In a 12-page report sent this week to more than 400 health care, government and business leaders, Judge Robert K. Young called LVH's surplus "both uncharitable and unacceptable," suggested the hospital reduce its charges and called for a public accounting. In lieu of that, Young said, federal, state, county and local elected leaders should consider legislation capping "excess profits" for nonprofits or challenging LVH's tax-exempt status.
THE DETAILS: LVHLEHIGH VALLEY HOSPITAL IN 2005
Admissions: 83,118 Emergency room visits: 113,173
Revenues: $998.6 million
Surplus: $75.9 million
Community Service: $79.2 million
Uncompensated charity care: $4.8 million
Total community service and charity care: $84.1 million
Employees: 8,000 (1,900 nurses and 900 doctors)
Major new projects at Lehigh Valley Hospital:-Scheduled to open in 2008: three parking decks, medical office building and seven-story patient tower, including a new intensive-care unit, open-heart unit, expanded burn center, three new medical-surgical units and room for growth at LVH-Cedar Crest. Cost: $181.5 million
-Opened 188-bed addition to LVH-Muhlenberg in March. Cost: $60 million Source: Lehigh Valley Hospital and Health Network
Retired Judge Robert K. Young's key challenges to Lehigh Valley Hospital's board of trustees: Hold annual community-wide conference to talk about lowering charges, hospital expansions.
Open board meetings, make financial information public.
Debate role as charitable community hospital.
Young's key challenges to federal, state, local officials if LVH fails to reform itself:
Hold congressional, state legislative hearings on operation of Lehigh County's nonprofit hospitals.
Introduce legislation to stop hospitals from accumulating excessive profits.
Investigate whether LVH should receive future exemptions from state sales tax, state grants.
Reinstate Certificate of Need program to contain state health care costs.
Consider appeals of LVH's tax-exempt status in county, municipalities, school districts.
Determine if county can tax LVH's surpluses.
Make LVH justify need for money from Pool Healthcare Trust, Trexler Estate, Century Fund, and Medicare, Medicaid program administrators until surplus is reduced.
Source: Retired Lehigh County Judge Robert K. Young's unsolicited opinion
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As a significant nonprofit, he said then and now, LVH strayed from its charitable mission. At the time of the first hospital review, HealthEast drew attention by posting a $17 million surplus. Reacting to a 2005 surplus that is nearly five times larger, Young wrote he "will be
sorely disappointed if all of our earlier work becomes meaningless. "
In a written statement issued Thursday, the Rev. Jeff Aiken, chairman of LVH's trustees, defended the institution, the Lehigh Valley's largest employer. "I take it personally when a community member challenges the outstanding results of the hard work and dedication of this organization's leadership, management team, physicians, nurses and other staff," he said.
"That surplus goes right back to the community to pay for new facilities, programs, equipment and technology, assuring the latest treatments available," said Aiken, senior pastor of First Presbyterian Church of Allentown.
Over the years, Young said, he has kept a keen eye on guarding the community's interest in charities. "This," he said, "has always been on my mind. "
The issue of a nonprofit's surplus -- the amount left over after subtracting expenses from revenues -- matters immensely to an institution the size of LVH. The exemption frees the hospital from paying property taxes to Lehigh County, Salisbury Township, Allentown and Bethlehem and their school districts. Attempts Thursday to determine the value of that tax exemption through LVH and the Lehigh County tax assessor's office were unsuccessful.
According to Lehigh County assessment records, the health network has 15 tax-exempt properties with a total appraised value of $176 million.
State law sets guidelines for organizations that claim nonprofit status. To maintain their tax exemption, nonprofits must meet a multi-point test that includes providing free services to the poor and needy, operating entirely without a profit motive and offering "substantial" free services to the community.
LVH last year provided $4.8 million in charity care, according to its annual report.
That was a part of the community, patient, volunteer and professional assistance and services it provided and valued at $84.1 million, the annual report said. Nonprofit hospitals determine community assistance by assigning a dollar value to items and services as varied as training for doctors and nurses, volunteer assistance, educational publications and the difference between their charges and insurers' reimbursements.
As he had in the past, Young made clear he was not suggesting LVH has failed to provide quality health care. Indeed, Young recently was hospitalized at LVH-Cedar Crest, and he declared its health care to be "outstanding. "
Young also stressed he did not want to focus on "personalities" -- including his, hospital administrators' or the trustees'.
"They're good people," he said in an interview.
Nevertheless, Young, who did not review LVH's financial reports before writing his statement, said developments demonstrated the trustees should not be allowed solely to determine how LVH spends its surplus. He charged that administrators and trustees "deliberately" set fees for services "greatly in excess of its costs," allowing it to collect more than it needed from Medicare, Medicaid, health insurance companies and the self-insured.
The surplus, he added, did not include revenues generated by LVH's real estate holdings or profit-making enterprises.
"There are plenty of unmet health needs in our county," Young wrote, "yet it is apparent to me that the hospital leadership, rather than address them, continues its pursuit to create the premiere health provider on the Eastern Seaboard Whether or not such a facility will be needed here in the future should be a community decision. "