When mission and margin collide

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John O'Connor
John O'Connor

We all know the difference between for-profit and nonprofit senior living operators, right?

The nonprofits are mission-driven. At least, that's the conventional view. By most objective standards, the distinction holds. But as the old saw goes, no margin, no mission.

At last year's LeadingAge show, I rediscovered the messy balancing act nonprofits must sometimes perform. During one lively session, an audience member asked for service alternatives to skilled care.

Was it because the operator felt that the needs of the community were not being fully met? Not exactly.

As she put it, pressure to transfer residents in fewer days was making it all but impossible to deliver such care without losing money. What she really wanted was an alternative that would, ahem, generate more margin. And it was pretty clear many other people in the room felt the same way.

The margin-mission quandary recently raised its head in Chicago. There, residents of three subsidized buildings owned by Presbyterian Homes in a low-income area were told to find housing elsewhere by November. The reason: the buildings would be put up for sale.

To be fair, Presbyterian Homes has been providing care and services to the indigent for a long, long time. Moreover, the group has been forced to subsidize the buildings for years. Government funding has been non-existent and donations have been far from adequate. And yet, the general public reaction has been that a covenant has somehow been violated. 

It hardly helps that Presbyterian Homes plans to focus more on the market rate senior homes it operates in tony suburbs such as Lake Forest. Even if you have empathy for what nonprofit operators are up against, that's hardly a flattering juxtaposition.

But nonprofit operators may have more than unflattering optics to consider. They are, after all, recipients of a huge tax break, one that is presumably tied to their ability to serve the less fortunate.

As more than a few hospitals have learned the hard way, the Internal Revenue Service is perfectly willing to remove that benefit when it concludes the privilege is being abused.


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