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

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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).