How much should a nonprofit hospital spend on its workforce? Caring for the poor? Lobbying and advertising? How much of its earnings should it keep?
Every year, the Treasure Valley’s two major medical systems disclose their answers to those questions in federal tax filings. The documents also show how the systems are growing. The latest filing comes from the Saint Alphonsus Regional Medical Center for the year that ended last June 30. It shows revenues and expenses climbed for a third straight year, in part because Saint Alphonsus merged with its previously separate physician group.
Nearly 45 percent of the hospital’s revenue went to employee compensation. That included $3.1 million for executives and $185.8 million for everyone else. The five highest-paid specialists earned a combined $5 million.
Employees received pay increases averaging 2.5 percent, said Blaine Peterson, chief financial officer, though bigger raises may have gone to some people with skills in high demand, such as emergency-room nurses. “Everyone is trying to hire (them) right now,” Peterson said.
The head count went from 3,326 employees to 4,034, partly because of the merger.
The hospital spent $2.5 million on advertising and promotion and $115,861 on lobbying.
After paying its bills, Saint Alphonsus kept about $11.3 million, about half as much as it kept two fiscal years earlier. That’s because the health system spent about $10 million changing to an electronic medical records system, Peterson said. The hospital’s parent company, Trinity Health, spent an additional $15 million on that transition, he said.
TAX BREAKS AND CHARITY CARE
As a nonprofit, the hospital can’t distribute profits to shareholders or executives. Saint Alphonsus reinvests its earnings in facilities, technology, and physician and staff recruitment, according to its annual report.
The hospital also gets a break on some taxes. Saint Alphonsus had about 110 property tax exemptions in calendar year 2010, according to the Ada County Assessor’s Office. The hospital says its land and buildings had a book value of about $213 million.
Saint Alphonsus did pay some taxes, such as $12.5 million of payroll taxes.
Under Idaho law, Saint Alphonsus must have a federal tax exemption in place and say each year what it has done to deserve nonprofit status. Nonprofit hospitals can count the value of unpaid and under-reimbursed care, discounted services and donations as charity care and community benefit.
The general rule for nonprofit hospitals is that they don’t turn away patients who can’t pay. But that doesn’t mean the hospital writes off unpaid bills as “charity” care. To count as charity care, a patient must be willing but unable to pay, Peterson said. Someone who ignores bill collectors’ calls doesn’t fit that criterion.
WHO BENEFITS, AND HOW?
Saint Alphonsus says it had 54 avenues through which it delivered charity care and community benefits in fiscal 2010. Almost 300,000 people got some service from Saint Alphonsus community programs, such as mobile mammograms, health fairs, classes, subsidized health services or cash and in-kind contributions to community groups, Peterson said.
During the 2010 fiscal year, charity care made up about 6.5 percent of the hospital’s expenses. That included costs that Medicaid didn’t reimburse. But it didn’t include a $5.9 million Medicare shortfall from roughly $83 million of Medicare-eligible services it provided.
Saint Alphonsus also handed out grants of at least $5,000 to 19 nonprofits. It spent about $74,000 giving people medical equipment or help with car insurance, groceries and gas, dental care, telephone bills, travel, utilities, education, rent and mortgages, according to its records.
Audrey Dutton: 377-6448, Twitter: @IDS_Audrey