Cleveland resident Jeff Barge, Chief Success Officer of Lucky Star Communications, has sent a request to Ohio Attorney General David Yost asking him to question The Cleveland Clinic Foundation on its multi-billion dollar expansion overseas before granting its request for renewal of its tax exempt status here in the U.S.
The Clinic’s tax-exempt status deprives the City of Cleveland and the Cleveland Metropolitan School District of approximately $40 million a year in much needed property tax revenue.
“I truly believe Cleveland Clinic has profoundly lost its way in terms of knowing its mission as to what a non-profit should be doing,” writes Barge in his request, “and merely views its current non-profit status as a way to legally avoid $100s of millions in taxes nationwide.”
Lucky Star Communications is a Cleveland-based consulting firm, and Barge is a former reporter for numerous legal and business publications.
Cleveland Clinic has been criticized in The Guardian and other publications for opening what are basically for-profit hospitals in overseas markets such as London and Dubai, while ignoring the medical needs of residents living mere blocks from its headquarters, according to Barge.
According to a recent article in Politico:
“More than one-third of residents in the census tract around the Clinic have diabetes, the worst rate in the city, according to the latest data from the Centers for Disease Control and Prevention. That’s just one of numerous chronic and preventable health conditions plaguing the area around the Clinic. Meanwhile, neighborhood residents say there are too few jobs and talk of hearing gunfire every night.”
According to its last quarterly report, Cleveland Clinic only provided $12.2 million in direct free non-Medicaid related care in the last quarter, which is a miniscule amount considering that it will have a $1.3 billion operating profit this year, and that it has $12.2 billion in unrestricted assets on its books that it is making no effort to use for charity, said Barge in the letter.
Instead, Cleveland Clinic is using this to invest in stocks and bonds, to buy office buildings as investments, and more significantly, to open specialty surgery hospitals in London and Dubai, Abu Dabi for the super rich, said Barge in the letter.
Cleveland Clinic has long been the subject of criticism for its lack of charity work, according to Barge. A recent study by the Lown Institute says it ranks almost last in the amount of charity work it does among all non-profit hospitals in the country, according to an article in the Cleveland Plain Dealer newspaper.
According to this article, the Clinic runs a $262 million annual deficit in the amount of community benefits it should be bringing to its host cities.
Many non-profits across the country, including hospitals, make what are called payments in lieu of taxes (PILOTs) to compensate their communities for the loss of tax revenue, says Barge.
In his letter, Barge is asking Cleveland Clinic to quantify in specific figures what charity needs the 501(c)(3) corporation is meeting by opening multi-billion dollar hospitals in Dubai and London. Barge notes that the new London hospital, currently under construction, is located across the street from Buckingham Palace.
In terms of the $12.2 billion in unrestricted assets that are on its books, a professor of non-profit accounting at Ohio State consulted by Barge stated that this money eventually has to come back out — “they can’t just keep it” — if Cleveland Clinic wants to keep its status as a non-profit, according to Barge’s letter.
“Cleveland Clinic should be asked to detail its plans on how it plans to eventually apply this $12.2 billion to charitable work,” says Barge.
Cleveland Clinic has been sued by the city of Strongsville in the past over its non-payment of property taxes, according to an article in the Plain Dealer. That suit was settled in return for a million dollar payment to the Strongsville school district, according to the article.
Copies of the request have been sent to Cleveland Mayor Frank Jackson, and Cleveland City Council Members Joseph Jones, Kevin Bishop, Kerry McCormack, Marion Anita Gardner, Delores Gray, Blaine Griffin, Basheer Jones, Michael Polensek, Kevin Conwell, Anthony Hairston, Brian Mooney, Anthony Brancatelli, Jasmin Santana, Jenny Spencer, Brian Kazy, Charles Slife, and attorney Tim Mizny, says Barge.
