How Not to Make Money
Leaders of SCL Health will close St. Francis Hospital in Topeka soon but “it’s business-as-usual for the three primary care clinics it still owns in the state”. Sounds great, right? The clinics serve the poor and people without insurance. They say that patients pay a flat rate of $15 per visit. You would think that means they run a very lean organization. The article goes on to say that “their tax filing shows a $59,000 loss in 2015, with about $1.99 million in expenses outstripping $1.93 million in revenues. Most of the revenues come from grants and donations.” Initially, those kind of numbers struck me weird. There’s more. “The Caritas Clinics have 21 full-time and eight part-time staff and 240 volunteers. In 2016, they served 1,855 patients.” What? Oh….I get it. These clinics use government math! Let me explain.
As a comparison, I serve 600 patients in my Direct Primary Care clinic with 1.5 FTE (full time equivalents or staff). I use a normal capitalistic model. I only spend what I can afford to spend. If I spend more then I go bankrupt. These clinics have figured out a way to MATCH their grants/donations that are coming in. The more they get the more they spend. How else would a clinic need 21 full-time and 8 part-time staff for 1855 patients? You could say, “Doug, these patients are more needy than yours”. I would need to see proof of that but for argument sake let’s say you are right. Do they need a 29 staff to my 2.5? That sounds improbable. The issue is that they can’t show a profit or else lose that free money coming in so they have to spend those funds somehow. It’s backwards. Welcome, my friends, to the government model of spending or what I call “how not to make money”.
Thoughts?
This reminds me of my year in the Indian Health Service in 1976. At the end of the fiscal year the Unit Director had to find things to buy with the allotted budget, otherwise it would be cut for the next FY. We needed to spend $10,000…so we picked an operating microscope which actually helped our visiting ENT PA because we saw so much chronic OM in kids. I used it exactly TWICE, as the only MD out there…to pick spitwads out of the same kid’s ear…TWICE.
‘An organization that tries to make itself look good by spending their own money is called a philanthropy. An organization that tries to make itself look good by spending other peoples money is called a government. “