The newly opened $580 million Northwestern Memorial Hospital in Chicago is testimony to the importance of philanthropy and wise money management in achieving business goals and fulfilling clinical dreams.
More than half of the sparkling 2-million-square-foot facility was financed in advance by gift-giving and returns from investment on nonoperating income. That potent one-two combination will increasingly become the tool of necessity for funding healthcare building projects and service expansions.
Contributions to healthcare organizations soared 20.4% last year to a record $16.9 billion, according to the American Association of Fund-Raising Counsel. The Association for Healthcare Philanthropy recently released its own set of figures, which show hospitals and health systems raised $5.7 billion last year through donations, endowments and investments.
The big gain is even more impressive considering that in 1997 contributions to healthcare organizations were flat.
The booming stock market undoubtedly has fueled much of the increase in hospital donations and investment income, but the bull can't run forever.
The challenge for hospitals and health systems is to leverage this new surge in giving and protect against major downturns in contributions if the economy should slip.
As this week's cover story points out, hospital operating margins plummeted 45% in the fourth quarter of 1998, compared with 1997's final three months. And this significant decline came before the heaviest hits inflicted on Medicare reimbursement by the Balanced Budget Act of 1997.
Lower-than-anticipated government funding and stingy managed-care contracts will continue to hamper providers well into the next millennium. Furthermore, the financial gap between the "haves" and the "have-nots" of healthcare will likely widen.
Donations, grants and wise investment decisions will help determine on which side of the profit ledger your organization falls. Chief executive officers should take a thorough audit of their development offices and money-management strategies. Then, they should study the practices and policies of those hospitals that do it best. Finally, they should make improved communication and commitment to community service high priorities. That type of game plan will work in any type of economy.