Although tougher times are looming for hospital fund-raisers, expect kudos all around when the Association for Healthcare Philanthropy convenes this week in Chicago for its annual conference.
Donations to healthcare institutions reached $6.96 billion last year, a 22% increase compared with 1998, when the association conducted its last member survey. Cash donations, which are considered a better measure of annual giving because they exclude planned gifts and income from endowments and investments, marked an even bigger increase of 27.5%, to $3.96 billion.
The jump, though welcome, was no surprise. William McGinley, president and chief executive officer of the 3,000-member association, credits a "return of confidence" from donors, who he says were put off by consolidations and for-profit takeovers in the mid-1990s. He also says hospitals have focused on donations as other revenue has slumped, while independent reports confirming hospitals' financial distress have spurred giving.
A strong economy helped, he says.
The survey showed a doubling of endowments at academic institutions and children's hospitals, by far the largest in the industry. Their median endowments were $108.3 million and $106 million, respectively. Long-term-care providers also showed a big gain, to $8.3 million. But less-mature community hospital endowments have been relatively flat, at $3 million.
Fund-raisers also can congratulate their lobbyists for killing a provision in the Health Insurance Portability and Accountability Act of 1996 that would have barred fund-raising departments from using patient demographic data to solicit funds. After an industry outcry, HHS relaxed its rules in February.
But the bounty might be in for a disruption. Aside from the obvious concern of a slumping economy, which McGinley believes could reduce healthcare philanthropy by as much as 4% this year, at least two obstacles loom.
One is the phase-out of the federal estate tax by 2010, which was signed into law this summer and begins next year. The tax reduction will eliminate incentives for tax-sheltered contributions. Although it will make more money available for private donations overall, McGinley doesn't expect a long-term increase in giving. Based on research, he says, "We know that the people who create the wealth are six times more generous than people who inherit the wealth."
Another concern is that remaining HIPAA regulations are expected to complicate fund raising when the rules take effect in April 2003. Until then, development offices will be exploring strategies to get around them. Specifically, for the first time, development offices will not have access to patient medical data, which could make it difficult, if not impossible, to target patients who have been in the hospital for a particular service. For example, fund-raisers could not determine which patients received cancer care, and therefore would be likely candidates to hit up for funding of a new linear accelerator.
That's a big concern for Joel Simon, director of gift planning at the charitable foundation of Greater Baltimore Medical Center, which raised $13.2 million in the fiscal year ended June 30. The medical center treats about 240,000 patients per year.
To do targeted fund raising, Simon says, "You need to find the needle in the haystack of 240,000, and HIPAA took away our magnet."
For example, he says, Greater Baltimore recently raised $150,000 to endow an honorary lecture for a retiring internist. He said the physician's former patients contributed all but $25,000 of the total. That type of fund raising could be impractical under the new rules, which would not allow hospital development departments to use information such as a patient's admitting physician, or which department treated the patient, says Simon, who will speak on the topic at the conference this week.
Simon says his hospital will be looking at the possibility of obtaining prior authorization from patients to use data such as their physician and the department where they receive services for fund raising. But he adds, "How much paperwork do you want to bombard the individual patients with?"
Just how much of a hindrance HIPAA will present remains to be seen. Simon says, "Hopefully the interpretations that come down (from HHS) in the years to come will be in line with the reality of the way we operate as ethical fund-raisers."