From the Department of, "About F%$#ing Time."

As cities get stiffed by hospitals going non profit, and redirecting the tax savings to things like senior executive salaries, states are starting to call bullsh%$ on the whole, "Non Profit," part.

This is good, and something that I actually have some direct knowledge about.  (Normally, I just pontificate without regard to the facts, but my reader(s) already know this.)

I founded a non-profit, and applied for, and got, 501(C)3 tax exempt status.

In the course of this, I accessed a lot of information supplied by state (Massachusetts) and federal authorities, and particularly in the case of the state documents, they provided case studies, some of them real, such as the saga of the buyout of the founder of SADD, which resulted in the founder giving the money back.

The term for this is, "Self-Inurement," and it's against most the rules for charities.

So, outside of lawyers who handle such things, and (of course) executives in the non-profit world, I can claim to pretty knowledgeable about all this.

Of course, the MBAs have gotten involved, so they set up all sorts of independent (really not independent at all) compensation committees to justify the over-payment of their senior executives.

It looks like someone is finally noticing:

The public school system here had to scramble in 2018 when the local hospital, newly purchased, was converted to a tax-exempt nonprofit entity.

The takeover by Tower Health meant the 219-bed Pottstown Hospital no longer had to pay federal and state taxes. It also no longer had to pay local property taxes, taking away more than $900,000 a year from the already underfunded Pottstown School District, school officials said.

………

The school system appealed Pottstown Hospital’s new nonprofit status, and earlier this year a state court struck down the facility’s property tax break. It cited the “eye-popping” compensation for multiple Tower Health executives as contrary to how Pennsylvania law defines a charity.

The court decision, which Tower Health is appealing, stunned the nonprofit hospital industry, which includes roughly 3,000 nongovernment tax-exempt hospitals nationwide.

If they are running that many hospitals, I can pretty much guarantee that this is MBSs running a charity like a business, if you define, "Running something like a business," as, "Burning it down for the insurance money.

“The ruling sent a warning shot to all nonprofit hospitals, highlighting that their state and local tax exemptions, which are often greater than their federal income tax exemptions, can be challenged by state and local courts,” said Ge Bai, a health policy expert at Johns Hopkins University.

The Pottstown case reflects the growing scrutiny of how much the nation’s nonprofit hospitals spend — and on what — to justify billions in state and federal tax breaks. In exchange for these savings, hospitals are supposed to provide community benefits, like care for those who can’t afford it and free health screenings.

More than a dozen states have considered or passed legislation to better define charity care, to increase transparency about the benefits hospitals provide, or, in some cases, to set minimum financial thresholds for charitable help to their communities.

The growing interest in how tax-exempt hospitals operate — from lawmakers, the public, and the media — has coincided with a stubborn increase in consumers’ medical debt. KFF Health News reported last year that more than 100 million Americans are saddled with medical bills they can’t pay, and has documented aggressive bill-collection practices by hospitals, many of them nonprofits.

In 2019, Oregon passed legislation to set floors on community benefit spending largely based on each hospital’s past expenditures as well as its operating profit margin. Illinois and Utah created spending requirements for hospitals based on the property taxes they would have been assessed as for-profit organizations.

………

Besides providing federal, state, and local tax breaks, nonprofit status also lets hospitals benefit from tax-exempt bond financing and receive charitable contributions that are tax-deductible for the donors. Policy analysts at KFF estimated the total value of nonprofit hospitals’ exemptions in 2020 at about $28 billion, much higher than the $16 billion in free or discounted services they provided through the charity care portion of their community benefits.

………

Bai, of Johns Hopkins, collaborated on a 2021 study that found for every $100 in total spending, nonprofit hospitals provided $2.30 in charity care, while for-profit hospitals provided $3.80.

So, charity hospitals spent less on charity care than for-profit hospitals.

This isn't management, this is looting.

Last month, another study in Health Affairs reported substantial growth in nonprofit hospitals’ operating profits and cash reserves from 2012 to 2019 “but no corresponding increase in charity care.”

And an April report by the Lown Institute, a health care think tank, said more than 1,350 nonprofit hospitals have “fair share” deficits, meaning the value of their community investments fails to equal the value of their tax breaks.

It should be noted that this situation is not just endemic to the charity hospital sphere, it is endemic to the whole charity sphere, first hitting the national zeitgeist when William Aramony was caught up in scandals involving misappropriation of funds, excessive pay, sexual harassment, and extramarital affairs.

Bill was a piker compared to today's guys, his total remuneration (ex-embezzlement) was less than $½ million.

As a starting solution, a hard limit on salaries at non-profit and tax exempt organizations (the former is state, and latter is federal) would be a good start.

I would suggest the salary of the President of the United States, $400,000.00 plus about $150,000.00 in other expenses covered.

This should not be too much of a hardship, except perhaps to college coaches, some of whom make more than $10 million a year.

It might scare away some of the MBA types, which would benefit everyone, except, perhaps for business schools.