How North memorial Spends Its Money

Despite pledging to be different from their larger competitors, one area in which North Memorial sees eye-to-eye with other hospital chains is in executive compensation. In 2019, hospital executives and other top employees took home a total of more than $15.2M.[1] Though he has described his work as a “labor of love,”[2] CEO J. Kevin Croston, MD is handsomely compensated, having received a salary increase of 24 percent between 2018 and 2019.[3] While most nonprofits do not compensate their board members,[4] all of North Memorial’s board members received $7,500 or more in 2019 despite working on average two hours per week.[5]

One area where North Memorial executives have channeled excess revenues is into Maple Grove Hospital. Recently, North Memorial purchased a parcel of land for $9.3M and announced an expansion which will cost over $191M.[6] Hospital executives hope to create a “medical destination campus” that will keep suburban residents conveniently closer to home.[7]

The rationale behind hospital executives’ focus on Maple Grove may rest on simple profit-seeking,[8] and it seems to indicate the kind of patient that North Memorial seeks out as a “customer.” The City of Maple Grove is primarily higher-income and less racially diverse compared to Robbinsdale or Minneapolis.[9] Healthcare workers raised the issue of “medical redlining” over a decade ago, fearing investment in the suburban hospital would result in cuts to facilities closer to Minneapolis serving less affluent communities.[10] Their concerns were validated over the years as North Memorial increased its workforce in Maple Grove while laying off workers in Robbinsdale.[11]

Where Isn't North Memorial Spending?

Source: Author’s calculations from 2010 – 2020 Consolidated Audited Financial Statements

Even as North Memorial executives have made the company more profitable at the expense of patients and workers, the company has given back less to the communities it promises to serve. In 2021, North Memorial recorded its most profitable year on record.[12] Despite this, executives recently decreased uncompensated care spending by 15 percent from the previous year.[13] One major component of this spending is charity care, or the dollar value of services provided for which payment was never expected and for which the patient is not pursued. North Memorial executives have decreased these charitable costs as a percentage of expenses compared to most years since 2010.[14]

SOURCES

[1] North Memorial Health Care, Return of Organization Exempt From Income Tax For the 2019 Calendar Year (filed November 16, 2020), https://projects.propublica.org/nonprofits/organizations/410729979/202033219349304073/full.             

[2] Carrigan Miller, “2021 Health Care Heroes: North Memorial CEO Dr. J. Kevin Croston Leads System to Punch above Its Weight; Health Care Executive – Hospital-Based,” Minneapolis / St. Paul Business Journal, June 11, 2021.

[3] North Memorial Health Care, Return of Organization Exempt From Income Tax For the 2019 Calendar Year (filed November 16, 2020), https://projects.propublica.org/nonprofits/organizations/410729979/202033219349304073/full;

North Memorial Health Care, Return of Organization Exempt From Income Tax For the 2018 Calendar Year (filed November 15, 2019), https://projects.propublica.org/nonprofits/organizations/410729979/201943199349302729/full.             

[4] Economic Research Institute, “Nonprofit Board Members – To Pay or Not to Pay in 2018?” Economic Research Institute (blog), May 8, 2018, https://www.erieri.com/blog/post/nonprofit-board-members-to-pay-or-not-to-pay-in-2018.

[5] North Memorial Health Care, Return of Organization Exempt From Income Tax For the 2019 Calendar Year (filed November 16, 2020), https://projects.propublica.org/nonprofits/organizations/410729979/202033219349304073/full.             

[6] Carter Jones, “Ryan, North Memorial Move Ahead with Maple Grove ‘Health Village’ Project,” Minneapolis / St. Paul Business Journal, March 31, 2020, https://www.bizjournals.com/twincities/news/2020/03/31/ryan-north-memorial-lock-in-land-for-100-acre.html;

Christopher Snowbeck

“North Memorial Buys Fairview Health’s Stake in Maple Grove Hospital,” Star Tribune, March 24, 2022, https://www.startribune.com/north-memorial-buys-fairview-healths-stake-in-maple-grove-hospital/600159148/?refresh=true.

[7] Corey Bork, “Maple Grove Hospital Plans Major Expansion, Targets Spring 2022 Groundbreaking,” CCX Media, September 23, 2021, https://ccxmedia.org/news/maple-grove-hospital-plans-major-expansion-targets-spring-2022-groundbreaking/.

[8] Minnesota Department of Health, 2020 Institution and Margin – Excel, available at https://www.health.state.mn.us/data/economics/hccis/data/stndrdrpts.html.

[9] United States Census Bureau, QuickFacts: Minneapolis city, Minnesota; Maple Grove city, Minnesota; Robbinsdale city, Minnesota, available at https://www.census.gov/quickfacts/fact/table/minneapoliscityminnesota,maplegrovecityminnesota,robbinsdalecityminnesota/INC110220/             

[10] Steve Share, “Report Raises Concerns about Maple Grove Hospital,” Workday Minnesota, June 29, 2006, https://workdayminnesota.org/report-raises-concerns-about-maple-grove-hospital/;

Jeremy Olson, “Union Suing over New Hospital; SEIU: Public Interest Overlooked by State,” St. Paul Pioneer Press, August 2, 2006.

[11] Christopher Snowbeck, “North Memorial Will Cut 200 Jobs,” St. Paul Pioneer Press, September 10, 2010, sec. Business;

Chris Newmarker, “North Memorial Tries to Stem Financial Bleeding,” Minneapolis / St. Paul Business Journal, December 10, 2010;

Sonya Goins, “Reorganization Underway at North Memorial,” Northwest Community Television – Channel 12, October 4, 2015, https://web.archive.org/web/20151004031637/http://www.twelve.tv/news/newsitem.aspx?newsid=1424&newsitemid=22269.

[12] North Memorial Care, “Financial Disclosure Statement For the Quarter and Year-to-Date Ended December 31, 2021,” Electronic Municipal Market Access (EMMA), https://emma.msrb.org/P21557028-P21203018-P21623032.pdf;

———, “Consolidated Financial Statements as of and for the Years Ended December 31, 2020 and 2019, Supplemental Schedules as of and for the Years Ended December 31, 2020 and 2019, and Independent Auditors’ Report,” Electronic Municipal Market Access (EMMA), https://emma.msrb.org/P11500141-P11161902-P11576939.pdf;

North Memorial Care and Subsidiaries, “Consolidated Financial Statements as of and for the Years Ended December 31, 2019 and 2018, Supplemental Schedules as of and for the Years Ended December 31, 2019 and 2018, and Independent Auditors’ Report,” Electronic Municipal Market Access (EMMA), https://emma.msrb.org/RE1341131-RE1043769-RE1451898.pdf;

North Memorial Care, “Consolidated Financial Statements and Supplemental Schedules as of and for the Years Ended December 31, 2018 and 2017, and Independent Auditors’ Report,” Electronic Municipal Market Access (EMMA), https://emma.msrb.org/ER1217985-ER953546-ER1354550.pdf;

———, “Consolidated Financial Statements and Supplemental Schedules as of and for the Years Ended December 31, 2017 and 2016, and Independent Auditors’ Report,” Electronic Municipal Market Access (EMMA), https://emma.msrb.org/EP1029877-EP797909-EP1199431.pdf;

———, “Consolidated Financial Statements and Supplemental Schedules as of and for the Years Ended December 31, 2016 and 2015, and Independent Auditors’ Report,” Electronic Municipal Market Access (EMMA), https://emma.msrb.org/EP998181-EP773882-EP1175635.pdf;

———, “Consolidated Financial Statements and Supplemental Schedules as of and for the Years Ended December 31, 2015 and 2014, and Independent Auditors’ Report,” Electronic Municipal Market Access (EMMA), https://emma.msrb.org/ES784797-ES617084-ES1012785.pdf;

———, “Consolidated Financial Statements and Supplemental Schedules as of and for the Years Ended December 31, 2014 and 2013, and Independent Auditors’ Report,” Electronic Municipal Market Access (EMMA), https://emma.msrb.org/ER875648-ER684128-ER1085807.pdf;

———, “Consolidated Financial Statements as of and for the Years Ended December 31, 2013 and 2012, Supplemental Schedules as of and for the Years Ended December 31, 2013 and 2012, and Independent Auditors’ Report,” Electronic Municipal Market Access (EMMA), https://emma.msrb.org/ER767856-ER597633-ER999705.pdf;

———, “Consolidated Financial Statements as of and for the Years Ended December 31, 2012 and 2011, Supplemental Schedules as of and for the Years Ended December 31, 2012 and 2011, and Independent Auditors’ Report,” Electronic Municipal Market Access (EMMA), https://emma.msrb.org/EA531616-EA414138-EA811011.pdf;

———, “Consolidated Financial Statements as of and for the Years Ended December 31, 2011 and 2010, Supplemental Schedules as of and for the Years Ended December 31, 2011 and 2010, and Independent Auditors’ Report,” Electronic Municipal Market Access (EMMA), https://emma.msrb.org/EP638208-EP498837-EP899666.pdf;

———, “Consolidated Financial Statements as of and for the Years Ended December 31, 2010 and 2009, Supplemental Schedules as of and for the Years Ended December 31, 2010 and 2009, and Independent Auditors’ Report,” Electronic Municipal Market Access (EMMA), https://emma.msrb.org/ER460587-ER358952-ER755641.pdf.

[13] Ibid.

[14] Ibid.