Too many years ago, when I was a reporter in the Illinois capital of Springfield, the governor and leading lawmakers concluded they needed to raise the state income tax. A prolonged economic recession and restrictive federal aid were bleeding the states coffers, they argued. Without more money, they predicted, important and even vital services might be axed.
The politicians won the tax increase in the end, but not before they endured lots of unpleasant scrutiny. Hosts of watchdog groups, media people and even some bureaucrats turned the microscope on state government, questioning every expenditure. How can you insist that ordinary taxpayers shell out more revenue when government is wasting money on this useless project or that grossly overpaid political appointee or these lavish trips?
Hospitals historically have not sweated under the hot lights the way public officials have had to. Their enterprises arose out of the tradition of community charity, with institutions often owned and operated by religious orders. Nobody questioned the good sisters or the good doctors or even the good professional administrators who came along later. After all, their work is purely for the benefit of the community.
Those days, you may have noticed, are retreating at light speed. Accountability and transparency have come to healthcare. Two reminders arose recently in the news: As reporter Melanie Evans told us, the Internal Revenue Service is expected to unveil its overhaul of not-for-profit reporting rules (June 4, p. 6); and reporter Cinda Becker examined a just-approved law in New Jersey that requires roughly 2,000 hospital trustees at 100 healthcare facilities throughout the state to receive certified training (May 28, p. 6).
In the first case, U.S. Sens. Chuck Grassley (R-Iowa) and Max Baucus (D-Mont.) have been pressing the IRS to revise its Form 990 to require more detailed information from the not-for-profit sector, especially hospitals and universities. The lawmakers said more specific information should be published if transparency and openness are to have any value.
Critics of the current form contend it reveals too little about lobbying, total executive compensation, joint ventures and charity care. The complaints shouldnt surprise anyone. As healthcare costs escalate and federal, state and local governments struggle to pay the bills, its only natural that people would ask what not-for-profit institutions are doing that justifies not paying taxes. When you add to that the stories of million-dollar compensation packages for some not-for-profit CEOs, executive perks and reports of the uninsured being hounded by collection agencies, its no wonder the politicians are getting aggressive.
Discontent over the status quo also led to the New Jersey hospital trustee education law. The lawmaker who authored the bill, himself a trustee, noted that the state spent more than $700 million on healthcare last year. He said the government has a legitimate interest in making sure that hospital board members are good stewards of that cash.
The state health commissioner, who had a hand in developing the law, argued that a lot of struggling hospitals are hamstrung by inefficient medical staff practices. He said board members have to ask questions and find answers.
Hospital executives today are learning what the previously mentioned Illinois politicians came to know. When you ask the community for money, whether that comes in the form of tax breaks or direct payments, you better expect some questions. And all the hospitals communitiesfrom the neighborhood to Capitol Hillwant to know what youre doing for them.