On Nonprofits

“UPMC and Highmark are at it again,” Mrs. Bowman was saying. “Pretty soon most of the hospitals in the city won’t accept my insurance. I thought these were supposed to be nonprofit corporations, but they sure act like all they care about is money.”

“It’s clear,” Mr. Magundi remarked, “that all this unseemly wrangling benefits no one but the top executives, who are as shamelessly greedy as the executives of any other big corporation. Fortunately, there’s an easy way to fix the problem. Let Congress declare that no corporation will be eligible for nonprofit status if any one of its employees makes more than $150,000 in total compensation—salary, bonuses, housing allowance, whatever, all included. The executives who are motivated mainly by greed would flee the nonprofit sector instantly. The ones who are motivated primarily by an instinct for public service—which is supposed to be the purpose of a nonprofit corporation—would be able to make a comfortable living and raise even large families with no deprivation. And don’t tell me the nonprofit sector couldn’t get talented managers that way. Plenty of charities are managed brilliantly by people who take no compensation whatsoever. No, instead of mediocre managers who care about nothing but money, the nonprofit sector would get dedicated professionals who cared about the mission above everything else.”

One thought on “On Nonprofits

  1. For your typical feed-the-poor charity, that might work. But the question at hand are nonprofit hospitals. Try hiring a good cardiovascular surgeon for only a hundred-fifty grand a year. Better yet, try hiring an obstetrician for less than his annual malpractice insurance bill is going to be. Yes, the malpractice insurance for an obstetrician easily exceeds $150 grand a year. Why? If you are delivering a couple hundred babies a year, then at least once a decade you’re gonna screw up (or look to an unsymathetic jury like you screwed up) badly enough that you’re gonna get slapped with a multi-million-dollar lawsuit. If just one of the babies you deliver dies or ends up permanently disabled in a manner that even LOOKS like it MIGHT be your fault, yes, you will almost certainly get hit with a lawsuit judgement that will reach well into the tens of millions of dollars once all the actual damages, punitive damages, court costs, and lawyer’s fees are taken into account. Finding an insurance company willing to pay out that much, with that much certainty that it WILL happen no matter what precautions you take, is incredibly expensive.

    Now throw in a doctor’s need to pay off a couple hundred thousand dollars worth of student loans, and you start to understand why the hell health care is so gosh-darned expensive.

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