Thursday, February 21, 2008

Columbo and Horwitz Speak Up on Dispute Re: Hospital Charity Care

Yesterday's New York Times includes an article regarding the proper measure of nonprofit charity care.  According to the article, "the 1.9-million-member Service Employees International, argues that a Boston hospital, Beth Israel Deaconess Medical Center, violated [Sarbanes Oxley accounting] standards by including its losses from bad debts in its tally of the charity care it provides."  Beth Israel is the teaching hospital for the very well endowed (indicating a measly $3.6 Billion endowment, no wonder uncollected bad debt is charity!) Harvard Medical School, by the way.  SEIU acknowledges that Sarbanes Oxley does not literally apply to nonprofit hospitals but it still argues that counting uncollected hospital bad debt as "charity" care is misleading.  The article quotes two prominent tax law professors, John Columbo (Illinois) and Jill Horwitz (Michigan) as confirming that Sarbox is generally inapplicable to nonprofit boards.  Still, Horwitz seems to applaud the "creative" efforts SEIU is using to encourage further discussion by nonprofit hospital boards. 

Massachusetts law, said Jill R. Horwitz, a law professor at the University of Michigan, does not require nonprofits’ directors to behave exactly like directors of for-profit companies, although it does require them to apply their knowledge in a general manner. Still, Professor Horwitz said, the union’s approach is “very aggressive, creative lawyering, and once they’ve sent the letter, I think the board members do have a duty to discuss the issues it raises with the executives of the hospital to make sure everything is in order.”

We all know what Columbo thinks about "hospital charity care".


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Hi, please do better research. BIDMC is not part of Harvard and does not have access to that large endowment. Also, we are one of several teaching hospitals in the Harvard system, not the only one.

Posted by: Paul Levy | Feb 22, 2008 8:31:23 AM

Thanks for your comment. I would not call it a "clarification" though. After all, one cannot have it both ways. BIDMC's own website states somewhat prominently that it is a "Teaching Hospital of Harvard Medical School." It uses Harvard's crest, no doubt with Harvard's permission or license. Perhaps that web statement is made in hopes that the reader assume the association that my post makes. That is, you wish to be associated with Harvard Medical School for its good reputational benefits; but then your comment seeks to disavow, on Harvard's behalf, an association with respect to any bad reputational impact. Indeed, your own comment is internally inconsistent. I also know from my days as college and university counsel that a university supports its teaching hospital locales financially. The only limitation on the medical school's endowement, I would imagine is Harvard's own volition. So yes, more research is necessary. With respect, I am just not sure which one of us needs to do the research.


Posted by: Darryll Jones | Feb 26, 2008 7:23:28 AM

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