A conservative watchdog group unveiled new findings on Monday, claiming there’s significant fraud, waste, and misuse of funding among three tax-exempt healthcare systems in Texas, as reported initially by the Daily Caller News Foundation.
The policy nonprofit Save Our States shared its discoveries alongside a YouTube advertisement—both first disclosed to the DCNF—spotlighting some of the most alarming instances of alleged gross spending mismanagement. This release follows a broader report in June that examined spending misconduct in nonprofit hospitals across eight states.
“Taxpayers shouldn’t be left footing the bills for nonprofit hospitals that operate more like corporations than community services,” said Trent England, the Executive Director of Save Our States, in a statement. “Large hospital chains receive millions from government programs and tax incentives, only to lavishly spend on executive benefits, overseas investments, expensive art collections, and extravagant sponsorship agreements.”
He further emphasized, “Subsidies and tax breaks should assist Texas patients rather than finance luxury for executives and other excesses. It’s crucial for lawmakers to scrutinize these nonprofit hospitals that have lost their way from their original charitable purposes.”
This marks the first instance where Save Our States has examined Texas healthcare systems in an accountability report, which highlights several nonprofit healthcare organizations known for poor financial practices.
One key focus is the Memorial Hermann Health System, one of the largest nonprofit hospital networks in Southeast Texas, which receives significant federal funding while paying numerous executives seven-figure salaries and engaging in billions of dollars of foreign investments and partnerships with sports teams. The analysis detailed in the report revealed staggering figures regarding executive compensation.
Memorial Hermann runs 17 hospitals and over 280 care locations, employing more than 35,000 staff members in the Greater Houston area. The CEO, David L. Callender, was reported to have earned over $6 million in the latest tax year, while several other executives took home between $2 and $3 million. Additionally, a total of 21 executives reported earnings of $1 to $2 million.
The report also referenced Memorial Hermann’s substantial foreign investments, which include around $666 million in Central America and the Caribbean, among other regions worldwide.
The collaboration with the NBA’s Houston Rockets as the team’s healthcare provider since 2005 also raised eyebrows, as neither organization disclosed the annual payment involved in this sponsorship due to a confidentiality agreement. However, estimates suggest it exceeds $1 million a year.
Moreover, there were indications that Memorial Hermann facilities may have allocated hundreds of thousands towards inflated art budgets, aggregating nearly $2 billion across three centers.
Another health system investigated was the Mission Regional Medical Center, currently under scrutiny for offering discounted birth packages that are subsidized by American taxpayers.
Additionally, Barrio Comprehensive Family Health Care was reported to have increased its revenue by more than tenfold over the last decade through a government program allowing the purchase of discounted drugs while charging patients full price.
This health center is affiliated with CommuniCare Health Centers in Texas, which itself experienced a significant rise in revenue, escalating from $28.8 million in fiscal year 2013 to $397.4 million in the most recent fiscal year, fueled mainly by the 340B program.
While CommuniCare’s revenue and net income have seen substantial growth, the compensation for its CEO Paul Nguyen also doubled from $330,000 to $740,000 within the same timeframe.
CommuniCare was previously found to have “duplicate discounts” during an audit by the Health Resources and Services Administration, which resulted in sanctions involving repayments.
As midterm elections approach, healthcare affordability and the issue of fraud in government healthcare programs have emerged as significant concerns for voters, according to a July KFF poll.
