Sex Sells CAN RUSSELL INSIDE Racy ‘Fifty Shades of Grey’ is like ‘Jane WILSON PLAY Eyre’ with sexting $73 ON SUNDAYS? IN COUPONS CAROLINA LIVING FORMER WOLFPACK QB ENTERS DRAFT WITH ANTICIPATION SPORTS 2012 TOTAL: $2,839 READ BY 1 MILLION+ IN PRINT AND ONLINE SUNDAY • APRIL 22, 2012 • $2.00 charlotteobserver.com CDEF ■ + $6.7 NONPROFIT HOSPITALS billion THRIVE ON PROFITS 6 CHS First of five parts 5 By Ames Alexander, Karen Garloch Hospitals in the Charlotte and Joseph Neff [email protected] [email protected] region are among the most [email protected] onprofit hospitals in the Char- profitable in the U.S. They have 4 lotte region are respected com- munity institutions. They save $3.4 lives, heal the sick and provide billions in investments and real billion N good jobs. At the same time, most of them are stock- estate. Experts say they should piling a fortune. Their profits have risen along with their 3 prices. Top executives are paid millions as do more to lower patients’ their hospitals expand, buy expensive tech- nology and build aggressively. rising costs. And they benefit each year from a perk Novant worth millions: They pay no income, prop- erty or sales taxes. Total revenue These institutions were created with 2 charitable missions. But many don’t act like $1.4 nonprofits anymore. In their quest for billion growth and financial strength, they have contributed to the rising cost of health care, leaving thousands of patients with bills they struggle to pay. 1 An investigation by The Charlotte Ob- server and The News & Observer of Ra- $1.04 Soaring revenue PHOTOS BY ROBERT LAHSER - [email protected] leigh found that many Charlotte-area hos- billion Carolinas HealthCare System has watched its total pitals: annual revenue grow nearly five-fold since 2000; at • Generate some of the nation’s largest Novant Health, the number has more than tripled. profit margins. Despite the Great Reces- sion, they have amassed billions of dollars in reserves. 2000 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 • Inflate prices on drugs and procedures, Note: Figures for Carolinas HealthCare are for the total enterprise, including facilities managed and leased by the system. sometimes as much as 10 times over costs. Hospital prices in the region are about 5 percent higher than the national average INSIDE and comparable to those of larger cities, CHS evolution: public such as Chicago, Dallas and New York City, MONEY FLOWS TO according to Aetna insurance company. EXECUTIVE SALARIES • Hike prices almost every year. Blue Cross At Carolinas HealthCare and hospital, private attitude and Blue Shield of North Carolina, the Novant Health, top officials state’s largest health insurer, says its total are paid millions. 8A By Karen Garloch even hospital leaders who de- cost per hospital admission went up nearly and Ames Alexander cided that, to survive, they need- 40 percent from 2007 through 2010. [email protected] ed to attract paying patients as • Pay their top executives millions. Nine- THE MYSTERIOUS [email protected] well as the uninsured. teen officials at Carolinas HealthCare Sys- HOSPITAL BILL Carolinas HealthCare System “We have so far overachieved tem and Novant Health got total compensa- Trying to decipher hospital wasn’t always the sprawling, our vision of 30 years ago, it’s tion exceeding $1 million in 2010 or 2011. charges isn’t easy. 10A profitable giant it is today. hard for me to comprehend,” All of this is entirely legal. No laws limit Only 30 years ago, it was a said board chairman Jim Hynes. profits, charges or executive pay for non- HOSPITAL COSTS charity hospital called Charlotte Mecklenburg County officials profit hospitals. CRUSH SOME PATIENTS Memorial – a crowded, dreary watched in amazement, too. Hospital officials say they’re simply act- Vietnam War vet Cleveland place that lost money every year They wondered why they ing as they must to survive. They point to a Davis got a $200,000 tab, because most of its patients should continue to subsidize in- U.S. health care system that rewards hospi- and then he got sued. 9A couldn’t pay their bills. digent care for a hospital system tals for providing more sophisticated serv- DIEDRA LAIRD – [email protected] Today, the nonprofit system that was making plenty of mon- ices to meet consumer demands. owns or manages about 30 hos- ey on its own. “The trajectory that we are on in health THE SERIES MORE ONLINE pitals, has nearly $7 billion in Finally, last June, county com- care spending is not sustainable,” said Mi- revenue and pays top executives missioners voted to stop paying TODAY TUESDAY See our audio chael Tarwater, CEO of Carolinas Health- millions of dollars. It’s the larg- Carolinas HealthCare $16 million Profitable nonprofits Suing the needy slideshow and Care. WEDNESDAY interactive map for est employer in Mecklenburg a year to care for the uninsured. He said patient expectations are: “I want MONDAY Staying strong in Raleigh information about your County and the nation’s second- With a profit of $428 million in the best. I want it now. I want it close. And I largest public hospital system. 2010 and nearly $2 billion in re- Charity care lacking THURSDAY hospital. SEE HOSPITALS, 8A The transformation amazes SEE CHS, 10A Policies that could help charlotteobserver.com 64o 42o COMPARE THE CANDIDATES Black churchgoers break with leading Forecast: Cloudy, showers. 12B Learn the views of those seeking three © 2012 The Charlotte Observer at-large Mecklenburg Vol. 143, No. 113 Democrats on marriage amendment County commissioner By Michael Gordon Thirty-one states – in 31 tries – have seats May 8. 3B and Tim Funk approved amendments to block gay [email protected] unions. Based on the polls, North Caro- Bishop Phillip Davis had not planned lina is a good bet to extend the streak to talk about marriage and politics, but May 8, due in part to African-American Ask Amy ..............4E Famed author: five minutes into his sermon at Nations congregations like Nations Ford. Books ...................5E Doris Betts, a cele- Business ..............1D Ford Community Church in Charlotte A March 23 survey by Public Policy brated Southern Classified ............6B he changed his mind. Polling of Raleigh showed that black writer and UNC Editorial ............24A Not only should the 6,000 mem- voters statewide support the measure Horoscope ..........4E Chapel Hill profes- bers of the overwhelmingly African- 61 percent to 30 percent. Whites: 58-38 Lottery..................1B sor, has died. 1B Obituaries ...........5B American congregation pray with ROBERT LAHSER - [email protected] percent in favor. Sports...................1C one voice, he said, come May 8 they Bishop Phillip Davis told Nations More than 80 percent of the state’s Auto mall: Rick TV..........................6E should vote with one, too. Ford Community Church to vote yes African-American voters are Demo- Delivery assistance Hendrick is opening “You know, we got this amendment on Amendment One. crats. Their support for the amend- or to subscribe a $55 million luxury on the ballot,” Davis said, walking to ment represents a rare break with the .......800-532-5350 auto mall in north To subscribe to the back of the church stage, then “If I was your pastor, and I was mar- party’s leaders and civil rights groups. Mecklenburg. It’s a OnTV magazine throwing his arm around a member of ried to him, how many of y’all would President Barack Obama, who in .........877-800-1335 bet on growth. 1D the men’s choir as laughter grew. be here today?” SEE BLACK CHURCH, 4A + 8A Sunday, April 22, 2012 ■ PROGNOSIS: PROFITS charlotteobserver.com • The Charlotte Observer + Charlotte area: Home to the state’s most profitable hospitals First on the state’s profit list: Presbyterian Hospital Matthews. The chart shows total margins MILLION-DOLLAR EXECS and operating margins for hospitals in the Charlotte area. Experts interviewed say that the Twenty-five N.C. nonprofit hospital executives made total compensation exceeding best measure is total margin, which includes investment income. But some hospital officials prefer looking at operating margin, which excludes investment income and reflects profits $1 million in 2010 or 2011. Executive raises have been generous. So have retirement from hospital operations. The figures are for 2010. packages. In 2009, Pitt County Memorial Hospital in Greenville, N.C., reported total Operating compensation of $8.7 million to former CEO David McRae, including a $7.7 million Carolinas HealthCare System Total margin margin payout to a retirement trust. When former Gaston Memorial CEO Wayne Shovelin Hospital CMC-Mercy/Pineville 28.6% 19.8% retired in 2009, he received a retirement payment of $5.9 million - a combination CMC-University 25.6 20.2 of deferred compensation and contributions from the hospital's parent company. Carolinas Medical Center 15.2 -9.8 CMC-NorthEast, Concord 11.3 -0.9 CAROLINAS HEALTHCARE SYSTEM CMC-Union, Monroe 9.6 6.5 Grace Hospital, Morganton 7.8 -7.0 -1.3 Valdese Hospital, Burke County -5.5 -1.9 Kings Mountain Hospital -2.0 -4.1 CMC-Lincoln -4.8 Total system8.4% Operating Margin 3% Michael Tarwater Joseph Piemont Greg Gombar Novant Health Total margin CEO President/COO CFO Hospital Presbyterian Matthews 34.7% 34.6% Carolinas Healthcare System Carolinas Healthcare System Carolinas Healthcare System Presbyterian Huntersville 33.5 33.4 +14.1 +19.7 +8.9 $4,236,305 % $2,536,792 % $1,751,798 % Presbyterian Orthopaedic