Making a profit as a non-profit.

In 1997 the powers that be in the Commonwealth of Kentucky state government and the powers that be in medicine in Louisville Kentucky got together and formed the Passport Health Plan. The organization is non-profit and has a board of directors made up of representatives from the medical practices and hospitals who originally organized the company.

The idea was to make sure indigent and the working poor got good preventative and chronic disease medical treatment and to save money while doing that. Since then the state has been awarding an annual contract which is now at $800 million. By treating a person for minor health problems or routinely for a chronic disease you keep them out of the emergency room and you keep them out of the hospital.

That saves money and everyone agrees on that.

Beyond this point the operation of Passport Health Plan for the benefit of the poor is murky!

This past spring a State Senator Tim Shaughnessy asked State Auditor Crit Luellen to look into the operation of Passport. It took a while to get her hands on the records. Although Passport gets all its funding from the state, they denied her their files. Finally the audit was done. Her report covering the period 2007-2010 was published. The report revealed reason for concern.

Before I go further let me tell you that I question whether Sen. Shaughnessy would have brought this to Mrs. Luellen's attention if he didn't have a divided loyalty. Shortly before his concern was voiced he was laid off from his job as an executive for one of the hospitals involved in setting up Passport. I like to think he would have requested an audit because of his fiduciary responsibility as a State Senator. Some suggest it was revenge for being laid off.

Now, let's turn back to the findings in the report.

Over a million dollars was spent on public relations and to lobby the state legislature. As far as I know there were no other competitors for the state contract. The percentage increase in the contract funding from one year to the next was well below the general increasing health care costs for the community. The question is why spend a million of your state contract funds to lobby those giving you the contract if you don't have a competitor or get increased funding?

The public relations expense included a large balloon version of SpongeBob SquarePants for the Kentucky Derby Pegasus Parade and a contribution to an annual Kentucky Senate cocktail party! The Governor was upset about the cocktail party funding. The President of the Senate David Williams, who hopes to be governor next year, said he didn't understand why the governor was so concerned about the cocktail party. It is Mr. Williams' party by the way and those attending are lobbyists.

Executives of Passport traveled to medical meetings held in lovely spa locations. They used limos and ate lavish meals while staying in palatial hotel rooms. These travel expenses as well donations, holiday gifts and flowers having nothing to do with health care, totaled over $616,000.

Salaries and bonuses to these executives are in the mid six figure range. Despite raking in huge income from Passport some executives have divided loyalties. For example the executive director received compensation from sub-contractors. The Chairman and CEO is an executive at one of the hospitals involved.

The thing that supposedly got Sen. Shaughnessy going however was the distribution of reserves. Thirty million dollars of excess reserves amassed by Passport were distributed not back to the state but were divided amongst the hospitals and medical practices that set up the organization in parts equal to their original participation. In essence this was a distribution of profits from a non-profit organization funded totally by the state.

While there is much ranting and raving about the horrible cost of treating the poor the rest of the story is that setting up and running a non-profit contract to help these most vulnerable is treated as a blank check by the management.

It will be said that this is what you get when you "give" money to the poor. I can almost hear the strident harangue by the resurrected moral majority that everyone should pull their own weight. To paraphrase the Son of God in Matthew 26:11, "the poor shall always be with us." I don't think Jesus wanted us to increase the numbers of poor or steal the most basic of support from them. A self-righteous person thinks they are good but proving that means helping not stealing from the least of us.