Few situations strike as much fear into the hearts of not-for-profit healthcare executives as when an inquisitive reporter says to them, "I'd like a copy of your Form 990, please." They know why you're asking. You know why you're asking. You want to print their salaries. You see it as a reader service. They see it as an invasion of privacy.
In 1990, Modern Healthcare published its first-ever story on what healthcare associations were paying their top executives. At that time, the disclosure rules issued by the Internal Revenue Service required tax-exempt organizations to make their 990s available for public inspection at their place of business only. They were not required to make a copy, give you a copy or send you a copy. The spirit of the law was disclosure, but many organizations discouraged the release of the sensitive information in their 990s by following the letter of the law.
Many of the organizations that I needed information from for that story 12 years ago were based in the District of Columbia area. "We'd be happy to show you our 990, Dave," they said. "When you come to Washington."
Always happy to spend the magazine's money, I called their bluff and flew to Washington and rented a car. One uncomfortable visit was to the American Group Practice Association, which is now the American Medical Group Association. I drove to Alexandria, Va., and waited in the downstairs lobby of the AGPA for quite a while before a woman I had never met brought down a 990 that I could briefly take a peek at. Brrrrr.
The most uncomfortable visit was to the Catholic Health Association. The CHA let me sit in an empty boardroom by myself, apparently to reflect on the sin I was about to commit. Eventually, three solemn men walked in. I think one was a priest; the second, a lawyer; and the third, the chief financial officer. I wasn't sure whether I was going to be read my last rites, sued or audited. Maybe all three. I copied the information I needed and got out of there as fast as I could.
Much has changed since then. Many tax-exempt healthcare organizations dropped their "just trust us" veil of secrecy as the public demanded to know what community benefits it was getting in return for lost tax revenue. Others began using their 990s as a public relations tool to explain how much they do for their communities. The IRS stiffened its disclosure rules, requiring tax-exempt organizations to provide copies of their 990s upon request. New independent databases of 990s sprung up.
So why publish salaries? First, it's interesting. Everyone wants to know what everyone else makes. But more importantly, our readers are members of these organizations, and compensation is a proxy for how well the executives are representing members' interests. The health insurance lobby stopped national healthcare reform in the early 1990s, and it iced federal patients' rights legislation in the late 1990s through today. As reporter Jeff Tieman disclosed in his Feb. 11 cover story (p. 6), three of the five highest-paid healthcare association executives in 2000 worked for the Blue Cross and Blue Shield Association, the Health Insurance Association of America and the American Association of Health Plans.
Conversely, when an executive abruptly resigns and his or her organization insists that the departure was voluntary, the 990 may say differently by revealing a lucrative severance arrangement and suggesting that the executive may not have been performing up to member expectations. That has happened on more than one occasion at the American Hospital Association over the years.
The 990s reveal in great detail how an organization generates its revenue and spends its money, including compensation paid to top executives. Since that first story in 1990, our coverage of association salaries admittedly has been poor. Not only are we going to do this annually, we're going to expand beyond the initial list of 20 organizations that Tieman reported on to include many more tax-exempt healthcare trade associations. You deserve to know how your dues money is being spent.