Establishment of the Foundation: Frequently Asked Questions
Why does PeaceHealth St. Joseph Medical Center have a Foundation?
PeaceHealth St. Joseph Medical Center seems to be well off. It is always expanding, remodeling or building something. It appears to be in good financial health, so why is it necessary to establish a foundation to raise funds for the hospital?
PeaceHealth St. Joseph's has been and continues to be one of the most fiscally well-managed hospitals in the region and has been able to maintain a high standard of service to the community largely because of this sound fiscal management. The “bottom line” has looked good but it must be remembered that, as a non-profit hospital, any revenues in excess of operational expenses are put back into the hospital and the community - for things such as capital equipment, building, charity care and community outreach programs.
Unfortunately, economic pressures are placing unprecedented strain on St. Joseph Hospital – draining precious dollars needed to buy medical equipment, upgrade services, expand programs and maintain excellence in patient care.
In recent years a number of factors have begun to threaten the hospital’s ability to maintain the healthy margin it has enjoyed in the past. That healthy margin is rapidly dwindling to the point where the hospital’s ability to meet community needs and expectations to replace equipment and bring new technological advances to Whatcom County will be severely curtailed without additional revenues. The five primary factors impacting PeaceHealth St. Joseph Medical Center’s margin include costs associated with: (1) Technology, (2) Reimbursement and Demographics, (3) Labor Shortages, (4) Regulations, and (5) Skyrocketing Insurance Costs. Further erosion of the hospital’s “margin” can only have a negative impact on health care services in Whatcom County.
There are, of course, other factors such as even slight variations from projections in the hospital’s census, the local economy, a natural or other disaster and for-profit medical “competitors” which could affect the hospital’s financial viability. Even sound fiscal management cannot predict or control any of these factors.
If the hospital is currently showing a positive bottom line, I still can’t understand why it is necessary to raise funds. At what point will the hospital begin to show a loss? What are the alternatives to going to the community for contributions?
The hospital may begin to experience a deficit in the very near future due to current financial pressures as well as unpredictable things like census figures.
Alternatives to beginning a fund-raising program for the hospital include:
- Cutting programs and services, especially those offered to those who are unable to pay; or
- Lowering the hospital’s standards, such as instituting delays in service.
NONE OF THE ALTERNATIVES IS ACCEPTABLE TO PEACEHEALTH ST. JOSEPH MEDICAL CENTER OR TO THE SISTERS OF ST. JOSEPH OF PEACE, BECAUSE EACH ALTERNATIVE IS IN DIRECT CONFLICT WITH THE HOSPITAL’S MISSION.
Won't a hospital foundation be in competition with the St. Luke’s Foundation? I thought the St. Luke’s Foundation was raising funds for the hospital? And what about United Way?
No. Although St. Luke’s Foundation accepts philanthropic gifts and conducts an annual campaign, its primary focus is on providing funding for health-related projects and education for a broad range of Whatcom County recipients, including PeaceHealth St. Joseph Medical Center. The hospital has been the grateful recipient of many St. Luke’s Foundation grants, including major support for the Community Cancer Center, the St. Luke’s Education Center, and several other projects. The PeaceHealth St. Joseph Medical Center Foundation staff will work closely with St. Luke’s Foundation staff to ensure that a mutually beneficial and positive relationship is in place.
Regarding United Way, the hospital, as one of Whatcom County’s largest employers, fully supports United Way and conducts an employee campaign each year. PeaceHealth St. Joseph Medical Center does not receive United Way funding but will enthusiastically continue to support the efforts of United Way.
How much of a bottom line does the hospital need to maintain its capacity to replace equipment and continue providing community services? When will the bottom line be “in the red?”
It takes a margin of minimal 6 percent of a hospital’s operating budget to maintain the hospital’s ability to continue its community services and meet its capital needs, such as the capacity to replace equipment. To grow programs and services requires an 8 to 10 percent margin.