Senator Grassley Goes after Non Profit Hospitals on Behalf of his For-Profit Benefactors?

Dear President Bush,

Senator Chuck Grassley, chair of the powerful Senate Finance Committee, just released his concerns about the unfair advantage non profit hospitals have by not paying taxes. His letters to the chief counsel and commissioner of the IRS clearly share his concerns about the non profit health care industry.

Last summer he joined his House counterpart, Rep. Bill Thomas chair of the House Ways & Means Committee, in shining the light on non profit community hospitals tax exempt status. Rep. Thomas held a hearing on the matter, while Sen. Grassley conducted a survey of 10 non profit systems. What was not mentioned by either candidate is each elected leader’s history of significant donations from the for profit hospital arena.

For over a decade for profit hospitals have complained about the unfair advantage non profits have by not paying taxes. What they usually fail to mention is uncompensated care. In my hometown the non profit system provides 80% of the uncompensated care while the for profit supplies 20%. For well over a decade, non profits have produced an annual report to the community detailing the benefits accrued via its’ not for profit status.

Senator Grassley wants the IRS to hone in on community hospitals and their benefits from being tax exempt. Charity care and executive compensation are among the items to be studied. To get a picture of these systems across the whole health care industry one would need to collect data from both the non profit and for profit sectors.

Hospital uncompensated care was $26.8 billion in 2004. I am sure this number has exploded the last few years with growing legions of uninsureds and the President’s plans to add millions of underinsureds via high deductible health plans. As non profit hospitals are also the country’s medical safety net, Senator Grassley’s desire that they be treated like the credit counseling industry by the IRS is ominous at best.

I know your friends at the Carlyle Group and Welsh, Carson, Anderson & Stowe appreciate the favorable position your administration is creating for the investor owned hospital industry. Senator Bill Frist, whose family has long history of running HCA, is likely also pleased. Have they sent their thank you letters to Chairman Grassley for his latest act on their behalf? If so, can you get the Justice Department to make a copy? It might come in handy later during the investigation.

They may wish to broaden their investigation beyond the two chairmen as 31 of 41 House Ways and Means committee members, and 12 of 20 Senate Finance Committee members accepted donations the last two election cycles from the Federation of American Hospitals. That is the advocacy arm of the for profit hospital industry.

I know you are aware of them as in 2001 you hired away their chief, Tom Scully to head up Medicare and Medicaid. He made his complete spin through your revolving door to a cush lobbying job specializing in for profit nursing homes! This was after entertaining numerous lobbyists in designing the new Medicare prescription drug benefit. And it is such a small world, Tom ended up as senior advisor for that health care investment house Welsh, Carson, Anderson and Stowe. Imagine that, all your friends are happy about Sen. Grassley’s move. Say hi to Tom for me!