Where Are Your Medicare Dollars Taking a Vacation?

By Mathew Keller, RN JD
Regulatory and Policy Nursing Specialist

Despite all of its bad deals and big debts, Allina Health is still making piles of money. As this space detailed back in June, Allina has made more than $1.3 billion dollars in net revenue over the past 6 years for which financial disclosures are available. That’s after expenses, including salaries, $23.9 million in executive pay, millions to buy out McDonalds’ lease, $60 million lost on bad loans, and so on.

While Allina is a not-for-profit company, it still has to pay taxes on things like capital gains. To avoid paying taxes on capital gains, standard operating procedure is to stash investments in Caribbean banks.

Maybe that’s why Allina has $160 million parked in the Caribbean Islands of Antigua, Barbuda, Aruba, and the Bahamas, according to its 2014 financial disclosures.

It could be a slush fund, it could be retirement accounts for its executives, it could be for Chinese takeout menus. We have no idea. And that’s the point of stashing money in the Caribbean—shielding it. It’s hidden from taxes and from any disclosure of what it’s for. Allina could say it’s for anything, and we would have no way to prove it true or false. Not without actual proof from Allina, anyhow.

Some hospitals claim their Caribbean stash is for liability insurance purposes. Essentia Health, for example, lists $145 million in Caribbean money for ‘investments’ and $7.4 million for self-indemnification (i.e. insurance) on its 2013 disclosures.

The issue of non-profit hospitals which receive approximately 50-60% of their revenue from taxpayer dollars (i.e. Medicaid/Medicare) shielding millions of that money in Caribbean accounts is not new, and it’s not limited to Minnesota. Massachusetts nurses, for example, are advocating for a bill in their state that would require hospitals to be more transparent about their Caribbean stashes. As Massachusetts state representative Jay Kaufman put it,

“We’ve been struggling mightily – and investing millions of taxpayer dollars – to keep healthcare costs in check. Why are our hospitals keeping accounts in the Caymans where they’re hidden from our oversight? Why are these funds not in Massachusetts banks? How much is there? We – taxpayers and legislators – have a right to know about what our hospitals are doing with our tax dollars.    Legislators and the public have the right to know how their tax dollars are being spent, especially when profitable hospitals are cutting needed services.”

Besides its Caribbean accounts, Allina has plenty of money stashed elsewhere too, including $1.2 billion invested in the stock market, hedge funds, private equity, and more; plus there’s $350 million in cash, more than two times the amount they had just two years ago.

So let’s calculate Allina’s financial position again. Here’s a company netting hundreds of millions every year with more than a billion in the stock market and hundreds of millions in shielded accounts in sunny, Caribbean banks, that somehow doesn’t have the money to invest in the healthcare and safety of its employees or the nursing care of its patients. Allina goes so far as to pay $20 million to weather a week-long nurses strike as it asks for those nurses to pay $10 million more for their medical coverage needs.

Something doesn’t quite add up.