For Immediate Release
Wednesday, April 05, 2006
AFSCME Calls For Senate Hearing To Shine Spotlight On "Poster Child" for Nonprofit Hospital Abuses
Illinois-based Resurrection Health Care gets tax breaks while marking up charges for uninsured patients, cutting charity care, paying big CEO salary.
WASHINGTON —The American Federation of State, County and Municipal Employees (AFSCME) today asked the Senate Finance Committee to hold a hearing to explore whether a nonprofit hospital chain is abusing the federal tax code by overcharging uninsured patients and failing to provide adequate levels of charity care.
Last year, the committee's chairman, Senator Chuck Grassley (R-IA), launched an inquiry into the practices of Resurrection Health Care and nine other hospitals (or hospital systems) related to their tax-exempt status. Because Senator Grassley has called on the nonprofit sector to increase transparency and accountability, Gerald W. McEntee, President of AFSCME, said the committee should focus its lens specifically on Illinois-based Resurrection Health Care, which, he said, is "one of the worst offenders."
In an April 5 letter to Grassley, McEntee said a congressional hearing on Resurrection would serve as a wake-up call to the nonprofit hospital industry and could help strengthen the requirements for the tax exemption.
"Resurrection Health Care is the poster child for a system in need of repair," McEntee said. "Resurrection embodies the most disturbing trends in nonprofit hospitals today: sharp decreases in charity care, unconscionably high price markups for patients who have no health insurance, a CEO compensated at 50 percent above the national average for hospital administrators, and a board of directors dominated by insiders."
McEntee added: "We believe that such a hearing will shine the public spotlight on the highly questionable practices that are becoming increasingly prevalent in the nonprofit sector. It's time we pull back the curtain and expose how a once-exemplary organization like Resurrection can quickly lose its way in pursuit of profit. By bringing the gavel down on Resurrection, Chairman Grassley can send a strong message that nonprofit hospitals cannot have it both ways. They must either serve the public good or pay taxes like any other for-profit entity."
Resurrection CEO Joseph Toomey was paid $2.3 million during fiscal year 2003, a year in which he sliced the level of his organization's charity care by more than one-half from $35.8 million in 2002 to $15.4 million in 2003. Problems at Resurrection also exist at the board level, where only five of 15 directors are truly independent and possess no professional ties to Resurrection. Of the 10 "insiders" on the board, seven are highly paid executives or physicians whose livelihoods are directly related to the hospital's financial gains and losses.
In the letter to Grassley, McEntee applauded the Senator for his ongoing efforts to rein in nonprofit abuses while preserving the tax-exempt status of deserving providers.
"Low-income Americans and the uninsured rely on the good works of nonprofit hospitals to gain access to care they would otherwise go without," McEntee said. "It would be a terrible shame if a few bad apples like Resurrection jeopardize the tax exemption for the entire industry."
Last week, Senator Grassley invited the American Hospital Association to "take a more active and serious" role in the discussion of reforming nonprofit health care systems. In October 2005, Grassley had publicly requested that nonprofit hospitals submit their own reform proposals, but none reportedly did.
AFSCME has issued two reports documenting the ways in which Resurrection Health Care has abdicated its responsibilities to uninsured and low-income patients. The reports, entitled A Failing Mission: The Decline of Charity Care at Resurrection Hospitals and The High Price of Growth at Resurrection Health Care, describe in detail how far Resurrection has strayed from its original mission. In light of the behavior of Resurrection, AFSCME hopes to work with Senator Grassley and the Senate Finance Committee to pursue three legislative goals:
- Preserve the tax-exempt status of nonprofit hospitals as an essential component of our health care system;
- Promote greater accountability and add specific charity care requirements to the existing tax-exemption standard;
- Mandate independent directors, good corporate governance and reasonable executive compensation consistent with the nonprofit mission.
AFSCME Reports on Resurrection Health Care:
- The High Price of Growth at Resurrection Health Care
- The Care Gap: Unequal Treatment of the Poor and Uninsured at Resurrection Hospitals
- A Failing Mission: The Decline of Charity Care at Resurrection Hospitals
AFSCME is the largest union for workers in the public service with 1.4 million members nationwide. AFSCME represents service workers in the public and private sectors including nurses, EMTs, bus drivers, child care providers, corrections officers, custodians and librarians.
