience with the M.D. Anderson Cancer Center, which demanded a total of $105,000 in cash up front before it would provide chemotherapy.

In discussing the issue, Grassley noted that M.D. Anderson is a non-profit "funded through taxpayers' dollars and charitable gifts," making its actions particularly troubling. As he has many times in the past, Grassley hinted that non-profit tax breaks could be in danger if the hospitals engage in this type of billing practice.

Among other things, Grassley has also proposed that rules be enacted to set minimum levels of charitable spending a not-for-profit would be required to make to keep its tax-free status. Meanwhile, the IRS is taking a closer look at such issues as it rolls out its Form 990, Schedule H, which will require detailed reporting on charitable spending by hospitals.

To learn more about Grassley's discussion at the hearing:
- read this Wall Street Journal blog item

Related Articles:
Senator may seek tougher charity rules for nonprofits
Senator wants nonprofit hospital investigation
IRS to investigate nonprofit hospitals
Charity care under fire

Community Health expects less '08 revenue

Fri, 22 Feb 2008 06:59:56 -0500

Hospital chain Community Health Systems is expecting to make a healthy profit in 2008, but expects to take in less revenue this year than it originally had projected. The company, which just released 2008 profit guidance to Wall Street, expects to make between $2.25 and $2.45 per share on revenue of $11 billion and $11.3 billion. If it hits these targets, that would mean a raise in revenue of 4.5 percent to 5.5 percent. Still, that's less than the boys on Wall Street predicted, so the company's stock fell on the announcement. It's kind of perverse, though, given that still making good profits on lower income suggests a smart management team, not failure!

Along the way, the company--now the largest publicly-traded hospital operator in the U.S.--just agreed to sell its interest in Dublin-based Beacon Hospital. It still operates, owns or leases 125 hospitals in 28 states.

To learn more about Community Health's outlook:
- read this Associated Press item

Related Articles:
Community Health buys Triad, creating U.S. leader. Report
Community Health becomes second largest for-profit hospital chain. Report
Community Health discloses further federal scrutiny. Report

Financial challenges in future for U.S. hospitals

Thu, 24 Jan 2008 06:59:58 -0500

Despite the challenges they face, U.S. hospitals have actually improved their financial picture in recent years--but that may be about to change, according to a new report. Moody's Investors Service, which rates not-for-profit hospital debt, has issued a warning that while hospitals appear to be financially stable in 2008, it's not clear what will happen in 2009 and 2010 if the economy takes a nosedive. Moody's notes that while hospitals are probably secure enough to keep on their feet through 2008, in coming years rising numbers of uninsured patients, growing regulation of not-for-profit charity care levels and changes engendered by the coming presidential election could bring financial problems. To cope, some observers expect not-for-profits will engage in more merger and acquisition activity in coming years.

To learn more about the report:
- read this Chicago Tribune piece

Related Articles:
FL hospital sued over $1.9B sale of bad debt. Report
Hospitals take new approach to debt collection. Report
In 2007, bad debt rising for hospitals. Report
Ratings firms slam nonprofit hospital finances. Report

Feds to crank up non-profit charity demands

Wed, 02 Jan 2008 06:59:58 -0500

Watch out, charity hospitals--Sen. Chuck Grassley is coming after you. In recent times, the Iowa Senator has been on the warpath over what he considers to be inadequate levels of charity care provided by hospitals--and has even had staff draft a proposal which would require hospitals to dedicate 5 percent of annual patient operating expenses or revenues to charity care. Meanwhile, the IRS is making changes to not-for-profit reporting forms which would ask hospitals to do more detailed reporting on the community benefits and charity care they provide. States, while less aggressive, are certainly keeping their eye on the issue. And don't forget advocacy groups--they're on the case, too.

Sure, this isn't a new thing. In fact, the IRS and legislators have been posturing on this subject for years. But my sense is that non-profit charity standards will be under particularly intense scrutiny this year. Look for other parties to insert themselves into the charity care/benefit debate in '08, including more state regulators. And if you're a not-for-profit hospital, make it a priority to document what you do in more detail than you ever have. Glossy brochures, happy talk and PowerPoints alone aren't gonna cut it.

160-physician group joins Essentia Health

Thu, 29 Nov 2007 06:59:56 -0500

Essentia Health of Duluth, MN is picking up a 160-physician practice which will add an additional 22 clinics to its footprint. The Dakota Clinic/Innovis Health, a Fargo, ND for-profit physician group that owns a not-for-profit hospital--is becoming part of not-for-profit Essentia, which already owns nine hospitals of its own. The deal will close as of January 1, 2008. Executives with the physician group said that they did the deal because they had tired of competing for market share with area integrated health systems, and that they needed additional capital to expand.

To find out more about the deal:
- read this Modern Healthcare piece

Related Articles:
Pediatrix sets $200 million acquisition fund. Report
Physician employment model coming to Alaska. Report

Ratings firms slam nonprofit hospital finances

Thu, 19 Jul 2007 06:59:58 -0400

Financial firms aren't happy with not-for-profit hospital performance, and are showing their ire by downgrading credit ratings. According to new data from Moody's Investors Services, downgrades exceeded upgrades in the second quarter of 2007 by a 1.3-1 ratio. That included 12 downgrades and nine upgrades. For the first half of 2007, downgrades outpaced upgrades by a ratio of 1.4-to-1, though that's actually better than the 1.5-to-1 pace for the same period last year. Ratings for the first six months of 2007 represented $19.2 billion worth of outstanding hospital debt.

Why the continued censure from Wall Street? Analysts aren't happy with deteriorating nonprofit hospital performance and lack of liquidity. Also, four of the downgraded hospitals had taken on some large new debts.

To find out more about the downgrades:
- read this Modern Healthcare article (reg. req.)

Related Articles:
NJ hospital plans private-to-public conversion. Report
Senator wants nonprofit hospital investigation. Report

Community Health buys Triad, creating U.S. leader

Mon, 19 Mar 2007 20:01:38 -0400

In a deal which should create the nation's largest publicly-traded hospital operator, Community Health Systems has agreed to buy Triad Hospitals for about $6.8 billion, including $5.1 billion upfront and the assumption of $1.7 billion in debt. HCA used to be the nation's top publicly-held hospital firm, but it was taken private in a $33 billion leveraged buyout last year. In agreeing to the Community Health acquisition, Triad paid out a $20 million termination fee to CCMP Capital and GS Capital, since the agreement canceled an existing buyout deal.

When finalized, the acquisition will create a $9.9 billion company with 130 hospitals in 28 states, including Community Health's 77 existing hospitals. Community Health is financing the buyout with $10.3 billion in debt financing. Once they begin working together, the companies expect to achieve operating efficiencies of $40 million to $50 million, according to Community Health CFO Larry Cash.

To learn more about the deal:
- read this Nashville Business Journal piece
- and see this Wall Street Journal article (sub. req.)

ALSO: At Hospital Impact, Tony Chen offers his take on the dimensions and consequences of the CHS/Triad merger. Blog

Related Articles:
$33 billion HCA sale approved by shareholders. Report
Community Health becomes second largest for-profit hospital chain. Report

Editor's Corner

Thu, 16 Nov 2006 19:01:39 -0500

You know, if this is what "non-profits" do, I'd hate to see the wrath a for-profit hospital would have visited upon the homeless, desperately-ill Carol Reyes. Steal the clothes off of her back? (Oh, wait, it seems someone did that, too.)

As you'll see below, Kaiser Permanente's Bellflower hospital did indeed take care of Ms. Reyes for a few days. To my knowledge, no one has suggested that the inpatient care Kaiser provided was anything but appropriate and respectful. But if the recent charges filed against Kaiser are accurate, when those three days were up, she was bum-rushed out the door and onto the street, seemingly without an effective discharge plan, without her own clothes or even a pair of shoes on her feet. To say the system failed is an understatement.

Yes, I realize that there are countless clinicians working in non-profits who would never countenance this sort of behavior, including, no doubt, many who work at the Bellflower facility. And I'm confident there's not a hospital exec reading this who's ethically comfortable with kicking sick old ladies to the curb, even if said ladies are costly to treat.

Still, if the notion of being a non-profit is so wispy that you can't tell the for-profits from the charities, something is terribly wrong. This goes beyond whether charity hospitals are providing enough free care--it's more about whether non-profit hospitals actually "feel" like charities to the people who come through their doors. Even if executive staffers have the right ideas, it's no good if they haven't gotten buy-in from line workers. After all, it's a good bet that harried staff-level employees, rather than the CEO, called the confused 63-year-old woman a cab. (I'm also guessing that Kaiser Bellflower employees were under great pressure to move patients in and out, rather than being incented to do the right thing.)

I know that in reality, a non-profit has to keep the lights on using the same cold cash as a for-profit facility, and that non-profits who run at a loss won't stay open forever (see story below). But if you aren't going to take care of the desperate and needy--and you don't make sure that everyone sees it as their job to treat them well--what's the point of staying in business anyway? -Anne

New York non-profit hospitals in the red

Thu, 16 Nov 2006 19:01:36 -0500

You think your budget is tight? Try being a New York state-based non-profit hospital. The state's 218 non-profit facilities lost a collective $95.4 million in 2005, putting them at 49th in the country for operating margins, according to the Healthcare Association of New York State (HANYS). HANYS said that 56 percent of the state's non-profits are losing money, breaking even or running margins of less than 1 percent, a dismal situation given that non-profits typically need margins of 4 percent or more to fulfill their charitable missions. I'm sure such stats will help get hospitals fired up to join the HANYS political action committee, which helped to block a planned $770 million in 2006 state Medicare cuts. A pessimist might say, though, that a mere PAC can do little to repair the larger structural problems that impact hospitals today.

For more information:
- read the HANYS press release
- read this article in Business First of Buffalo

Related Articles:
- IRS to investigate non-profit hospitals. Article
- At MA hospitals, non-profit CEO pay draws fire. Article
- Non-profits face community benefit scrutiny. Article

Impact of Democratic gains? Not much

Tue, 07 Nov 2006 19:01:37 -0500

With yesterday's Democratic takeover of the U.S. House of Representatives, and the possibility of a Senate win still in the air, what might the impact be on healthcare providers? Not much, at least in the short term, it seems. True, the Democrats have vowed to address the Medicare Part D "donut hole" issue and invest in medical research, including stem cell research. The party also offers a none-too-specific pledge to provide Americans with access to affordable health care. But no one seems to think the proposals have any teeth.

Some hospitals contributed dollars to Democratic efforts, hoping for the ouster of Senator Chuck Grassley from the chairmanship of the Senate Finance Committee. The industry would be relieved if Grassley, who has spearheaded investigations into non-profit hospital operations, was no longer breathing down their necks. Otherwise, look for two more years of flourishes, rhetoric and little change--until both parties trot out vague proposals prior to the next presidential election in 2008.

For more background on these issues:
- read this blog entry at HospitalImpact
- review the Democratic National Committee's health policy statement

Related Article:
IRS to investigate non-profit hospitals. Article