Ascension Health Ministries, a Catholic health care system formed from the 1999 merger of the Daughters of Charity National Health System and the Sisters of St. Joseph Health System, has become the nation’s largest nonprofit health system.
“Ascension’s $30 billion in assets include cash and investment portfolios worth about $15 billion,” the St. Louis Post-Dispatch reported. “Its $2.7 billion in nonoperating earnings-- such as gains from investments-- in 2013 dwarfed its nearly $400 million in earnings from its hospitals.”
The corporation has 220 tax-exempt subsidiaries and over 125 for-profit subsidiaries.
“Why is this organization charitable?” said a law professor quoted in the article. “They provide health services for the poor, but it’s not their primary mission anymore … Ascension has transformed itself over time to a major big business enterprise. I’m not denying that they do some charitable things, but so does Microsoft-- and they pay taxes.”
It certainly merits review, but I suspect its not just that Ascension is hoarding and sitting on cash. Non-operating revenues are not part of normal non-profit or not-for-profit operations. There are stipulations as to how they are to be treated - for example, investment in facilities.
I also need to point out the careful distinction between revenue (which is every dollar received) and profit (which is every dollar available after expenses are paid). Revenues don’t automatically mean profits - indeed high-revenue hospitals often operate at a loss. In 2013, Ascension did have a banner year, taking in nearly $4Bn in operating revenues in excess of expenses. What they do with those excess revenues is what matters.
Building a luxury care facility in the Virgin Islands probably won’t qualify much. Subsidizing health care provided to the poor would. Those are details to be seen.
Good points. Also the state regulators require each insurance company to have so much in reserves per number of insured. (This amount could get into many billions.) And this money technically belongs to the policyholders, so it’s not like it becomes profit for the company.
The unpaid cost of providing care to persons living in poverty and community benefit programs was $1.5 billion for the year ended June 30, 2013, a $154 million, or 11.5%, increase over the year ended June 30, 2012. This increase is primarily attributable to increased charity care provided as a result of the addition of the Marian Systems and Alexian Brothers, economic conditions driving increased charity care in certain markets, further eligibility restrictions and reduced reimbursement in state sponsored Medicaid programs, and increased unreimbursed costs of medical education and community clinics.
I am pretty sure Ascension pays no taxes on the Non-Profit parts of it’s holdings.
Likewise, I am pretty sure they do pay taxes on the For-Profit holdings.
I am withholding my judgement until I see their tax returns. I would expect reasonable, analytical people to do the same. To fall for a blanket suggestion…Ascension pays no taxes…without any evidence is…well…you know…
Many hospitals have historically been organized in the manner of Ascension…but, not always. Tax exempt non-profits cannot distribute dividends nor have shareholders who own the equity in the entity.
Unrelated business income of a public charity is taxed. Investment income is typically tax exempt for public charities, but it can sometimes be deemed UBI.
Tax Exempt Bonds can be issued by public charities - as Ascension has done.
The bond covenant will dictate certain coverage ratios which affect cash reserves. There are sometimes restrictions on donations, but it would surprise me if that were a significant part of Ascension’s funds. Guide Star will have the Ascension IRS Form 990 on line for review - not sure how current.
It’s a good question about the tax status of many hospitals…I can’t tell the difference in many instances. So, as an historic artifact, should tax exemption for healthcare and hospitals simply be eliminated?
I also agree that simple size is hardly an indicia of charitableness. (What does one do with Harvard, Yale and the rest of the great universities? - just an aside)
BTW cash and revenue are two different things, as you can tell by the fact that they are different words. I assure you ascension uses accrual accounting and not cash accounting so Revenue is most assuredly NOT cash collections.
As to whether they actually pay taxes on their for-profit entities, my guess is it’s structured to offset losses and gains in most cases leading to no or very few taxes being paid. Joint ventures may be another matter.
It’s always unclear what is bad debt and what is charity care. How that is allocated is a bit of an art. The 'Daughters of Money" have years of experience with that game.
As to luxury facilities, look at many hospitals - as much marble in the atria as any bank.
I don’t know what the answer is, but it is very complex - and not necessarily bad. As one Daughter of Charity is famous for saying, “No money, no mission.”
Actually that site lists no directors at all - simply officers of the 2 Ascension entities. It could be that the sponsors actually control things (I would hope so!) and thus no directors in the usual sense.
I recall when a Catholic doctor of my acquaintence went with a non-Catholic hospital megagroup. I asked him why he didn’t go with the Catholic one, which (like the non-Catholic one) offered him the head of a department. “There’s no such thing as a Catholic hospital anymore” was his reply.
Granted, I think there are some diocesan hospitals back east somewhere, but much of what I have observed in recent years persuades me that the doctor was right, but left something out. There aren’t any truly charitable Catholic hospitals anymore either.
“Not-for-profit” only means that there is no dividend to shareholders. But they make plenty of “profit” in the sense of revenue over expense. In pursuit of that profit, they will milk Obamacare like everybody else, no matter what practices that leads them into. And there is precious little “conscience protection” for a Catholic worker in a “Catholic” hospital.
I’m not sure when last there was any significant difference between catholic and non-catholic healthcare. Maybe, not since the early 19th century.
Let’s face it before antibiotics and anesthetics, hospitals were largely places for people to go to die in some sort of dignity. If someone actually recovered, it was certainly a miracle!
As such, those places could really be Catholic. With the advent of modern medicine in the mid-19th century, hospitals more and more became places of physical healing rather than mostly hospices for the dying and providers of spiritual comfort. Of course, many still could not pay, and many hospitals were organized as charities with the fees paid by the wealthy supporting the entire structure. Whether the charity was related to the Church or an order, the charitable aspect was real for years.
With the advent of health insurance and later Medicare and Medicaid, the charitable part slowly has eroded. Much of what passes as charity is simple bad debt. Nonetheless, a whole industry of bonds, research, and care has grown up. Aside from a crucifix in a room, I’m not sure what makes a hospital especially “Catholic” - the ethical and religious directives of the bishops notwithstanding.
The for-profits complain about the advantage of the tax-exempts, but they have willingly eschewed the tax-exempt model in order for them to pay dividends. It was certainly their choice. Now, they complain. One could say that the government and society has long ago agreed to treat healthcare in a special tax-exempt way for any number of purposes due to its special nature. The same can be said of other industries - education for one comes to mind - where charity is perhaps not the animating concern whatever the rationale was historically.
Mostly, I see the for-profits as simply complaining over their own choice. As to tax policy, I can easily see many reasons for keeping healthcare tax-exempt if that is chosen. I honestly am unsure how it’s kept Catholic, however.
My know a man who used to be administrator at a Catholic hospital in Chicago. His boss was a nun. She would forgive debt left and right. Her mission was compassionate, but the hospital ran into major problems and was ultimately sold to a for-profit organization.
The religious should maintain the spirit of the hospital and enforce an ethic of providing care to those who cannot pay for it. Everyone, religious or not, should run the hospital as best they can, relying upon their talents, the many gifts of the One Spirit. The CFO may be S.J. or lay or even non-Catholic, but he or she should absolutely be a CPA or have an MBA with a focus in finance.
Yeah, it just doesn’t work as a model anymore in any modern sense. The techniques are too advanced. I think you can have a Catholic hospital that enforces certain ethics but that runs into legal troubles. Perhaps the Catholic medical mission has moved on from providing hospital services to providing basic medical care to the poor, and providing chaplaincy to all. One of the reasons we had hospitals in the first place is because no one else was doing it. Our mission may be more akin to running care clinics in poor areas and running ability to pay and on donations and volunteer work.
There’s a bit more to that - the mission and activities must be sufficiently-focused on a narrow band of objectives (are of the poor and disenfranchised, advancement of religion) that are generally not profit-garnering, and tax exemptions are granted.
Considering the substantial costs of providing care, a not-for-profit hospital would be foolish not to accept insurance (whether through an ACA-initiated exchange or merely an ACA-compliant employer insurance). And the hospital would be constrained on what it can charge, since insurance companies more or less set prices now. What would differentiate a non-profit or not-for-profit hospital from a profitable one would be how uninsured patients are treated, and under what conditions their debts are dismissed.
I’m not sure there is no place for a truly Catholic hospital, but it would be different from what they are now. Nowadays, due to the practices of insurers, Medicare and Medicaid, hospitals are really “ultra-acute” or “crisis” places of treatment. People are sent home or to nursing homes very quickly, while still very much disabled and in recovery. That’s also true of people with terminal conditions. They get shipped out fast.
If nursing homes can take care of such people, then I see no reason why Catholic organizations couldn’t. Maybe Catholic institutions can no longer provide the “super high-end” processes and care on a charitable basis, and the fact that they don’t do much else is fairly indicative.
But I see no compelling reason why Catholic organizations could not provide the sort of care one struggles with at home or that is provided in nursing homes, and on a relatively charitable basis.
I am old enough to remember what Catholic hospitals were once like. No, they didn’t have laser robotic surgeries, PET scans and the like, because those things didn’t exist. But they did keep people with much less than desperate conditions, as well as people who “went there to die” and for a considerable period of time.
Yes, much or most of the labor was provided by highly trained nuns, and nuns now are far fewer in number than they once were, and many are not interested in providing healthcare. Still, since nursing home personnel and many of the hospital personnel are not highly paid workers, it seems to me it could still be done. And, too, quite possibly there would be more young women interested in providing charitable care as religious if the opportunity to do it was there for them. It certainly once drew them. Some of the newer orders of nuns of other sorts are drawing a lot of recruits, so I don’t discount the possibility.
And if private “birthing centers”, often operated by NPs, are proliferating for low-risk pregnancies (and they are) I see little reason why a new form of hospital could not cater to that as well. And, they wouldn’t have to recommend sterilizations and such.