Reports, rally, and hearing call for more public benefits from nonprofit hospital chains

CPMC has put more effort in winning approval for this huge new profit center than improving its dismal community benefits.
Artist rendering by SmithGroup

A rally and legislative hearing in Sacramento tomorrow (Wed/15) will highlight how little community benefits and charity care large nonprofit healthcare corporations offer despite their tax-exempt status. At the center of that critical spotlight is Sutter Health, the healthcare behemoth that owns California Pacific Medical Center and is locked in a high-stakes standoff with the city over whether to rebuild St. Luke's Hospital in exchange for approval of a massive luxury hospital on Cathedral Hill.

Last year, we reported on a local study that found CPMC provided far less charity care and other community benefits than any other healthcare provider in the city, despite its tax-exempt status and extraction of $744 million in profits from San Francisco between 2006-2010. CPMC reported $189 million in profits for its San Francisco operations last year, and that's expected increase sharply if Cathedral Hill Hospital is built.

Last week, the California State Auditor issued a scathing report – based on investigating four nonprofit California hospitals, including St. Luke's – calling for stronger demands on these supposedly nonprofit corporations. Among its findings were “The amounts of community benefits the hospitals provide cannot be used to justify their tax-exempt status” and “Neither federal nor state law requires nonprofit hospitals to deliver specific amounts of community benefits for hospitals to quality for tax-exempt status.”

Tomorrow's hearing by the California Senate Select Committee on Charity Care and Nonprofit Hospitals, and a rally afterward by the California Nurses Association, will spotlight those problems and call for tougher new standards. CNA's research arm, the Institute for Health and Socio-Economic Policy, will also unveil a new report that defines the problem and reinforces the need for reform.

“These hospital chains are exploiting their nonprofit status to enjoy enormous tax benefits while returning very little to their communities,” CNA spokesperson Chuck Idelson told the Guardian.

He said the problem began with the “corporatization of health care” in the late-'80s, when deregulation and corporate-friendly legislative changes encouraged the consolidation of health providers and lowering of public accountability standards, coupled with a corporate culture that began providing excessive pay and benefits to executives.

“There used to be better standards, certainly at the federal level, with what they were required to do to maintain nonprofit status,” Idelson said. “But the distinctions of for-profit and not-for-profit has become blurred and the burden is falling of public hospitals like SF General Hospital.”

Nonetheless, Sutter/CPMC continues its aggressive tact with San Francisco city officials, refusing to offer firm guarantees that St. Luke's – which serves much of the city's low-income population, second only to General, which would be overwhelmed if St. Luke's closes – will remain open for at least 20 years and promising only modest improvements in its charity care standards. Despite taunts from Sutter spokespersons that city officials are endangering public safety by stalling the rebuild of St. Luke's, which isn't seismically sound, the Board of Supervisors refused to approve the lucrative development agreement last month, delaying consideration until after the election in November in the hopes that CPMC will offer better guarantees and community benefits.

“It's an extremely timely issue for San Francisco,” Idelson said tomorrow's hearing (which is from 10am to noon in Room 3191 of the State Capitol) and rally (from 12:15-1pm on the Capitol's North Steps).


hospital's tax-exempt status, which is a Federal IRS ruling, and an entity's voluntary decision of how much pro bono work to do.

The latter is nice for them to offer, but we cannot demand it.

St. Luke's is too small to be viable, and is too close to SFGH to be needed.

Posted by lillipublicans© on Aug. 14, 2012 @ 10:47 pm

Clearly, you're the right-wing lillipublicans imposter, because the other lillipublicans understands that corporations are chartered by the people to provide public benefits, and nonprofit corporations are explicitly required to provide them. That's why they're exempt from federal taxes. Get it? It's a fairly simple concept and only conservative reactionaries with the lowest possible expectations would possibly believe that a corporation should have huge taxpayer subsidies and no attendant responsibilities or obligations. Can I get an amen from the real lillipubicans?

Posted by steven on Aug. 15, 2012 @ 10:52 am

profit. It isn't necessary for a non-profit to do good - only that it not make a profit. If you run an entity "at cost", you will pay no tax.

And of course they will give away as many free services as it takes to ensure that no profit is made. You cannot ask that they make a loss just because the demand for free healthcare is infinite.

Posted by lillipublicans© on Aug. 15, 2012 @ 10:00 pm

Some interesting facts on revenue and 'charity care' for 2010.
Revenue: $112,200,000
Charity: $19,400,000
%: 17.33%
CPMC. (4 Campuses)
Revenue: $1,000,000,000
Charity: $46,000,000
%: 4.24%
On top of this there was a significant amount of care provided by St Lukes for which it did not receive reimbursement.
I do find it somewhat disingenuous to continue naming dear old CPMC as the 'bad guy' in this controversy. The real architect behind this shell game is SUTTER INC which is monopolising Medical care in our city. It is instructive to review the struggle of Marin General Hospital to extricate itself from their grip. For example an article in the North Bay Business Journal:7/30/2010, reports the following. Between 2002-2009 Sutter removed a combined $648,000,000 out of Marin General and CPMC/SF. It justified this by stating that it is company policy to "move dollars from one entity to another based on need". If this is still company policy then subsidising St Lukes to ensure it's survival should be a routine proceedure. As Sutter owns St Lukes why haven't they come up with a way to resolve the lack of reimbursement issue as opposed to threatening closure. They have a battery of CEO's pulling in million dollar salaries and high priced lawyers on the pay roll, isn't that their job.
This situation illustrates the desperate need for for some form of "Single Payer System" to deal with the catastrophic state of our lack of health care system. As long as we continue to allow "non-profit" corporations like Sutter to maximise profits rather than care for the health and welfare of patients millions will continue to be underserved, undertreated and the cost of eventually caring for them will continue to escalate. We will all pay the price one way or another.
Just my thruppence.

Posted by Patrick Monk RN on Aug. 15, 2012 @ 10:51 am

Cottage hospitals are uneconomical. If we force CPMS to run uneconomic hospitals, they will be less willing and able to run charity work.

Oh, and does SFBG donate 4.24% of it's revenues to good works? Did Bruce give 4.24% of his profit on the building sale to charity? No, didn't think so.

Posted by lillipublicans© on Aug. 15, 2012 @ 10:03 pm

Have you ever had to use SFGH. Have you ever had to use St Lukes.
Over the years I have beed serviced by both. I received some of my training at SFGH. Many of my close professional friends and colleagues have worked, or are working there. The staff - god bless them, especially at SFGH, already work under extreme pressure.
If St Lukes patients, largely minority and low income, are forced to seek care at SFGH the system will collapse.
Whatever SFBG does with it's money is totally irrelevant.

Posted by Patrick Monk RN on Aug. 16, 2012 @ 10:37 am

not cost-effective. The money saved by closing St. Lukes would be better spent increasing capacity as SFGH than building or rebuilding a facility on that very limited space. Moreover, that space could be sold for redevelopment and some of those monies reinvested at sFGH.

So there's really not a reason to keep St. Luke's and it is so very close to a much bigger hospital. Looks like a no-brainer to me.

Posted by Guest on Aug. 16, 2012 @ 11:08 am