One might think that operating a non-profit ‘public charity’ foundation would result in transparency while operating as a for-profit corporation would shield a company from the public eye. Furthermore, one might anticipate that a non-profit foundation would bring greater financial benefits to the public than a normal corporation. But in the case of Lancaster General Hospital (LGH), both suppositions would be incorrect.
The administrators of LGH have erected a curtain around its activities, prohibiting monitoring of its meetings by the public or media. Furthermore, it provides no reports other than an annual 990 as required by the federal government and it seeks to conceal the day, time and place of the annual public meeting also mandated by federal regulations.
A corporation traded on a stock exchange is required to be transparent in much of its activities, publishing a ‘prospectus’ whenever it sells additional stock, reporting earnings quarterly, promptly announcing any important developments such as mergers and acquisitions, and providing a detailed report for stock holders once a year. Furthermore it must hold a well publicized annual meeting at which time stockholders may make suggestions, criticize and present motions. All of this is meant to protect the investors.
According to Wikipedia, “Federal corporate income tax is imposed at graduated rates. The lower rate brackets are phased out at higher rates of income. All taxable income is subject to tax at 34% or 35% where taxable income exceeds $335,000.” It can be assumed that a combined federal and Pennsylvania state income tax would cost LGH at least $35 million to $40 million.
In addition “Shareholders of corporations are taxed separately upon the distribution of corporate earnings and profits as a dividend. Tax rates on dividends are presently lower than on ordinary income for both corporate and individual shareholders.” Current income taxes on dividends for most individuals range from 10% to 15%.
Thus were LGH a publicly traded corporation, its typical $100 million in earnings would result in about $40 million to $45 million in taxes for public use.
The actual situation in Lancaster is that LGH pays no corporate income taxes. There are no stockholders so there are no personal income taxes either. It does not generate any taxes, let along $45 million!
What is did do in 2007 is contribute about $2 million in grants and in 2008 about $6 million in grants. (Some of which grants were contributions in lieu of real estate taxes, which any corporation would have to pay in full!)
In short, LGH’s status as a ‘public charity’ foundation both shields it from public monitoring and, after grants, saves it around $40 million per year!
This is not a negative reflection on the excellent medical services provided by the dedicated health care workers at LGH. Rather this is an indictment of the executives and board members who run LGH as a private fiefdom, intimidating its professional staff, and ignoring the multiple needs of the community.
LGH should go for-profit, like say Health Management Associates, the billion-dollar owner of Heart of Lancaster and Regional. You surely must be an HMA shareholder, given that you never question its commitment to our community.
It’s doubtful they would serve the public better as a tax payer. LGH wouldn’t have to worry about conducting programs in the community to remain tax-exempt. Surely its property taxes would be lower than what it’s giving the city and school district – and it could challenge its assessment like Armstrong, Fulton and HMA regularly does.
They could dump programs that lose money, sell its college, close its city clinics, stop funding city development and focus on creating shareholder value (i.e. makin’ money for Wall Street investors).
And they could hold their board meetings totally in private. Careful what you wish for, LGH just might take you up on that idea before healthcare reform really gets going.
Mr. Field,
I am following up on my email sent to you on Sept. 9, which said: I noticed on your website that you would like to know the date and time of the annual Open Meeting of the Lancaster General Hospital Board of Trustees. It will be held Nov. 18, beginning at 3 p.m., at Lancaster General Hospital. As we do every year, we will advertise the Open Meeting in Lancaster Newspapers, at least a month before the meeting.
Sorry for the delay in a reply, but we did not receive your emails. To avoid any future delay, feel free to call me anytime at the office: 717-544-5054 or my cell phone: 717-468-8303.
Thank you.
John Lines
Editor’s response: All three e-mails from Field to Lines were addressed to [email protected], the same address as on the above posting.
Lines above message was sent at 5:56 PM on Sunday. He received a fourth request for the information as of 5:13 PM, forty-three minutes earlier.
Neither NewsLanc or Field received a September 9th message from Lines, not does one appear under “New” or “Old” messages.
Tom Beeman, President of LGH, was copied by NewsLanc on its messages to Lines.
It is wonderful to have an alternative newspaper. Absolutely wonderful!! NewsLanc is not, as John Lines, self-servingly seems to believe, the private “website” of its founder and editor. Many people both enjoy reading Newslanc as well as depend on it for public information that would not, otherwise, be available.
I love LGH and we are lucky to have it here but that is beside the point when considering their potential contribution to the city and school district, which are institutions as vital to Lancaster as LGH. High Industries and Lancaster newspapers are also a great local institutions, but that is also beside the point when considering the roles each played in the greatly flawed Convention Center history.
The question posed by this newspaper (or so it seems to me) is; given the extraordinary profits (excess income over expenditures, if you will), is a sufficient share coming back to the schools and other community services of Lancaster? That is a legitimate question and is not being explored, in nearly the detail it deserves, by other local newspapers. A “wag of the tail” from here for NewsLanc.