regulating "nonprofit" administration

[gasdoc77]

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Does the classification of an institution (ie hospital) as "nonprofit" come with any restrictions on the compensation of the administrators? My observation has been that these "nonprofits" are some of the worst fiscal offenders toward the providers. I can see no other origin except these CEO's, etc. that make millions if not in salary, in their bonuses or golden parachutes. Is there a way that we as physicians can petition that in order to qualify as nonprofit, the total compensation of these officials must fall in line with the upper tier providers as a whole?

 

[deleted87051]

Does the classification of an institution (ie hospital) as "nonprofit" come with any restrictions on the compensation of the administrators? My observation has been that these "nonprofits" are some of the worst fiscal offenders toward the providers. I can see no other origin except these CEO's, etc. that make millions if not in salary, in their bonuses or golden parachutes. Is there a way that we as physicians can petition that in order to qualify as nonprofit, the total compensation of these officials must fall in line with the upper tier providers as a whole?

No. Just as your compensation must be competitive with those of other physicians, their compensation is benchmarked against other ceo's in similar industries with similar operating budgets. If you think that's unfair, just become a CEO. Or a trader or investment banker.

 

[2ndyear]

You can't petition to decrease CEO pay to qualify as a nonprofit, as stated 'reasonable and customary' is what the IRS uses to determine if the salary is in line with other nonprofits. We all know this number is huge, especially for small hospitals. Here's an interesting article about a hospital in California:
http://www.modernhealthcare.com/article/20130722/NEWS/307229946
Basically the SEIU pushed a ballot measure that passed limiting CEO pay at a hospital to twice that of the governor. A judge then ruled it invalid.

I do think nonprofit CEO pay is ridiculous and that reasonable and customary is artificially inflated. But then I look at our CEO who looks and sounds like a used car salesman in a cheap suit and pulls 800k for a 100 bed hospital, and think I'd really hate to see what a 200k CEO would look like. Online MBA? Previous Wal-Mart managerial experience? I can only imagine.

 

[gasdoc77]

You can't petition to decrease CEO pay to qualify as a nonprofit, as stated 'reasonable and customary' is what the IRS uses to determine if the salary is in line with other nonprofits. We all know this number is huge, especially for small hospitals. Here's an interesting article about a hospital in California:
http://www.modernhealthcare.com/article/20130722/NEWS/307229946
Basically the SEIU pushed a ballot measure that passed limiting CEO pay at a hospital to twice that of the governor. A judge then ruled it invalid.

I do think nonprofit CEO pay is ridiculous and that reasonable and customary is artificially inflated. But then I look at our CEO who looks and sounds like a used car salesman in a cheap suit and pulls 800k for a 100 bed hospital, and think I'd really hate to see what a 200k CEO would look like. Online MBA? Previous Wal-Mart managerial experience? I can only imagine.

Perhaps we as physicians could petition the AMA to start such a movement. Big hospitals are becoming no better than big government, and these administrators are just like congressman. The hypocrisy comes when they want the shelter of nonprofit status while paying themselves free market salaries that are directly bolstered by making cuts to those beneath them, usually starting with the OR. It's indirectly like getting a government bailout while keeping your golden parachute (cough, cough, big banks).
Since anesthesiologists are always targets of these Yahoo articles on large salaries, maybe they should instead explore the salaries of "nonprofit" administrators. There should at least be a public awareness campaign.

 

[jwk]

Perhaps we as physicians could petition the AMA to start such a movement. Big hospitals are becoming no better than big government, and these administrators are just like congressman. The hypocrisy comes when they want the shelter of nonprofit status while paying themselves free market salaries that are directly bolstered by making cuts to those beneath them, usually starting with the OR. It's indirectly like getting a government bailout while keeping your golden parachute (cough, cough, big banks).
Since anesthesiologists are always targets of these Yahoo articles on large salaries, maybe they should instead explore the salaries of "nonprofit" administrators. There should at least be a public awareness campaign.

It's called "free enterprise". It works.

Do I think 800k for a 100 bed hospital is absurd? Absolutely. Do I think 800k for a 500 bed hospital is absurd? Absolutely not. My hospital is a 3-hospital system, with multiple ASC's and dozens of outpatient centers, does many millions of dollars in unreimbursed care each year, and is heavily invested in the entire metro area reaching out 50+ miles from it's primary facility. It's a multi-Billion dollar business with thousands of employees. I have a general idea of his compensation range - he's worth every penny.

 

[gasdoc77]

So how again is the tax advantaged status of nonprofit "free enterprise". Seems to me to be an unlevel playing field.
These are private businesses gaming the system. If they wanna be a nonprofit extension of the county hospital than they should pay their administrators accordingly.

 

[deleted126335]

It's called "free enterprise". It works.

Do I think 800k for a 100 bed hospital is absurd? Absolutely. Do I think 800k for a 500 bed hospital is absurd? Absolutely not. My hospital is a 3-hospital system, with multiple ASC's and dozens of outpatient centers, does many millions of dollars in unreimbursed care each year, and is heavily invested in the entire metro area reaching out 50+ miles from it's primary facility. It's a multi-Billion dollar business with thousands of employees. I have a general idea of his compensation range - he's worth every penny.

He may be worth every penny. Not quite the same thing. These jobs tend to be very political. The CEO answers only to the board. With board members being local businessmen who often sell goods and services to the healthcare system. Also board members who are big employers that buy the healthcare systems insurance products(s). In the towns that I have worked I have seen a real lack of accountability for bad decisions as well as incompetence and some things that smelled more than a little dirty.
Of course the same may be said for more than a few medical practices in a variety of specialties, including our own. The dollars jut get bigger at the board/CEO level.

 

[deleted480308]

I'm shocked physicians would think it's a good idea for artificial contraints on salaries under the "it's unfair they make more than me" principle.....that's a dangerous stone to start rolling

 

[gasdoc77]

I'm actually a HUGE believer in the free market and a libertarian. The idea that these entities would want to have their cake and eat it too (nonprofit status for shelter that is effectively subsidized by the taxpayers, yet constantly seeking personal profit) is a double standard, and has a "Pelosi" feel to me.

 

[jwk]

I'm actually a HUGE believer in the free market and a libertarian. The idea that these entities would want to have their cake and eat it too (nonprofit status for shelter that is effectively subsidized by the taxpayers, yet constantly seeking personal profit) is a double standard, and has a "Pelosi" feel to me.

So non-profit hospitals should just take whatever dregs they can find for a low salary and hope they do well, or should they get the best CEO they can find to run a large corporation? For-profit or non-profit, these ARE big businesses. For-profits answer to stockholders - non-profits answer to the community. I can tell you the non-profits in my area are far more valuable members of the community as a whole than any of the for-profits I can think of. More services, more charity care, more community-minded - you name it.

 

[gasdoc77]

While I've seen local nonprofits invest more in public perception of their brand, I have not witnessed the altruism you speak of. In fact, they are eager to slash OT for all their staff and pile more and more work on their nurses. They constantly try to undercut the anesthesia department and "consult" with AMC's (who, laughably, aren't even interested). Admin looks for every nickel to increase their bonuses at the expense of their very lifeblood.

 

[2ndyear]

I I have a general idea of his compensation range - he's worth every penny.

If it's a nonprofit it's public information given on the IRS Form 990. You can google it or go to a site called guidestar.org and look it up. It can be pretty eyeopening for sure.

 

[deleted126335]

If it's a nonprofit it's public information given on the IRS Form 990. You can google it or go to a site called guidestar.org and look it up. It can be pretty eyeopening for sure.

It can be understated through deferred compensation plans. We have a previous CEO who left a number of years ago. He is still drawing six figures, from what I suspect as a payout of his deferred comp program.

 

[deleted50478]

I'm shocked physicians would think it's a good idea for artificial contraints on salaries under the "it's unfair they make more than me" principle.....that's a dangerous stone to start rolling

You don't constrain his salary. You prevent the non-profit classification for hospitals that clearly ARE for profit.
They should start paying their property taxes just like everyone else too.

 

[deleted480308]

 

[gasdoc77]

Our administration built themselves a state of the art office building completely seperate from where patient care is delivered. Why? Because, as the military folk say, familiarity breeds contempt. Should people be mad that it has a fitness area? How about retinal scanners? You couldn't make this s&%t up. Meanwhile, the "nonprofit" suspended any overtime pay (but not overtime hours) for its nurses for almost a year due to uncertainty (that later proved to be record profits). They look for any and every way to send the message to employees that they are not valued, particularly anesthesia. I yearn to see a story on the business of these hospitals on 60 minutes!!! The public needs to be informed where an increasingly disproportionate amount of healthcare $$$ are moving, which is "management".

 

[smb4]

Our administration built themselves a state of the art office building completely seperate from where patient care is delivered. Why? Because, as the military folk say, familiarity breeds contempt. Should people be mad that it has a fitness area? How about retinal scanners? You couldn't make this s&%t up. Meanwhile, the "nonprofit" suspended any overtime pay (but not overtime hours) for its nurses for almost a year due to uncertainty (that later proved to be record profits). They look for any and every way to send the message to employees that they are not valued, particularly anesthesia. I yearn to see a story on the business of these hospitals on 60 minutes!!! The public needs to be informed where an increasingly disproportionate amount of healthcare $$$ are moving, which is "management".

Absolutely agree, however our lame-stream media will never report this. It is too easy to blame the shortcomings of our health care system on "greedy" docs. Never-mind one fat cat CEO making out like 20-30 docs combined.Than you have to add to that all the minions and you have a whooping amount of money going sideways so to speak.

 

[IlDestriero]

They answer to the board of directors who approve their salaries. Mine too.

 

[deleted50478]

This has nothing to do with hospitals. They aren't charities. They are non-profits so all that tax savings can go to administrators not to help people.

 

[deleted50478]

They answer to the board of directors who approve their salaries. Mine too.

Yeah, and they are on the board of their board-members' companies and vote on their salaries. I'll scratch your back and you scratch mine while we screw the rabble so we can add new wings to our castles.

There should be more tax brackets and they should approach 100% at some point and should include stock option-denominated salary.

 

[smb4]

They answer to the board of directors who approve their salaries. Mine too.

Sure crooks cover up for crooks and all is well in the financial world. One word scumbags

 

[IlDestriero]

As long as they keep approving my bonus, I'm good.

 

[Psai]

Our administration built themselves a state of the art office building completely seperate from where patient care is delivered. Why? Because, as the military folk say, familiarity breeds contempt. Should people be mad that it has a fitness area? How about retinal scanners? You couldn't make this s&%t up. Meanwhile, the "nonprofit" suspended any overtime pay (but not overtime hours) for its nurses for almost a year due to uncertainty (that later proved to be record profits). They look for any and every way to send the message to employees that they are not valued, particularly anesthesia. I yearn to see a story on the business of these hospitals on 60 minutes!!! The public needs to be informed where an increasingly disproportionate amount of healthcare $$$ are moving, which is "management".

Just wow