Akron’s hospitals spent nearly $28.1 million last year providing free or less expensive charity care to patients who couldn’t afford their medical bills.
The three health systems also paid six- or seven-figure salaries to their high-profile doctors, including a few who made nearly as much or more than the hospital chief executives.
The nonprofit hospitals provided a glimpse into their financial health, executive compensation and charity policies in recent public filings required by the Internal Revenue Service.
Tax-exempt organizations are required by the IRS to complete these annual disclosures, also known as the Form 990. This year’s filings, which were due in November, cover hospital business operations for 2010.
Along with being the region’s biggest tax-exempt organizations, Summa Health System, Akron Children’s Hospital and Akron General Medical Center are among Summit County’s largest employers.
Starting with the 2010 forms filed this year, nonprofit hospitals must fill out additional information known as a “Schedule H” that outlines the charity care and other community benefits they provide.
The new paperwork is required by the federal health reform law for nonprofit hospitals to prove they deserve to maintain their tax-exempt status. The requirement comes as nonprofit hospitals nationwide are under increasing pressure to show how they earn their tax exemptions.
“Hospitals welcome the opportunity to tell the story to their communities about all the different ways they are serving their communities,” said Mary Yost, spokeswoman for the Ohio Hospital Association. “It’s not just in charity care that they provide. It’s in the medical research that they engage in that leads to better treatment and cures. It’s their work in training physicians to make sure they’re going to be there in the future to care for people when they need medical care. It’s providing some of the resources to help people be healthier and reduce their dependence on medical care.”
Community benefits
Last year, Children’s spent $65.3 million — roughly 15 percent of its expenses — providing financial assistance and other benefits at cost to the community, according to the hospital’s IRS filings.
Those items include free care or care at a reduced cost, care, services that aren’t fully covered by Medicaid and other government programs, community health programs, contributions to community groups, education and research.
Children’s actual costs to care for patients covered by the state-run Medicaid program exceeded payments by nearly $54.1 million in 2010, accounting for more than 12 percent of the hospital’s expenses, according to the filing.
“I think it’s good for us to have this data to prove that we’re entitled to tax-exempt status, both from a federal and state standard,” said Shawn Lyden, executive vice president for Children’s. “I think it paints a very clear picture.”
Likewise, Akron General spent nearly $43.5 million — 10 percent of its total expenses — on financial assistance and other community benefits. About $11.2 million was spent on charity care to poor patients.
Akron General Medical Center's filings include Edwin Shaw Rehabilitation Institute in Cuyahoga Falls.
Summa Health System spent about $91.2 million — 9.5 percent of its expenses — on community benefits, including more than $14 million in charity care.
Summa’s fully owned hospitals covered in the filing include City, St. Thomas, Barberton and Wadsworth-Rittman.
Financial forecast
Despite the region’s economic challenges, Akron’s hospitals ended 2010 in the black financially.
Summa’s revenue exceeded expenses by $31.7 million, for an operating margin of about 3 percent.
Akron General Medical Center’s revenue exceeded expenses by about $8 million, resulting in an operating margin of 1.7 percent.
Parent company Akron General Health System posted a loss of about $1 million on revenue of $854,207, according to IRS filings. The health system's filings reflect investment income and the costs of providing health screenings to the public, not hospital operations, Akron General spokesman Jim Gosky said.
Revenue at Children’s exceeded expenses by about $35.3 million for a 7.4 percent operating margin.
Top salaries listed
As part of the annual filings, the hospitals disclose the salaries for executives and directors, as well as the five highest-paid employees.
Children’s President and Chief Executive William Considine received compensation and other benefits totaling $1,560,659 in 2010.
Thomas J. Strauss, president and chief executive of Summa Health System, received a total compensation and bonus package worth $1,408,062 last year.
For Akron General, 2010 was a year of leadership transition, with a former, interim and current leader all receiving executive pay.
Alan J. Bleyer, who retired as the hospital’s leader in 2009, received $677,267 in compensation. Michael Rindler, a national health-care consultant who was interim chief executive and continued in a consulting role through the year, made $983,744.
Vincent J. McCorkle, who took over as president and chief executive on July 1, 2010, received $568,605 in total compensation last year.
Nonprofit hospital executives could make substantially more if they worked in for-profit industries, Yost said.
“A million dollars certainly is a decent package, but it’s not the highest thing that these people could command,” she said. “We’re blessed that there are people who want to work for a nonprofit that has the mission of serving its community and they’re not just in it for the money.”
Last year’s highest-paid Akron-area hospital employee identified in IRS filings was Dr. Justin Lavin, a maternal-fetal medicine physician who received $1,694,625 in compensation before retiring at the end of 2010 from Children’s. His compensation for 2010 includes a year of severance pay he received as part of his retirement, Lyden said.
Other top-paid employees at Children’s were Dr. Anton Milo, director of ear-nose-throat, $1,361,981; Dr. Roger Hudgins, director of neurosurgery, $1,214,573, Dr. Philip Smith, director of the Heart Center, $1,097,193; and Dr. Dennis Weiner, orthopedic physician, $821,792.
Along with their physician responsibilities, the top-earning doctors have considerable administrative duties, Lyden said.
The top-paid employees at Akron General were Dr. Daniel Guyton, surgery chairman, $504,134; Dr. Robert A. Marley, director of general surgery, $469,085; Dr. Eric L. Jenison, chairman of the Department of Obstetrics and Gynecology, $426,005; Dr. Farid F. Muakkassa, director of surgical intensive care trauma, $377,459; and Dr. David Peter, chief medical information officer, $352,201.
Summa’s top-paid employees in 2010 were Dr. Jennifer E. Restivo, oncologist, $688,531; Dr. Jeffrey T. Junko, orthopedic surgeon and orthopedics residency director, $682,730; Dr. Scott D. Weiner, chairman of the Department of Orthopedics, $679,471; Dr. Mehool Patel, hematologist/oncologist, $663,840; and Dr. Gary B. William, general surgeon, $654,691.
Cheryl Powell can be reached at 330-996-3902 or chpowell@thebeaconjournal.com. Follow Powell on Twitter at twitter.com/abjcherylpowell.
