When you hear the term “nonprofit hospital” what comes to mind? Are there really hospitals out there operating as charities, putting patients before profit? If these charitable hospitals are receiving tax exempt status from the IRS, why would they be paying their CEOs millions of dollars each year?
That’s right, there are numerous “nonprofit hospitals” that appear to be wonderful charities, but are not living up to their nonprofit name. Upon further investigation, it becomes apparent that the state of New Jersey contains a myriad of “fake” nonprofit hospitals. According to IRS tax filings, these not-for-profit hospitals are actually paying CEOs millions of dollars per year. These so-called charities are nothing but a facade; they’re really just factories churning out millions for their CEOs.
Here’s a list of the 10 highest-paid nonprofit hospital CEOS in New Jersey for 2014:
- Joseph Trunfio, Atlantic Health: $4.7 million
- John K. Lloyd, Meridian Health: $3.5 million
- Robert Garrett, Hackensack University Medical Center: $3.3 million
- William McDonald, St. Joseph Health System: $2.5 million
- David Tilton, AtlantiCare: $2.47 million
- Barry Ostrowsky, Barnabas Health: $2.27 million
- Audrey Meyers, Valley Hospital: $2.2 million
- Michael Maron, Holy Name Medical Center, $2.2 million
- Chester Kaletkowski, Inspira Health Network: $2 million
- Richard Miller, Virtua Health: $1.94 million
Nonprofit hospital loophole exposed
When you ask the leaders of these nonprofit hospitals whether their CEOs are making too much, they respond with a resounding no. When pressed about why their CEOs make outrageous salaries, they always compare their salaries to what other hospital CEOs in the marketplace are making. This is precisely how these nonprofit hospitals justify their tax exempt status: They compare their CEOs’ salaries with others in the competitive market. It’s an IRS loophole that allows nonprofit hospitals to appear charitable, while concentrating millions of dollars into the hands of their CEOs.
This kind of phony justification continued uncontested until a tax court judge disagreed. Last summer, State Tax Court judge Vito Bianco ruled that the Morristown Medical Center would lose its tax exempt status because its CEO, Joe Trunfio, got paid up to $5 million in 2014 using bogus justifications for the salary and bonuses.
Read original article here:http://www.naturalnews.com/055597_nonprofits_hospital_fraud_tax_loopholes.html
Judge Bianco laid his decision out, exposing the Atlantic Health nonprofit hospital system. He ruled that the Morristown Medical Center generates “significant revenue and pay their professionals salaries that are competitive even by for-profit standards.”
Judge Bianco described Atlantic Health as “wholly self-serving” in their justification to pay their CEO up to $5 million. Morristown Hospital reached a settlement with the court and agreed to pay $15.5 million over 10 years in the form of property taxes. When the judgment came down Morristown CEO Joe Trunfio went into retirement.
Since the ruling, 35 other tax appeals have come forward from municipalities that are ready to contest their own nonprofit hospitals that are funneling millions to their CEOs. The IRS has the power to withdraw their tax exempt status.
To maintain their tax exempt status, these nonprofit hospitals hire executive compensation firms to pool together “comparables” in the marketplace, which are then used to justify the astronomical salaries paid to these CEOs.
This is just another crooked part of the medical system that reaps a profit off reoccurring treatment and insurance reimbursement. As CEOs sit on piles of cash, they are essentially getting paid for creating lifelong customers. To fix this problem both in the competitive marketplace and in the nonprofit hospitals, the system should reward hospitals and medical professionals only when they help people get well and teach them how to stay well.