Why St. Joseph Hospital Is Targeted
It’s all about greed by “non-profits,” chasing revenues and big salaries.
St. Joseph Hospital
In early April we learned that St. Joseph Hospital on 50th and Chambers planned to close its surgical and medical units and discontinue other services as well.
The decision was announced by Bernie Sherry, whose title is “Ministry Market Executive” for Ascension Health, the St. Louis-based chain which operates St. Joseph. As his title is perhaps meant to suggest, Ascension is technically a “not-for-profit,” a “charitable organization“ which is the nation’s largest Catholic health care system. And as Sherry saw it, this reduction in services would actually be a boon to the community by offering some of the newly vacated space to other groups in the area.
“Our vision is to transform the St. Joe’s campus into an urban health village that brings together partners to address social and community needs and spark economic investment in the Sherman Park neighborhood,” Sherry announced in his press release.
What some might see as simply taking services from the neighborhood was actually “an innovative approach to community health and wellness together,” according to Sherry
Except that Columbia St. Mary’s is 5.6 miles away, Froedtert 4.6 miles away and Aurora Sinai Medical Center 4.1 miles from St. Joseph. That’s a long way for the many low-income families in the city who lack a car.
“We ship them off to another hospital in the city, how does their family get to them?” asked George Hinton, the CEO of the Social Development Commission and a former hospital administrator, in a story by CBS 58. Hinton called the slashing of services by St. Joseph a “dismantling of a neighborhood’s safety net.”
What Sherry and Ascension Health really seemed to be doing is shifting some of the lower paying patients to other facilities. As a story in the Journal Sentinel noted, about 51 percent of St. Joseph patients are covered by Medicaid, compared to 14.5 percent of Aurora St. Luke’s Medical Center and Aurora St. Luke’s South Shore’s patients and 15.9 percent of Froedtert Hospital’s patients. And the reimbursement rate for Medicaid is lower than for private insured patients.
“They’re nonprofit organizations, and yet what is fueling every decision they make is the bottom line — is the money,” Ald. Bob Donovan told Fox 6 News. “Shame on them.”
And Ascension Health has been very successful at making money. Its most recent audited financial statement shows the organization made more than $22.6 billion in revenue and $1.9 billion in net income (or profit) and $5.6 billion in reserves.
Its leaders are becoming quite wealthy running a charity. According to to the organization’s most recent annual federal tax forms, Ascension President and CEO Anthony Tersigni earned $13.9 million in compensation in 2015, $17.5 million in 2014 and $14.3 million in 2013. His 2014 compensation topped that of every executive at 100,000 nonprofit organizations whose data was analyzed by the Wall Street Journal.
In addition, Ascension’s chief financial officer and five executive vice presidents all earned anywhere from $2.8 million to $8.3 million that year. All told the seven men in Ascension’s executive office earned $40.7 million in 2015. In 2014 these seven men earned $41.8 million.
They decided to reduce services at St. Joseph because the hospital is losing $20 million per year. If they earned half as much in compensation, they’d still make enough to be in America’s top 1 percent and Ascension could have afforded that loss.
If it seems churlish to criticize them, consider that Ascension is a tax-exempt non-profit, meaning we the taxpayers subsidize them, paying more in taxes because Ascension is exempt. In 2011 it was estimated that the value of the tax exemption to America’s nonprofit medical organizations was a whopping $24.6 billion. Ascension is what we used to call a “charity,” and its federal tax form shows it still got some $9.7 million in contributions and grants in 2015.
It wasn’t that long ago, back in the early 1990s, when the president of St. Mary’s Hospital in Milwaukee was a nun who took a vow of poverty and earned $1 a year. There are still some people who make donations to hospitals, unaware they are contributing to the wealth gap in America.
The writer, Robert M. Doroghazi, MD, charged that “executives of ‘nonprofit’ health chains have seized some of the tax-exempt advantage for their own personal enrichment.” In 2011 and 2012, he noted, 30 executives at non-profit health care organizations made more than $4 million a year, with a mean total compensation of $6.5 million. Two executives made more than $10 million, and one made more than $20 million. “I do not believe the average chief executive officer on that list is more valuable to society than 100 registered nurses,” he wrote.
But those salaries were more than five years ago. You can bet they have risen since then. At Ascension the seven top officers saw their compensation rise by 20.8 percent in 2014.
Precisely how all this squares with the mission of a Catholic institution, or the teachings of Jesus, is difficult to understand. In reaction to Ascension’s announcement about St. Joseph, there was an outpouring of criticism from city officials and members of the community, and the health care chain announced “a pause” in the changes for now. Just how long that pause will last is not clear.
But there is ever reason to believe Ascension will look to slash services at St. Joseph as quietly as it can, at some point in the future. Because the big health care organizations nowadays do everything they can to reduce their load of Medicaid patients and those with no coverage whatsoever — what used to be embraced as charity care by Catholic hospitals. Nationally, Doraghazi noted, a 2013 study showed that charity care represented only 1.9 percent of nonprofit hospitals’ operating expenses. But the figure is 5 percent at St. Joseph, its figures show.
With that kind of loss, how can Ascension afford to pay the next raise in salary for Anthony Tersigni?
Update 6:15 p.m. April 27: Sherry released a statement saying this: “In response to feedback we received from the mayor, Common Council, community leaders and others, we announced that we would “pause” our plans to reconfigure services at Ascension St. Joseph Hospital. To be clear, ‘pause’ means we are stopping the plan to consolidate medical/surgical and ICU inpatient beds and surgery from St. Joe’s to Ascension Columbia St. Mary’s Milwaukee… Ascension Wisconsin’s three city hospitals play an essential role in Milwaukee’s safety net system, providing quality care for those who are poor and most vulnerable. For more than 170 years, that has been our Mission and our privilege. That has not changed and will not change.”
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Excellent and important piece, which is likely to get much readership among medical staff at Ascension who are suffering cutbacks that have not been explained to them.
Insightful, well written investigation article with important maco and micro implications. A “Should Read Article” for every WI health care worker and social policy professional given Ascension’s presence here in our largest market and beyond.
Jeff Kunz, MD., MA
Madison
Former WI State Health Officer
Truth!
Point of order: Especially when talking about compensation that you’re arguing is excessive, do not use the word “earn” in relation to whoever is receiving that compensation.
“Earn” implies that the person deserves it—which is, of course, exactly the point you’re arguing against.
It is in fact quite difficult to find any objective criteria by which most CEOs “earn” the ridiculously huge sums they take in.
Good work, Bruce. It’s one thing to have numerous facts at hand, it’s another thing to present them with clarity and insight.
Bruce, you don’t think being forced by government to except Medicaid patients is not a factor. Doctors and nurses cannot work for free.
@Troll, “Do no harm” does not mean letting your fellow Americans die in the gutter.
Tom, it seems pretty simple to me, socialize the hospital. Limit options. Ration, services, devices and goods. The talent, like in any other field is going to go where the best environment and monetary incentives exist. St. Joe’s is simply following the talent.
First it is accept Medicare not except and the rates may be lower than a doctor could make but not that low. In fact most physicians participate according to
https://www.medicareresources.org/faqs/how-does-medicare-reimbursement-work/
Medicaid not medicare..Noth get it right Noth, one is for the elderly and disabled…the other is for what Obama declared poor is…which can be lower middle-class
DR. KUNTZ, Is you perspective from Madison, where the unemployment rate is 2.0 percent. We cannot all live in Camelot. It must be good to be king. Do they know what food stamps and Medicaid are out in the land of milk and honey. Every hospital in America would love to be in Madison.
@Troll, like the old Dead Kennedy’s song, republicans want to Kill kill kil kill the poor…pathetic
Tom, the left does not care for the poor they simply hate the rich. This issue is similar to a waitress not getting a tip. The government orders everything on the menu and leaves the waitress high and dry but before leaving the government says i will see you tomorrow. Eventually, the waitress goes somewhere else.
While Acsesion is going to cut inner city services to mainly black people .
It has been expanding into wealthier white areas.
It’s straight up racism by Acesion.
@Troll, wrong. Republicans are vampires sucking the blood of the suffering, the working class and the poor. Get your head out of your ass
Jake, the proximate issue is economics. That does track race, but you can not condemn the hospital as racist, without first working your way through all the intervening factors, policies and payment schedules, so please…can we talk the cases at hand instead of reflexing like a bunch of Know-nothing, Copperhead reactionaries? or is it more fun to do drivebys than to converse ?
So what where the good Doctor lives? And what did he say except the article had some substance on several levels? Where, what words make you go frothing about Elite Madison…other than the word “Madison?”
Excellent reporting and analysis, very much appreciated.
@LenaTaylorIsAwesome, go away you dirtbag druggie.
How can a wealthy non profit who’s administration makes millions, who’s supposed to help the needy because of their Catholicism want to shut down in an area where it’s needed the most?
At the same time they are expanding in wealthier whiter areas.
Ascension thought no one would notice abandoning their mission in the central city, while I and every tax payer subsidizes Acseions profit and CEO salaries.
I think it’s a racist decision just like the Red ross pulled last fall in Milwaukee inner city.
Jake, why is it Ascensions responsibility to administer to the poor masses. At anytime, any of Ascensions competitors can come in and stake claim to its business. This is a government problem. This would be like the Starbuck’s in Philly deciding to close up because of loitering and homelessness issues. Must they stay open after denying to African American men the right to sit down or will the government step in and say loiters have a legal right to stay in your store.
Excellent article showing our health system for what it is…big business that far too often puts needs of corporation over the care of the community.
This situation illustrates the need for universal health insurance for EVERYBODY. If everybody had real coverage, there would be no financial incentive to close inner-city hospitals like St. Joseph.
Thanks, Bruce, for writing this. It’s a critical piece to understanding what is wrong with our healthcare system and why it is so much more expensive here than in other countries around the globe. There used to be another important check and balance on the system: the state Hospital Commission which OK’d (or denied) every bed that was built. If there wasn’t a justified need for the bed, it wasn’t approved for building. The Commission went away under Tommy Thompson, another deregulation that would affect so many people. Now, clinics, hospital beds and expensive medical equipment are built or added willy nilly without regard for need–an “If you build it, they will come” marketing strategy. The Taj M’Aurora in Oconomowoc is a perfect example: it has corridors so wide a semi could drive through without touching anything. And no people! It’s my understanding that it had so few patients when it first opened, employees were asked to park on the I-94 side so that it would look busy. Non-profits should be taxed on their profits and CEO and upper administration salaries capped. Taxes on the hospital and other medical services could be pooled to provide additional health coverage to the poor, and med school tuition for aspiring Drs and nurses and other med tech professions. And bring back some form of the Hospital Commission: medical costs will never be contained without it. The costs of empty beds and under utilized medical equipment will continue to be passed on to consumers.
Troll, even Mark Belling wrote a column denouncing the greed of hospital chains chasing after patients from wealthy areas. His article made virtually the same points raised here.