The uncertainty in the minds of some donors about what is coming next is creating a pause. (William McGinly, Ph.D., Association for Healthcare Philanthropy)
We know that the Supreme Court decision on healthcare reform did not eliminate uncertainty about our system of healthcare. We know we need to cut costs further. We need to put the most effective network structures in place and significantly enhance IT. “Society’s explicit message may just be to bring down costs. But the message, now a scream, may prick our sector to change the way we deliver and manage our care. Our providers may do so to save costs, but a more rational delivery of care may come along with it,” said Michael Connelly of Catholic Healthcare Partners in a recent article. (Philip Betbeze, “CEOs: Now It’s Time to Address Affordability,” HealthLeaders Media, June 29, 2012)
Not only must hospitals and systems focus on structural changes. They also must deal with the uncertainty surrounding Medicaid. In the article cited above, Michael Connelly noted, “Unless payments change, we can’t afford costs of expanded coverage.” We need to move from our traditional payment structures to value-based payment. And we can’t forget the possibility of additional Medicare and Medicaid cuts looming on the horizon due to the federal budget deficit.
Imagine how this uncertainty spills over into the donor world.
In the iProtean course Philanthropy, William McGinly, Ph.D., Marian Jennings and Elizabeth Mills, Esq., discuss the impact of the health reform law on philanthropy, as well as the importance of philanthropy for today’s hospitals, different fund development models, the role of trustees, the role of physicians, fundraising strategies, restricted versus unrestricted funds, and how tax reform may affect your organization’s philanthropic efforts.
William McGinly, Ph.D., Association for Healthcare Philanthropy
Healthcare reform is presenting a lot of challenges for healthcare and philanthropy as well. The positive about this is that one of the intentions of healthcare reform is to cover a lot more people . . . it has also introduced uncertainty in the minds of donors about the changes that are going to take place. How will it be different? How will it affect me? Will the hospital in my community still be there? Will it be delivering care the way it is now? Is what I’m supporting now through my philanthropy going to grow? Is that crucial to the community? How will that affect us?
Elizabeth Mills, Esq., Proskauer
Some people will say that because we now have healthcare reform we won’t have any uninsured people—any people who need financial assistance—and we won’t need philanthropy. I think we can all foresee that that is not precisely what is going to happen. We will still have those who can’t afford insurance, still have those who don’t buy insurance and those who aren’t required to buy insurance, as well as undocumented persons who may not be able to obtain insurance. So there will always be a role for hospital philanthropy, both to serve the people who can’t pay and to enhance hospital services.
In addition, the health reform act has many exciting opportunities for demonstration projects, for trying new ways of doing things. And some of these require that in addition to getting government money, you must put up some of your own money as well. So that is another role for philanthropy, specifically in relation to the health reform process.
Marian Jennings, M. Jennings Consulting
We may see a resurgence of the importance of philanthropy for hospital financial viability and, specifically, for major projects for the hospital. When hospitals first started as non-profit organizations they often had benefactors. We then got into the world of complex payment—Medicare and Blue Cross and many different insurance companies—and we started relying appropriately on those who used our services to pay for the hospital and allowed us to flourish.
But in the world we are facing, with cutbacks on payment from the federal and state level, Blue Cross plans, other private insurance plans, many hospitals will not be able to generate internally or through borrowing sufficient capital to meet their needs for growth and development to invest in new technology, to put in that new information system, to go to a more modern emergency room. They will have to rely on philanthropy.
William McGinly, Ph.D., Association for Healthcare Philanthropy
Tax reform is an area that both hospital trustees and foundation trustees need to be aware of and they need to keep a constant focus on what is happening. One element that we see occurring consistently is the proposal to reduce the deductibility of gifts from 33 or 35 percent to 28 percent. We find that this proposal will have a broad impact across all not-for-profit arenas. We know that people will give to a hospital or the charity of their choice based on their interests and their experience. They are not going to give because of the tax deduction, but they will give more [when donations are tax deductible] because that is an incentive the government is providing. We have estimated that reducing that deductibility in the healthcare arena may result in a loss of nearly a billion dollars.
What you have to remember is that this isn’t a benefit for those who are making the gift. It is a benefit for those who are receiving services. If I’m giving less at one level, there will be fewer dollars available to support the services of the needy and those programs that are essential in communities, and that is the key element. So I would suggest as a hospital executive, as a hospital board member and a foundation board member, you keep your eye on the ball about what is going on with tax reform. Let’s not introduce disincentives for donors. Let’s keep it positive.
For a complete list of iProtean courses, click here.
iProtean Symposium & Workshop
Mark the Date!! October 10 – 12, 2012 at The Lodge at Torrey Pines, La Jolla, CA. Faculty: Barry Bader, Monte Dube, Esq., Lisa Goldstein, Dan Grauman, Marian Jennings and Brian Wong, M.D. For more information, click here.
For more information about iProtean, click here.