There are just 12 days left until Christmas. Yes, the season of giving is upon us, unfortunately this year, hospital philanthropic foundations didn't feel too much of that giving spirit—donations for hospitals are lower than last year and the forecast is a slow, if any, increase, for next year. However, there are strategies CFOs can employ at their facilities to see some changes in their fundraising divisions.
Presently, philanthropic efforts nationwide aren't booming. So, it's not surprising that healthcare philanthropy has also had difficult year. The Association for Healthcare Philanthropy (AHP) reports that its members nationwide have seen donations fall off considerably since mid-2008, and it's not clear when they will pick back up again.
"It's overwhelming if all of a sudden your funds dry up," says AHP President William C. McGinly, PhD. "When you're faced with it, you've got to get creative with your funding."
Philanthropy, especially at nonprofit hospitals, has long been a strategy for supplementing capital budget needs. However in recent years, some finance executives are finding ways to make fundraising an integral part of their financial planning efforts—recognizing that an operating budget funded in part by philanthropy can strengthen the overall bottom line.
However, not all facilities have set up strategic philanthropic divisions, and that amounts to financial loss that few can afford these days. The AHP reports that nearly three-out-of-four hospitals' philanthropy efforts have been squeezed by the recession, and the "giving forecast" at most hospitals is projected as lower than in years past.
William S. Littlejohn, Pacific regional director for AHP and CEO and senior vice president for Sharp HealthCare Foundation, knows that "squeeze" only too well. The Sharp HealthCare Foundation raises money for seven acute-care and specialty hospitals in San Diego County. Three of the foundations within the health system have raised a combined average of approximately $20 million per year over the past five years. Sharp philanthropies have raised about $100 million in the past five years and turned over about $92 million in cash over the past seven years.
However, Littlejohn says while Sharp's foundation managed good results through the end of 2008, by 2009 they felt "a contraction of about 20%, especially in large gifts." Philanthropic donations fund about 10% of the capital plan for Sharp Healthcare, so while the fundraising drop isn't positive, it hasn't stopped projects at Sharp Healthcare.
"Sharp is always rolling forward with the long-term plan. We had four good years and then one contraction, so we aren't taking a huge hit," he says.
Other philanthropic divisions aren't faring nearly as well as Sharp during the economic recession. The AHP reported earlier this year that nearly one-third of negatively affected hospitals are postponing the purchase of new equipment funded by philanthropy. Moreover, 20% of survey respondents said they were scaling back on areas, such as events and capital campaign programs.
Eight Strategies for CFOs Philanthropic Divisions
Though scaling back has become a fact of the recession, CFOs who take a different tack with their philanthropic divisions may find a strong strategic partner waiting to improve their bottom line.
1. Decide if it's fundraising or development. Fundraising is designed to focus on the next cause, says John B. Donovan, executive director at Dubuque Mercy Health Foundation in Dubuque, IA, part of the Trinity Health Network. The foundation, which was created in February 2008, gathers charitable contributions for the 288-bed, Catholic nonprofit Mercy Medical Center. Getting the foundation off to a swift start was difficult in the down economy, though Donovan says that realigning the focus to look at the larger picture for the facility is the key to long-term success.
"You may not develop long-term donors if your primary goal is to raise money for the latest project," Donovon says. Instead, he advocates for development, in which a regular team is used to cultivate donors and looks at the broader scope of capital projects for the entire facility and works toward larger goals. It's a tactic Sharp Healthcare Foundation has employed successfully for nearly eight years.
2. Use performance measures. You measure every other aspect of your finances, if you aren't tracking performance measures for your philanthropy division in the organization's monthly "dashboard" reports, then start. McGinly says when evaluated on net return philanthropy is sometimes the hospital's most valuable revenue producer.
Sharp HealthCare uses these measures, and Littlejohn says they take a strategic approach by reviewing the hospitals five-year capital plan and the five-year cash projection, then they determine how the foundations efforts will fit into the larger plan for the facility.
"Our approach is a bit of a departure from other organizations who may look at philanthropy [donations] as a 'nice thing' to have," says Donovan. "We want to know what role our team will play in funding the long-term projects, so we can articulate this to our donors."
3. Get the right tools in place. CFOs can be instrumental in helping the fundraising team evaluate information systems to track their financials. The information that is gathered can go a long way toward helping you set up performance measures and establish five-year projections.
4. Educate your team. Your finance team may need a better understanding of what the fundraising team does for the hospital. Have the philanthropy team explain the multitude of reasons people give to hospitals and the value their efforts bring to the bottom line. By ensuring your team has a clear understanding of the value of the donor-hospital relationship, they will be better able to support philanthropy.
5. Give at the office. If you want to show your team to value your philanthropic efforts, make a personal donation. Whether it's via a check or through event attendance, the more efforts you make to support philanthropy at your hospital, the more likely your team will follow suit.
6. Keep the team intact. In this economy, cost reductions are important and that means sometimes CFOs need to reduce staff. This is not the department to target first. Rather than cut personnel, first look for other ways to reduce their costs, such as reducing events.
"You have to keep the fundraising office as strong as you can and not lose seasoned people," advises McGinly. "You don't want to rebuild that infrastructure when the [economic] shift comes around."
McGinly continues that if you have a capital campaign that is currently being delayed and you cut your fundraising department to the core, "you are going to have some real rebuilding problems and that will impact the community as things start to turn around." Philanthropic relationship-building is no easy task and donors are more inclined to give to people and facilities that they have developed a relationship.
"There's always money for projects that are worth doing, you just have to make a case to the donors as to why the community will be better off when it's completed. But to do that you need to have the right people ask them for the donation, just as you need to have the right project for them to support," says Donovan.
7. Stretch the idea of donation projects. Certainly calls, letters, and events go a long way toward keeping you in contact with donors, but there are less conventional fundraising efforts that facilities can turn to, as well. For instance, Sharp offers potential donors a deferred gifts program called the Life Estate Gift Annuity. The program allows some people to donate their homes to the health system and live in them for the rest of their lives. Sharp takes ownership of the home when the donor dies and sells the property.
The majority of candidates are over 70 years old and either own their home or are close to it, and Sharp pays the donors an annuity based on the value of the house.
8. Say "Thank You." Now more than ever those two words mean a lot. For nearly seven years, Sharp's philanthropic team has focused on gathering larger numbers of smaller donors. The effort proved fruitful when the economy dipped. Littlejohn explains that all former patients are potential donors, and many make donations to express their thanks to the hospital. But the gratitude shouldn't stop with your donors. Personal "thank you" calls or notes from the CFO or CEO of a facility go a long way toward helping to build a strong relationship with your donor community. "Call them up and say 'Thank you.' Let them know their donations are touching lives," says Donovan. "Give them examples of positive ways their gifts will be used."
It's the season of giving, but if you haven't given your philanthropic division a once over in quite a while, your facility may be truly missing out on a great opportunity to not only live up to their mission, but also to bring in some greatly needed funds for your future capital projects.
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This weekend, the Senate sat in a waiting pattern for healthcare reform—waiting for the Congressional Budget Office to complete a scoring of what several alternate proposals to the public insurance option will cost. If the numbers are there with the plans—showing no increase in deficit spending—will Senate Majority Leader Harry Reid (D-NV) insist on pushing ahead quickly to meet a deadline of passing a reform bill before Christmas?
Maybe he will. President Obama, speaking on CBS' "60 Minutes" on Sunday night, expressed confidence that a bill will be coming through:
"I think it's going to pass out of the Senate before Christmas," Obama said.
However, Reid will need to answer the major question: Are the 60 votes there to ensure passage? While the opt-out public option seems to be a thing of the past, new proposals—such as permitting individuals ages 55 to 64 without insurance to purchase Medicare coverage—have created debate among the senators.
One senator who appears unmoved by the Medicare proposal is Sen. Joseph Lieberman (I-CT), who has traditionally voted with the Democrats and is considered one of the 60 votes needed for bill passage. He has repeatedly stated that he would not vote for a bill with a public option. And yesterday, speaking on CBS' "Face the Nation," he said several areas of the current bill need to be removed as well—including the Medicare buy-in.
"There's a good basic bill in here,” Lieberman said, adding, parts of it can be supported by 60 senators, including some Republicans. “But we've got to stop adding to the bill. We've got to start subtracting some controversial things," Lieberman said. "I think the only way to get this done before Christmas is to bring in some Republicans who are open minded on this—like [Senator] Olympia Snowe" (R-ME).
On Friday, a group of 10 senators from states whose providers have consistently received lower reimbursements from Medicare (including Minnesota, Oregon, Vermont, New Mexico, Washington State, Vermont, and Wisconsin), sent a letter to Reid—saying that "creating a Medicare buy in program will exacerbate the existing funding inequity."
They said that Medicare is spending over a third more for each Medicare beneficiary in some states compared to theirs and that "an antiquated payment formula" has "penalized rural providers and greater medical efficiency" in their states—forcing many physicians to stop accepting or limiting the number of Medicare patients they serve. They called for ways to "incentivize providers to see more Medicare patients."
The issue of cost containment has continued to circle around the bill and came to a head last week when the Centers for Medicare and Medicaid Services (CMS) chief actuary noted that national health expenditures under the bill could increase by $234 billion between 2010 and 2019.
This issue has been addressed in part in the past week by Lieberman, Sen. Susan Collins (R-ME), and Sen. Arlen Specter (D-PA) through an amendment that would move up the starting times for bill provisions aimed at lowering costs. For example, penalties aimed at hospitals to stop acquired infections that could have been prevented would begin in 2013—two years earlier than stated in the bill.
Also, a group of 11 freshman Democratic senators announced last week a set of proposals designed to reduce healthcare spending, promote efficiency, and expand authority for a new commission charged with identifying Medicare savings.
One of the major issues Reid still has to address is be abortion. Sen. Ben Nelson (D-NE), also speaking on "Face the Nation," again said that said he "can't support the bill with the ... the abortion language that's there." While his amendment proposed last week "failed ... I do know that there are some who are, right now, trying to find language that might be compatible with the Stupak language in the House. That's a tall order for people. And I'm not prescribing ahead what they may be able to do."
A Senate plan to cut Medicare to pay for an overhaul of the health system would threaten the profitability of roughly one in five hospitals and nursing homes over the next decade, according to an analysis by Rick Foster, chief actuary for the Centers for Medicare and Medicaid Services. In a report, Foster questioned the sustainability of many of the proposed cuts, the major source of funding in a plan to extend insurance to more than 30 million additional Americans, the Washington Post reports. The proposal to reduce payments to hospitals and other providers to force them to adopt more efficient practices could prove particularly problematic for institutions that serve large numbers of Medicare patients, Foster wrote in the analysis.
Republicans seized on a report by government actuaries that said the Senate health bill would cause national health costs to rise, the Wall Street Journal reports. The report, compiled by the chief actuary at the Centers for Medicare and Medicaid Services, estimated that total health costs in the U.S. would be $234 billion higher than if the bill weren't passed. The report said measures in the bill to restrain Medicare costs and trim generous insurance plans "would have a significant downward impact on future healthcare cost growth rates," but said those gains would be outweighed in the initial years as newly insured people sought to get more healthcare, the Journal reports.
Senate Republicans on Dec. 12 sought to increase the pressure on Democrats over a new actuarial report suggesting that major healthcare legislation would increase national spending on medical care rather than lower costs, the New York Times reports. At a news conference, Senator Mitch McConnell of Kentucky focused attention on the internal disagreements among Democrats that remain an obstacle to them pulling together the 60 votes needed to approve the measure, reports the Times.
Two key senators raised concerns over one aspect of a proposed compromise on the healthcare bill, putting up a hurdle to passage of the measure in the Senate, the Wall Street Journal reports. The proposal to open Medicare to individuals below the age of 65 was a part of a compromise reached among senior Senate Democrats. Under the compromise, the bill wouldn't include a government-run insurance plan. Sens. Joe Lieberman (I, CT.) and Ben Nelson (D, NB) voiced strong doubts about the Medicare proposal, which would allow individuals as young as 55 to buy into the program.
In a setback for Democratic leaders, Senator Joseph I. Lieberman, independent of Connecticut, said that he would vote against healthcare legislation in its current form. The bill's supporters had said earlier that they thought they had secured Lieberman's agreement to go along with a compromise they worked out to overcome an impasse within the Democratic Party. But Lieberman told the Senate Majority Leader Harry Reid to scrap the idea of expanding Medicare and abandon any new government insurance plan or lose his vote, the New York Times reports.
A high-ranking surgeon at Boston-based Brigham and Women's Hospital who was sued for sex discrimination two years ago will resign from his position Dec. 31. Arthur Day, MD, will step down as chairman of the neurosurgery department, the hospital's president told staff in an e-mail. John Popp, MD, will take over as chairman of neurosurgery at the hospital.
New Jersey Attorney General Anne Milgram has recommended banning doctors licensed in the state from accepting gifts that don't directly benefit their patients, and requiring them to report consulting fees greater than $200. The recommendations are subject to further review, and it could take six months or more for the Board of Medical Examiners to amend the rules, according to a spokesman for the Division of Consumer Affairs. New Jersey has one of the nation's largest concentrations of pharmaceutical firms, and Milgram said she hoped the proposed rules would provide a model for other states, the Philadelphia Inquirer reports.
By obtaining data from pharmacies and health insurers, drug companies learn the prescribing habits of thousands of doctors. That information has become not just a powerful sales and marketing tool for the pharmaceutical industry but also a source of growing concern among some elected officials, healthcare advocates, and legal authorities, the Los Angeles Times reports. What worries some government officials and patient advocates is that keying sales tactics to an individual doctor's prescribing preferences—known as data mining—may distort decision-making and fuel prescribing of new, high-cost drugs, the Times reports.
