Why Do Hospitals Host Charity Galas? (Hint: Not To Raise Money)

Tickets started at $500. Food and beverages totaling $258 were budgeted for each person. A lucky reveler went home with a $125,000 Lexus Luxury Hybrid Sedan, donated for the occasion. It was the November 8, 2011, nonprofit Cedars-Sinai Medical Center’s annual Board of Governors Gala at the Beverly Hilton Hotel.

Of the hospital’s $2.8 billion total revenue that year, the lavish party netted the hospital $780,000 — barely a quarter of the C.E.O.’s salary.

Most galas, says [Charles Rehberg, a former hospital C.F.O], “are part of a carefully crafted strategy to promote their ‘charitable’ image in the community and engage the community leaders in their market. Look at the board of the foundation. It is generally the community business leaders, politicians and thought leaders in the community. It is very difficult to serve on such a board and also criticize the hospital for their high costs, charitable conduct, etc. By engaging these leaders in their ‘mission,’ they buy their support.

Rita Healey, 100Reporters. HT: Ron Shinkman, FierceHealthFinance.

Comments (14)

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  1. Hector M says:

    These galas are very expensive marketing campaigns, which demonstrate that the hospitals are not the moral, good faith institutions that many perceive them to be. They are a business like any other, focused on being profitable and amassing wealth.

    • Matthew says:

      What more can you expect from scumbag executives. They always have other interests in mind.

  2. Veronica H says:

    Most hospitals are now collecting art… no wonder the system is failing. The system has lost priorities and has shifted their focus into something way off their mission. Obamacare made things worse, but the system in general (way before ACA) is flawed and doomed.

  3. Gabriel P says:

    How is spending money on art a charitable act? How can it make healthcare better? Tax those institutions and use the revenues to fund those institutions that are not getting paid for providing services.

  4. Brayant D says:

    Once you are pocketing a million dollar form a non-profit organization, you know that you are not accomplishing the institution’s mission. If you are working in a non-profit organization and getting rich with money of those who are poor, it’s a clue that you are probably doing something wrong.

    • Thomas says:

      These non profits are businesses too. And very profitable ones. But when people who run them make very lavish salaries, it sends the wrong message.

  5. Jesse O says:

    How can a charitable institution be a sponsor of a multimillion dollar professional team, without any kickbacks?

  6. Sergio says:

    I think it is somewhat ironic that we are asking for more governmental control. The post is criticizing the amassment of wealth, the free choice of spending it freely, the lax taxation… practically everything opposite of what this blog normally stands for.

  7. Leopold S says:

    I think we are simply envious that we are not being invited to be part of those galas. At least I would love to attend to one of them.

  8. Martin V says:

    Hospitals are just one link of a long chain of corruption that has inflicted pain to the United States since long time ago.

  9. June says:

    I don’t have a problem with a private hospital doing what it wishes to raise funds and engage people in the community. I’ve personally seen hospital fundraisers that spend extraordinary amounts of money that, I think, was both unnecessary and fiscally unwise, but that’s something for local residents and volunteers to deal with, not something to regulate.

  10. Joe Barnett says:

    This sounds similar to the rationale for corporate “green” programs: buying good will.
    There is nothing inherently wrong in doing so, but it is just brand management and promotion.

  11. Devon Herrick says:

    I worked for a large, nonprofit hospital system many years ago. It’s very common for hospitals to promote goodwill and network with major donors. I always assumed galas were organized primarily with the goal of fundraising. Charging, say, $1000 per couple would guarantee only those with money to burn would attend. Yet, $1,000 per couple entry fee would hardly cover the costs of a lavish gala. Attendees (for their participation) could be assured they would not have to mingle with the riffraff. It makes sense that merely raising enough funds at an event to cover the cost of networking with movers and shakers would benefit the hospital brand as well as the attendees.