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Sacred Heart Lands in Top 10 for Highest Profits

The analysis, published recently in Health Affairs, analyzed fiscal year 2013 data for about 3,000 acute care hospitals.
May 11, 2016

Sacred Heart Medical Center may not feel like bragging after landing in the top 10 list of the most profitable hospitals across the country. In fiscal 2013, the Springfield hospital walked away with $171.2 million in profits from taking care of patients.

Sacred Heart has the distinction of being the only Oregon hospital to appear on that list. Another nonprofit, Gundersen Lutheran Medical Center in La Crosse, Wis., profited the most from patient care, bringing in $302.5 million, or $4,241 per patient.

Researchers relied on Medicare cost reports to compile the top 10 list, according to a study published in Health Affairs

"The system is broken when nonprofit hospitals are raking in such high profits. The most profitable hospitals should either lower their prices or put those profits into other services within the community,” according to Gerard F. Anderson, PhD, director of the Johns Hopkins University Center for Hospital Finance and Management, who was among the researchers who compiled the data, and spoke with Kaiser Health News.

Hospitals such as Sacred Heart shared a key attribute, according to Anderson. Whether because of their size, their prestige or their influence in the community, they have more power to negotiate prices, meaning they can charge insurers more for the care they give.

“They are the only provider — or they are clearly the dominant provider — and the insurers in that community are relatively weaker, and there are a lot of them,” he said. “[The hospitals] can take advantage of their market position. And they do. Mostly, the hospitals are able to charge more because they can, and they do. There’s no need for nonprofit hospitals to earn substantial profits.”

Paul Ginsburg, who was not involved with the study but is considered an expert in health economics, told Kaiser Health News, “Many of the hospitals best-positioned to earn profits are non-profits — they’re the ones often that have the most prestige, they’re the largest hospitals.”

Ginsburg is director of the Center for Health Policy at the Brookings Institution and director of public policy at the University of Southern California’s Schaeffer Center for Health Policy and Economics.

He also pointed out that the majority of hospitals on the top 10 list were nonprofits and, as such, are tax exempt because they provide a public service. But, he added, these findings “very clearly raise the issue about … whether these hospitals need or deserve the tax exemption.”

The researchers only looked at profits made from medical care and didn’t include the substantial amount of money hospitals make from sources like investments, grants, donations, parking fees and property rentals, according to Ge Bai, the study’s primary author who’s an assistant professor of accounting at Washington and Lee University.

“All hospitals should make a little profit,” she told Kaiser Health News, “but some hospitals are obtaining outrageous profits.”

PeaceHealth in the News

An earlier article in The Lund Report revealed that Ron Saxton had joined PeaceHealth – the parent company of Sacred Heart -- as interim executive vice president and general counsel. He’s now in charge of government and public affairs at the Catholic health chain.

Our earlier analysis also looked at the turmoil at PeaceHealth and the ongoing litigation by frustrated employees since Beth O’Brien became chief operating officer.

New Organizational Chart

The Lund Report also obtained a copy of the latest organizational chart at PeaceHealth. The following people report to Liz Dunne, president and CEO:

  • Beth O'Brien, Executive Vice President & Chief Operating Officer
  • Carol Aaron, Executive Vice President & Chief Administrative Officer
  • Peggy Allen, Executive Vice President & Chief Financial Officer (Interim - an employee of FTI Consulting)
  • Ron Saxton, Executive Vice President & General Counsel
  • Vacant, Executive Vice President, Strategy & Community Health

Those reporting to O’Brien include:

  • Val Baciarelli, SVP, System Services & Operations
  • Rand O'Leary, Chief Executive, Oregon
  • Nancy Steiger, Chief Executive, Columbia
  • Dale Zender, Chief Executive, Northwest
  • Mike Metcalf, Chief Executive, PeaceHealth Medical Group
  • Victoria King, SVP & Chief Nursing Officer
  • Mark Adams, SVP & Chief Medical Officer
  • Dan Hein, SVP & Chief Information Officer

And those reporting to Aaron include:

  • System Vice President, Human Resources Operations
  • System Vice President, Labor & Caregiver Relations
  • System Vice President, Talent Development
  • System Vice President, Chief of Staff
  • System Vice President, Mission Services
  • System Vice President, Philanthropic Development
  • System Vice President, Strategic Communications & Engagement

Diane can be reached at [email protected].

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