Where hospital philanthropy is headed and how CEOs can keep up

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Hospitals and health systems are aggressively expanding their footprint, their services and overall patient experience.

 

The competition has never been more intense. While philanthropy used to be an afterthought for hospitals, it is now a critical component to funding their growth and long-term sustainability.

"Philanthropy used to be the icing on the cake for many hospitals; now it is the cake," said Chad Gobel, founder and CEO of the Gobel Group.

Gobel Group is the leading consulting and technology firm focused on healthcare philanthropy, working with hundreds of hospitals around the country and with employees who have worked at top ranked places, including Cleveland Clinic and Rochester, Minn.-based Mayo Clinic. Mr. Gobel points to higher education as a model for where healthcare needs to move when it comes to philanthropic giving.

Many decades ago, federal and state support for colleges and universities began to slow down, becoming a smaller and smaller percentage of their overall revenue. As a result, the presidents of these educational institutions recognized they needed to replace that government revenue with alternative sources. And so the role of the president moved from being internally focused to externally focused. The role of the boards became less about managing the enterprise and more about generating new resources. The same revenue challenge is happening in healthcare. Government and insurance payments are becoming less predictable. Hospitals CEOs are, as a result, spending more time externally, creating partnerships with for-profit corporations and seeking greater contributions from individuals and foundations. But healthcare is probably still 20 years behind educational institutions.

The COVID-19 pandemic also spurred a change in charitable giving. Many hospitals didn't see a decline in funding, as they may have assumed, but rather donors changed the focus of their support by making gifts to COVID-19 relief funds. Now, many institutions are seeing a shift back as donors refocus their giving on capital and programmatic project support.

"We are seeing a reemergence of big ideas and projects, as hospitals launch new campaigns and prioritize new buildings and programs," Mr. Gobel said. "As these important projects become more visible, we are seeing really big gifts, $25 million to $100 million, and they seem to be happening more frequently."

Patients and community members have a higher level of appreciation for healthcare institutions because of the pandemic.

"In the past, grateful patients and families realized the importance of healthcare institutions and their clinicians and professionals. It’s why we call them grateful. But in the last 18 months, because of COVID, I think our communities also began to appreciate even more than before how important their hospitals and especially the doctors and nurses were to them and the community. COVID reminded us how vulnerable we all are and how much we need our hospitals to be strong. The community responded, and we’ve moved from just having grateful patients to now having grateful communities. Philanthropy became an important way for a community to show its appreciation to their hospitals and its employees,” said Mr. Gobel.

Around 60 percent of revenue from philanthropic giving usually comes from grateful patients, but many hospitals and physicians miss out on opportunities to accept gifts because of discomfort with the philanthropic process.

"Most of the time the hospitals and doctors do their work on one side of the organization and the hospital's foundation is on the other side. The hospital doesn’t make the connection," Mr. Gobel said. "But the foundation and the work of the doctors and nurses are intimately connected. In most cases, patients and families are grateful for the care and compassion of the doctors and nurses, and sometimes those patients and families want to express gratitude for that care. But because of a clinician’s discomfort, they often miss the signals of gratitude and the desire of the patient and family to give back. And when a patient goes home, the clinician may feel their job is done, but the reality is, for the patient or family, the relationship is just beginning."

If patients and families would like to make a gift, clinicians need to know how to graciously accept their gift. This expression of gratitude is often part of the patient's clinical experience and an important part of their healing process.

"If people are giving because they are grateful for the care and compassion the health system and its caregivers provided to them and their families, they are recognizing the work healthcare professionals do every day to provide extraordinary experiences to patients," Mr. Gobel said.

"Historically, philanthropy has been viewed as a financial transaction. We've assumed that the wealthy are our best potential donors. Frankly, the focus on money is a big reason why clinicians have discomfort. But focusing on money is a mistake. Just because you are wealthy doesn’t mean you’ll be a donor. In fact, gratitude drives the decision to give. Wealth, if anything, drives the decision of how much to give,” said Mr. Gobel.

Going forward, Mr. Gobel sees philanthropy as an even more important part of a hospitals' revenue and an even more important part of a CEOs job. Philanthropy will follow a hospital's strategy. If hospitals are focused less on new hospitals and more on ambulatory facilities and more on growing clinical programs, especially in areas like cancer, orthopedics, cardiovascular and other areas, then philanthropy will follow that strategy. Those hospital leaders that spend more time externally, like educational leaders have been doing, are going to be the big winners.

"Philanthropy will absolutely be the most important competitive advantage that a hospital will have in their community," said Mr. Gobel.

 

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