The rapid growth of a St. Louis-based Catholic healthcare system that is branching out into for-profit ventures is raising questions about its charitable status.
Ascension Health was created 15 years ago with the merger of the St. Louis-based Daughters of Charity National Health System and the Michigan-based Sisters of St. Joseph Health System. It has since grown into the nation's third-largest healthcare system by buying dozens of nonprofit hospitals and pursuing numerous for-profit ventures.
The company reported $17 billion in revenue in the 2013 fiscal year but didn't pay corporate income taxes on its nonprofit operations, the St. Louis Post-Dispatch reported. Financial statements show Ascension has $30 billion in assets.
"Why is this organization charitable? In my view, it's not," said John Colombo, a University of Illinois law professor who studies tax-exempt organizations. "They provide health services for the poor, but it's not their primary mission anymore ... Ascension has transformed itself over time to a major big business enterprise. I'm not denying that they do some charitable things, but so does Microsoft — and they pay taxes."
Ascension is preparing to open a 140-bed hospital in the Cayman Islands this week in cooperation with a for-profit hospital chain based in India, part of what could eventually become a $2 billion "health city" complex.
John D. Doyle, an Ascension executive vice president, told the newspaper the health ministry needs "new sources of revenue to sustain our enterprise. ... Our job as a generation of managers is to make sure our platform is strong for the next couple of hundred years."
Doyle said the company provided $525 million in charity care to the poor last year as well as $775 million in community benefits to the general public.
"As a tax-exempt organization, Ascension acts for the public good," he said. "We are a faith-based ministry that's trying hard every day to make sure we have the resources to take care of people."
Ascension Health Ministries is a corporation within the Roman Catholic Church that reports to the Vatican on its key transactions and must adhere to church directives such as the prohibition on abortions. It's affiliated with a religious order called the Daughters of Charity of St. Vincent de Paul, which created schools for orphans and hospitals for the poor.
The company employees several hundred people at its headquarters near Lambert-St. Louis International Airport. CEO Anthony Rocco Tersigni, who declined a Post-Dispatch interview request, and his deputies travel first class and on charter jets to conduct business across the country and overseas.
Industry experts say Ascension's scope of investment in for-profits is unrivaled in nonprofit healthcare.
Ascension's holdings include about 220 tax-exempt subsidiaries, from hospitals and nursing homes to outpatient clinics. Its largest nonprofit subsidiary, Ascension Health, operates 114 acute care hospitals in 23 states and the District of Columbia and has about 155,000 employees.
Its subsidiaries also include more than 125 for-profit companies that specialize in radiology services, medical equipment sales and rental, outpatient surgeries, endoscopic centers and cardiac care services as well as investment firms, condominium associations, a laundry in Michigan and a local travel agency.
Ascension Ventures LLC., a for-profit subsidiary, has created venture capital funds on Wall Street to pool $550 million in investments in startup companies. Ascension and its limited partners have spawned startups that create medical devices and provide health technology services.