Social Cost of Boston Teaching Hospitals' Tax Breaks Too High; Reforms Needed

Anyone who has had questions about how Boston's multibillion dollar teaching hospitals (a.k.a. "academic medical centers") can remain nonprofits while acting like for-profit corporations towards their un-unionized labor force - or remain non-profits while not doing their fair share to provide affordable healthcare to everyone that needs it in our fair metropolis - will find the new report by Community Labor United most illuminating.

CLU, a coalition of community and labor groups whose mission is "to protect and promote the interests of working class communities in the Greater Boston region," has just released "The NonProfit City:The Impact of Boston’s Teaching Hospitals on Our Community." This major examination of Beth Israel Deaconess Medical Center, Brigham and Women’s Hospital, Children’s Hospital Boston, Dana Farber Cancer Institute, Massachusetts General Hospital, St. Elizabeth’s Medical Center and Tufts Medical Center, demonstrates that these institutions are now essentially non-profit in name only - and actually leech resources from Boston as effectively as Bernie Madoff recently fleeced his investment clients ... and with roughly equal moral turpitude.

For all the talk of the "value added" to Boston's economy and reputation by academic medical centers, the NonProfit City report found that:

• Despite the City of Boston’s intense Payment in Lieu of Taxes (PiLoT) efforts, the AMCs as a group paid only one-quarter of the cost of providing them with essential City services such as police and fire. Their payments totaled only 6% of what the AMCs would owe if they were not tax-exempt. Boston residents and other businesses are paying at least $12 million a year to cover the gap between what these institutions pay in PILOTs and what it costs to provide them with essential city services. This taxpayer subsidy would pay for 151 Teachers or 115 Firefighters or 98 Police Officers.

• If the AMCs were not exempt from paying property taxes, the additional $60+ million that they would pay to the City of Boston would pay for four times that many Teachers, Firefighters or Police Officers, and in fact would close almost half of the $140 million budget gap the City currently faces.

• While the AMCs are among Boston’s largest employers, two-thirds of hospital occupations do not pay a wage that can support a family of three in Boston.

• In FY07, Massachusetts taxpayers spent $9.4 million on MassHealth, the Uncompensated Care Pool services and Commonwealth Care to provide health care for 8,000 employees of the Boston AMCs and their dependents.

• The Boston AMCs do not begin to meet the proposed federal standard of spending 5% of their revenue on uncompensated charity care for low-income patients. Over the past six years, none of the Boston teaching hospitals has provided even half of the level of charity care suggested by proposed federal legislation. In 2007, none of them met even 10% of the proposed federal goal, spending less than 1/2 of 1% of patient revenues on uncompensated charity care.

• These failures cannot be explained by a lack of resources: although they do not term them “profits,” Boston’s AMCs have annual surpluses totaling hundreds of millions of dollars. There is no credible evidence that the AMCs cannot afford to pay more equitable and self-sustaining wages for their workers and to provide more generous uncompensated charity care, just as there is no credible evidence that they cannot better support a fair share of essential municipal services.

We don't have a whole lot to add to these findings except to say that we believe they provide ample grounds to call for the reform of non-profit academic medical centers and the renegotiation of their PiLoT agreements with the City of Boston - with an eye towards redressing all the grievances uncovered in CLU's report.

CLU has done a fine job on this and many related efforts and deserve Open Media Boston viewers' support.

Check out their website at http://massclu.org, read their full report and find out how you can lend them a hand.