High-Profile Fundraising for Health Care Nonprofits: Boon or Bust?

October 30, 2014

by Jennifer Redmond

Jennifer RedmondImplementation of the Affordable Care Act has created an equal share of opportunity and difficulty for health care providers. In an evergrowing market, providers are vying for the attention of consumers in creative ways, but some, in an effort to edge out the competition, are met with vehement criticism. This pressure to gain more customers can lead to seemingly controversial and divisive actions that could do more harm than good in promoting a company’s image to the general public.

Take recent events concerning regional health care providers in the San Francisco area—Dignity Health and Blue Shield of California. These not-for-profit providers purchased luxury suites at the brand-new Levi Stadium, which opened for regular season games in September. The stadium offers over 165 luxury suites to buyers at an annual cost of $250,000 to $400,000 each, with contract minimums at 10 or 20 years. Simple calculations show that Dignity Health and Blue Shield most likely paid a minimum of $2.5 million for their respective company suites.

The essence of the controversy is that groups such as Consumer Watchdog believe health care providers could lower premiums instead of spending money on luxury suites. Jamie Court, a spokesperson with Consumer Watchdog, told the San Francisco Chronicle the spending is “scandalous.” He especially focuses on the “not for profit” designations that Dignity Health and Blue Shield hold, saying “two not-for-profit health care companies that are exempt from state taxes waste millions of dollars on luxury skyboxes rather than putting those charitable dollars toward patient care or lower premiums.”

But is it possible that purchasing these luxury suites could contribute to those very same goals?

Wes Cole, a web developer and marketer for nonprofit and for-profit companies alike, says, “It’s too early to say whether this decision is a bad one or not. [Dignity Health and Blue Shield] could use these skyboxes in some incredible ways to [help] their patients and also increase [company] awareness within the community.”

It’s important to remember that “without marketing these organizations won’t grow and won’t be able to … impact the community,” Cole points out, adding that “people outside of an organization often do not have any supporting context around decisions to be able to judge them appropriately.”

Jamie Court’s statements to the press indicate a disregard for any potential positive uses. This reaction is par for the course, according to Cole, who says, “Organizations often get criticized because people outside of an organization are extremely shortsighted in understanding the reasons [for spending].” Thus, Court presents this particular situation as a false dilemma, claiming that if the multimillion-dollar boxes were not purchased, then premiums would automatically go down. But is it possible that Court has oversimplified a complex issue?

Nonprofit Quarterly reported earlier this year that a “promising opportunity for health care nonprofits is in the area of fund development.” In his February 2014 article entitled “The Role of Nonprofits in Health Care: A Trends Summary,” Michael Wyland states that nonprofits will need to “emulate other charities in crafting a more diversified fund development plan for more diversified purposes.”

Perhaps the purchase of those boxes was one of these said “diversified” efforts to increase revenue. It’s possible that the purchasing of these luxury suites could have a wide range of profitable uses.

Indeed, an official statement from Dignity Health indicates that exact mentality. Dignity says: “[I]n today’s highly competitive health care market, the sponsorships also provide positive visibility and recognition for the Dignity Health brand and the services we provide.”

“Highly competitive” is the key phrase. Going back to Wyland’s report, the only sure thing in health care is that everything will continue to change as it has been. To remain financially sound, not-for-profit organizations must think like for-profit ones.

“Many people don’t realize that marketing is a key part of a not-for-profit’s business,” says Cole. “And thus money must be spent for money to be made.”

But Cole would give some qualifications; he does not encourage unbridled spending or lavish expenditures.

“No matter what type of business, the goal should be to serve your customers,” Cole says.

As the official health care partner of the San Francisco 49ers, Dignity Health will also be sponsoring “health and wellness events throughout the season” and hosting first-aid clinics throughout Levi Stadium facilities. In a statement released for this article, Dignity Health officials said they “regularly sponsor events and organizations that share [their] strong commitment to the community and to bringing healthy lifestyle programs and services to consumers.” They declined further comment.

To salvage the backlash Dignity Health and Blue Shield experienced, Cole suggests redemptive uses for the luxury suites, such as “giving sick people a dream day away from the hospital.”

Above all, this situation serves to illustrate the complexities involved in a health care marketplace where bottom lines rule supreme. For Dignity Health and Blue Shield, the goal should be to find a balance between expanding company opportunities without alienating the very same customers they are trying to attract.

Jennifer Redmond is a freelance writer who writes about politics, health, and wellness.