Academic journal article Frontiers of Health Services Management

The Maturing Role of Philanthropy in Healthcare

Academic journal article Frontiers of Health Services Management

The Maturing Role of Philanthropy in Healthcare

Article excerpt

SUMMARY

Hospital and healthcare system executives today face myriad issues that revolve around finances. Aging infrastructure must be replaced and staffing shortages addressed while pursuing costly advances in treatments and technology. Higher operating expenses, especially those resulting from care of under- and uninsured patients, continue unabated, while the adequacy of reimbursement from private and third-party sources, including Medicare and Medicaid, continues to lag. Complicating matters are concerns-and their associated costs-about patient privacy, changing relationships with physicians, and the need to provide and demonstrate community benefit (Costa 2005). Philanthropic giving is emerging as a significant means by which health systems can enhance financial resources when those in leadership positions foster a culture of philanthropy.

FACTORS DRIVING THE IMPORTANCE OF PHILANTHROPY: TWO CASE STUDIES

Nyack Hospital and Good Samaritan Hospital, located about a dozen miles from each other in New York, worried when locally based Union State Bank was sold to Key Bank in 2007. The two hospitals, which each have approximately 370 beds, were faced with the loss of a longtime benefactor, U.S.B. Foundation, Inc., the charity arm of Union State Bank.

Over the years, Nyack, a member of the New York-Presbyterian Healthcare System, and Good Samaritan, part of the Bon Secours Charity Health System, had received generous donations from the foundation. While Key Bank, based in Cleveland, Ohio, also operates a foundation for philanthropic purposes and has provided support for hospitals and other health-related causes, its primary focus is on grants that foster workforce development and financial education programs (Key Bank 2007).

The experiences of Nyack and Good Samaritan serve to illustrate several factors that are driving the importance of philanthropy for nonprofit hospitals and healthcare systems, as well as the efficacy of building a culture of philanthropy within an institution and its surrounding community.

The first factor is the high cost associated with upgrading hospital infrastructure, including expensive new technologies. A Westchester Journal News report published several weeks prior to the completion of Union State Bank's sale to Key Bank noted that the U.S.B. Foundation had recently given $500,000 to Good Samaritan to support a new cardiac surgery center and $100,000 to Nyack Hospital to purchase digital mammography equipment. The newspaper quoted Union State Bank's vice president for municipal affairs as saying, "This is the community we live in and the community we make our money in. We always felt it made good business sense to invest in the community"(Lerner 2007).

Would Key Bank, with branches throughout the Hudson Valley, be willing to maintain these relationships? Would its foundation be as generous to healthcare institutions?

Good Samaritan's director assured the Journal News medical writer that he had already been in contact with Key Bank officials and was "looking forward to enhancing that relationship." An AHP official, interviewed by the same reporter, made the glass-half-full observation that "(i)f the new corporation is bigger, there could be more dollars available for philanthropy," while cautioning that "the decision-making process isn't totally local anymore"(Lerner 2007).

Meanwhile the hospital, seeking to upgrade its emergency department, was also promoting an offer by a wealthy area resident to match major donations of at least $10,000 in appreciation for the outstanding performance of Good Samaritan emergency room staff in saving his wife after she suffered a brain aneurysm (Lerner 2007). Clearly, Good Samaritan was not about to "put all its eggs in one basket."

Rising expectations among the public that they and their family members deserve and will receive healthcare services of the highest quality constitutes a second factor that tends to heighten interest in philanthropic giving, because of the pressures placed on health systems to invest heavily and continually in upgrading their facilities, equipment, and procedures to keep their healthcare programs as up-to-date and as appealing as possible (Cauchon 2006). …

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