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Schafer: For Mayo and other nonprofits, operating in the black is about survival, not greed

Lee Schafer, Star Tribune (Minneapolis) on

Published in Business News

We have to once again talk about how it just isn't possible to have a greedy nonprofit, never mind what presidential candidate Bernie Sanders might think.

"Mayo Clinic executives have decided to strip away access to health care from tens of thousands of rural Midwesterners -- putting profits over people," Sanders complained just before Christmas, in a Twitter post that also promised to end "corporate greed."

The big thing he gets wrong here is that Mayo is not a for-profit corporation.

It's a public charity under the federal tax code, and if you talk to Mayo people they might call it a "foundation," a term Chief Financial Officer Dennis Dahlen used in our conversation last week.

A campaign pledge to end charitable greed can't be much of a vote-getter.

Let's be clear about this: A nonprofit, any nonprofit, has to make sure it doesn't lose money or it won't be around very long. In its last reported year, Mayo made about $706 million on the line that seems closest to the for-profit concept of income from operations, on $12.6 billion in revenue.

 

Mayo uses business thinking and business processes when making budgets, deciding what technology to invest in, and so on, Dahlen said, more or less confirming the obvious.

But nobody can get any of the money left over at the end of the year. Nothing goes to Mayo shareholders, LLC members or partners, because there aren't any. There are no dividends, distributions of profits, profit-sharing payments, shares to buy back and so on.

People can make what seems like a lot for working at Mayo, including about $3.5 million for its CEO, according to the latest available figures. But that would be small beer for the people who are in health care management for the money.

The executive who ran the big hospital company HCA Healthcare got a total of $21.4 million for one year of work, as of last report. The CEO and founder of publicly held Universal Health Services made even more. And nobody hoping to be CEO at Minnetonka-based UnitedHealth Group seems likely to take a job at either of those places, because they might not pay enough.

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