The Wall Street Journal has yet another good story in its series on nonprofit hospitals acting like for-profit companies. This one’s nasty: The University of Pittsburgh Medical Center cut corners to crank out liver transplants.
A surgeon it hired to boost volume used livers from older people and performed lots of transplants on people who were ranked low on a test that predicts the likelihood of a transplant’s success. All to support this:
UPMC is a nonprofit hospital system whose income is largely exempt from taxes. Yet, it is increasingly run like a for-profit company, paying its executives high salaries, jumping into new activities and expanding abroad. Its quest to ramp up its transplant business shows how a drive for higher revenue, now common at nonprofit hospitals, could risk compromising patient care…
Even though three-quarters of its $7 billion in annual revenue is exempt from federal and local taxes, UPMC has acquired many of the trappings of large, for-profit corporations.
Its chief executive, Jeffrey Romoff, earned $4 million in the fiscal year ended June 30, 2007, and 13 other employees earned in the roughly $1 million to $2 million range. For their transportation, UPMC leases a corporate jet. Earlier this year, UPMC relocated its headquarters into Pittsburgh’s tallest skyscraper, the 62-story U.S. Steel Tower.
The transplant program is a source of both profits and prestige that UPMC leverages to attract star doctors and build its other businesses, which include a health-insurance arm. Hospitals charge $400,000 to $500,000 for a liver transplant. UPMC’s transplant program produced $130 million of revenue in its latest fiscal year.
Great reporting by the Journal. This is a Pulitzer-worthy series.Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at email@example.com. Follow him on Twitter at @ryanchittum.