Writer’s choice

ABC hospital is a large rural-community-based hospital, which has 501(c)(3) status. The CEO, Mark Jones, has been in the system for seven years and the CEO for two years. Profits at the hospital have gone up significantly in the past two years of Mr. Jones’s tenure as CEO. His annual compensation package as CEO is $12.5M. The hospital is deemed a critical access hospital. The facility provides an outpatient clinic, as it has for years, and uses a sliding scale for establishing needs-based waiving of any bills. The clinic has not changed size over the past eight years and has not conducted a community needs assessment. The capacity of charity/community care they provide has not increased in the past four years, although the population in the community has grown 12%. They do provide a written policy to patients concerning their financial assistance policy. Patients who do not pay their share, however, are aggressively pursued by a collection agency after needs assessment. Recently, Mr. Jones and ABC entered into a joint venture (JV) with Big Boss, Inc., a management corporation. ABC leased their land and building to Big Boss to run all operations at the hospital, including revenues collection. They also charge them a hefty rent for the building and land lease. ABC ceded all control of daily operations as part of the JV agreement. Big Boss agrees to provide charity care consistent with how ABC has been doing it in the past.As a result, ABC Hospital’s revenues went up dramatically, providing substantial bonuses to all the executives. Substantial revenues were provided to State politicians in lobbying efforts to maintain laws favorable to hospitals and non-profit status.You are an investigator at the Department of Justice, assigned to review a complaint about how ABC handles it’s nonprofit status. Review the facts, apply the standards, and determine any issues (if any) you see here, and what the remedy likely should be.