October 11, 2010; Source: ModernHealthcare.com | Hospitals seem sure of two things as they look to the future: revenues are likely to be squeezed once the new health care legislation fully kicks in and slows increases in Medicare payments. They also don’t expect private philanthropy to increase over current levels anytime soon to help close budget gaps and underwrite hospital construction.
Rich Gross, vice president and CEO for Johns Hopkins Health System in Baltimore, says in the current environment hospitals shouldn’t rely on donors to help plug financial shortfalls. He says that strategy only works when the economy is humming and “to assume” private philanthropy can answer calls for help today “would not be prudent.” He notes that Johns Hopkins’ has already reduced its medical school fundraising budget by 6 percent for 2011.
Martin Arrick, managing director in U.S. healthcare not-for-profit ratings for Standard & Poor’s, confirms the worries of Gross and other hospital leaders about a slow down in donor support. He says that healthcare executives have lowered expectations and similarly reduced capital spending plans after the topsy-turvy markets in 2008 and 2009 led to fewer private gifts.
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The Association for Healthcare Philanthropy released figures last month showing that healthcare giving declined 11 percent in 2009 to $7.64 billion from $8.59 billion in 2008. However, believing the best defense is a strong offense, some hospitals—albeit in the minority—are strengthening their development activities and reaping the rewards. North-Shore Long Island Jewish Health System in Great Neck, N.Y., increased its development office last year—anticipating a better economic picture—to more aggressively go after likely givers. While fundraising had been harder than earlier years, for North-Shore it is now returning to its historical levels.—Bruce Trachtenberg