Chicago Not-for-Profit Hospital Experiences Difficulty Fulfilling Charity Mission
The Wall Street Journal on Friday examined the experience of Chicago's Mount Sinai Hospital, as it "tries to live up to its obligations as a nonprofit hospital" and "tackle its community's social ills."
The hospital opened in 1919 to provide health care services to Eastern European Jewish immigrants and provide a place for the city's Jewish doctors to train and practice. In the 1960s, Lawndale, the hospital's neighborhood, underwent a demographic shift. The black residents who moved into the neighborhood initially went to hospitals other than Mount Sinai, "which had become known as a white hospital," and the hospital experienced a serious decline in revenue, the Journal reports.
In the 1970s, hospital executives and board members decided to remain in the neighborhood instead of moving out to the suburbs and began community outreach as a way to maintain and attract patients. The hospital now runs programs to address street violence, smoking cessation and teen pregnancy. More than 90% of those living in North Lawndale are black, while about 85% of South Lawndale residents are Hispanic. According to the Journal, the area around the hospital has high rates of heart disease, infant mortality, asthma and HIV.
Not-for-profit hospitals like Mount Sinai "are usually located in inner cities and not anchored to nonprofit systems, nor can they rely on government support the way county or state hospitals can," the Journal reports. Not-for-profit hospitals are exempt from local, state and federal taxes and must provide charity care and other community benefits in return. Mount Sinai is the safety net hospital for many of the indigent who live in Chicago; 72% of the patients it treats are either uninsured or enrolled in Medicaid.
The hospital has had both small net profits and annual losses -- as high as $15 million -- in the last five years. In 2007, it spent $16.6 million on charity care and $16.2 to subsidize health care specialists who normally would not work at the hospital because reimbursements are low. Many of the hospital's patients are treated for gunshot wounds, which can cost up to $12,000 to treat. According to the Journal, such patients "rarely have health insurance or qualify for Medicaid." The hospital's financial situation means that it has had to delay purchasing new equipment or making other upgrades (Martinez, Wall Street Journal, 12/12).