Last year, Ascension Health closed Riverview Hospital, the third Detroit hospital it’s closed in the last 10 years but the non-profit system is spending $224 million to open Providence Park Hospital in suburban Novi, reports the WSJ. Ascension last year reported $1.2 billion in net income for its 67 hospitals in the Midwest, South and Northeast and its CEO earned $2.4 million in total compensation in 2006.
And while it might make good business sense to shut down a hospital that reportedly lose $16 million before announcing it would shut down, “nonprofit hospital systems aren’t ordinary businesses,” says the report. “They’re required to provide benefits to their communities, such as free care for the indigent, in exchange for the billions of dollars in annual tax exemptions they receive.”
However, at the same time Ascension’s net income is increasing, so is its charity care $320 million this year (up from just under $250 million last year). That’s “2.5 percent of its patient revenue the highest percentage among the nation’s five largest non-profit hospital systems.” This is despite reporting net income, due to the difficult financial markets, of $351 million for the year ended June 30. Further, says the chief strategy officer of Ascension’s Michigan subsidiary, the real need in Detroit is for primary care physicians, not hospitals. Critics counter that Riverview’s shuttering has driven physicians away, a situation that was already dire.
The report goes on to appear to question the decision to leave only a pared-down urgent care center in Riverview’s place, but does note that “every 52 seconds one of [Ascension’s] hospitals nationwide treats an uninsured patient.”
The full report is available here for subscribers. The WSJ has previously reported on non-profits’ prosperous times here.
