Last year, as Saint Thomas Health Services was freezing its 401(k) matches for its employees, it paid $50,000 in initiation fees to allow its CEO and president Tom Beeman to join the exclusive Belle Meade Country Club. At a time when lavish compensation packages are under increased scrutiny, the five-hospital health care chain defends the practice as a typical executive perk.
“It’s part of the compensation package for the president of Saint Thomas Health Services and member hospitals,” says hospital spokeswoman Rebecca Climer. “It was approved by the board of directors to use as a resource to entertain or meet with other leaders and physicians in the community.”
Like many religious hospitals, Saint Thomas has a conflicted identity. On the one hand, it’s a billion-dollar enterprise with hospitals serving 80 counties in three different states. But in its mission statement, it characterizes itself as a religious institution, “rooted in the loving ministry of Jesus as healer.” Paying for a country club membership is consistent with the first identity but seems irrelevant or even inconsistent with the values of the latter.
In addition to paying for Beeman’s initiation fees, Saint Thomas will also pay his $4,200 annual membership fees and a required annual assessment fee. This year’s assessment fee is predicted to be rather hefty, as it will include a massive renovation of the club’s private, 18-hole golf course as well as ongoing capital costs. Saint Thomas doesn’t pay for any of Beeman’s personal expenses at the club, like food and bar tab, and he does pay taxes on his club fees.
Michel Kaplan, a partner at Sherrard & Roe in Nashville and a national expert in laws affecting tax-exempt institutions, says that Saint Thomas isn’t doing anything particularly wrong, other than sending mixed messages. “Is paying for a hospital CEO’s country club membership prohibited on its face? Probably not,” he says. “But it certainly looks bad and would be difficult to justify.”
Jim Vaillancourt, the executive director for the Center for Nonprofit Management in Nashville, says that the country club perk has to be judged relative to the industry as a whole. “The question is if this is a reasonable business expense. I’m guessing that the board calculated it in.”
Tom Beeman’s most natural counterpart in the local health care market is Dr. Harry Jacobson, vice chancellor for health affairs at Vanderbilt. Both executives run high-flying nonprofits that pursue doctors and market as aggressively as any for-profit venture. But while Jacobson also belongs to Belle Meade Country Club, he pays for all of those expenses out of his own pocket, according to a spokesman for the medical center. Interestingly, the two club members are engaged in a dispute of sorts, as Vanderbilt recently pulled its residents from Saint Thomas after Jacobson and Saint Thomas failed to agree on the costs of the program.
Making matters stickier for Saint Thomas is that the hospital froze its employee 401(k) match for nearly six months last year. While Climer, the hospital spokeswoman, acknowledges that the freeze was a way to accomplish short-term savings, she claims that the company also wanted to restructure the benefit and make it more attractive to employees. Climer says that a richer match was reinstituted last month. Still, many nurses grumbled when the hospital froze the employer contribution to the retirement plan.
Saint Thomas isn’t the only institution to pay for its executive’s club fees. Vanderbilt University Chancellor E. Gordon Gee’s compensation package includes a membership at Belle Meade Country Club (though one longtime club member says that it’s “rare” for institutions and companies to cover club costs for their top officers). But, then, Vanderbilt doesn’t wrap itself around a deeply religious mission.
On its Web site, Saint Thomas says that its “Catholic health ministry” gives special attention to the “poor and vulnerable.” Not exactly the target audience at a country club.
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