Thursday, August 7, 2008

EDITORIAL: Profits can be put to good use.

NewsLanc received a letter from an informed source stating "After reading NewsLanc's LGH Report#2 (as part of your series of financial reporting on the plentiful treasure chest owned by not-for-profit Lancaster General Hospital), I am dismayed at the lack of edge that the reporting offered."

Far be it for the publisher of NewsLanc to be critical of what every red blooded business person seeks in order to achieve high profits: market dominance!

In the case of for profit enterprises, public policy may require regulation, such as is done with utility companies.

But LGH is a 501(c)3, not for profit corporation. It has no stock holders. Its purpose is to serve the public.

In the situation of Lancaster General Hospital, it is in part already regulated because Medicare and Medicaid referrals are compensated in amounts determined by the federal government. It is the insurance companies(and thus the insured) and cash paying individuals who pay a premium when there is a collapse in competition.

While the citizenry may have to pay higher premiums and fees, the profits earned by LGH can and should be applied to further our community.

What is needed is more candor and transparency on the part of LGH's management and greater public participation on how it spends its earnings, be they for excessive executive compensation or perks or on unnecessary investment in medical facilities.

LGH already does so in part. As a 501(c)3, it is exempt from real estate taxes. Yet it makes a contribution to the City of an even greater amount than it would otherwise pay. In the same way, it would be suitable for LGH to contribute more to public clinics and other public health efforts.

It might also provide additional funding for regional charities and make donations to the enhancement of public services such as the local libraries and schools systems. LGH's contributions might be somewhat guided by their beneficial impact on public health.

NewsLanc does not fault LGH for competing successfully. But we do insist on transparency and an open process whereby the public participates in deciding on how earnings are to be put to optimal use.