HSS Reaps Taxpayer Dollars for Pricey Equipment Despite Massive Profits 

HSS surgeon-in-chief Bryan T. Kelly and CEO Louis Shapiro were paid millions while the hospital received taxpayer dollars | Bespoke Films, Envato Elements, Composite by Upper East Site
HSS surgeon-in-chief Bryan T. Kelly and CEO Louis Shapiro were paid millions while the hospital received taxpayer dollars | Bespoke Films, Envato Elements, HSS, Composite by Upper East Site

There’s no easy way to write a story about the City budget without it being boring, unless you’re writing about the Hospital for Special Surgery— the tax-exempt Upper East Side medical center is set to receive nearly a million dollars in taxpayer money from New York City’s 2023 budget, despite sitting on mountains of its own cash. 

Tucked into the budget is a line slating $638,000 to the Hospital for Special Surgery, sponsored by the City Council Speaker Adrienne Adams, as well as an additional $322,000 committed from Manhattan Borough President Mark Levine, for a total of $960,000 for a hospital whose own Internal Revenue Service filings show HSS has no financial need for taxpayer money whatsoever. 

In fact, the Hospital for Special Surgery’s most recent IRS 990 form filing— from December 2020— disclosing the hospital’s revenue and compensation, show that the hospital had more than $45 million in revenue after expenses— better known in the business world as profit, unless your organization is tax exempt. 

That huge number is actually a fluke, but for being low. The hospital had more than double those profits in 2019—  nearly $98 million— and more than $101 million in 2018. A mountain of cash that won’t be visited by the tax man due to the tax exempt status enjoyed by HSS. 

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According to that same filing, the Hospital for Special Surgery had more than $443 million in cash on hand at the end of 2020— while its endowment grew to over $468 million.

It’s not exactly the amount you’d need to fill Scrooge McDuck’s money bin, but it’s more than enough to pay out sky-high compensation packages to the CEO and top doctors. The surgeon-in-chief, Bryan T. Kelly was paid more than $5.8 million dollars in 2020, while another attending physician raked in more than $3.1 million. 

Louis Shapiro, the president and chief executive officer of HSS, had a total compensation of over $4.1 million. Four more doctors had salaries higher than $2 million.

A baker's dozen of HSS employees identified in the hospital's IRS 990 form received $1 to $5.8 million in 2020
A baker’s dozen of HSS employees identified in the hospital’s IRS 990 form received $1 to $5.8 million in 2020

Meanwhile, the Hospital of Special Surgery, does not maintain an emergency room– which would be required to accept all patients by law– and instead points to New York Presbyterian Hospital across the street, with whom HSS is affiliated. 

The nearly one million dollars the Hospital for Special Surgery is set to receive from the City comes under a program that reimburses money to tax-exempt organizations that apply, but requires the capital project receiving the funds serve a defined City purpose.

In this case, the Hospital for Special Surgery sought the $1.2 million dollars to pay for three x-ray machines in its pediatric center— which also does not contain an emergency room.

The so-called ‘defined City purpose’ the Hospital for Special Surgery claims the machines serve is as “an instrumental role in providing the highest quality musculoskeletal care” at HSS— which sounds more like the mission of the private hospital than a defined purpose of city government.

After combing through the application documents submitted to the City Council, Upper East Site has learned the three medical imaging machines, which have already been ordered by HSS, would be replacements for three current units that are in operation at the hospital.

All three machines were described in the application as “nearing the end of their useful life,” but did not specify an exact length. 

The Hospital for Special Surgery is first in the nation for orthopedics | Upper East Site
The Hospital for Special Surgery is first in the nation for orthopedics | Upper East Site

That might sound medically necessary, until you read further and discover the hospital has 52 x-ray units, 15 of which were paid for by New York City taxpayers since 2015, according to the application submitted by HSS. 

Let us reiterate. A private hospital with nearly half-a-billion in cash on hand and a nearly half-a-billion dollar in endowment had taxpayers— our city’s teachers, baristas, janitors, police officers, waiters, etc.— pay for nearly a third of their x-ray equipment.

The Hospital for Special Surgery also says money is no issue when it comes to footing the more than $300,000 bill for construction costs to retrofit the rooms and do some “cosmetic improvements,” of course. 

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When asked what will happen if they don’t get this taxpayer money from the council, the application said HSS would “use a combination of city funds, funds from Hospital operations, or seek other financing as needed to support the purchase.” 

If they didn’t get this taxpayer money, they’d either just use other taxpayer money, some of the hundreds of millions in cash they’re sitting on or they’ll just finance their new machines.

Taxayers will foot the bill for new Definium 656 x-ray machines at HSS | GE Healthcare
Taxayers will foot the bill for new Definium 656 x-ray machines at HSS | GE Healthcare

Upper East Site asked HSS how it justifies— or even rationalizes— taking one million dollars from taxpayers when it is flush with cash and paying out enormous compensation packages— their response avoided the question, pointing towards the procedure rather than the moral implications.

“HSS applied for and received city capital funding made available to qualified non-profit organizations,” a hospital spokesperson said in a statement. 

“This funding will be used to purchase new radiology equipment to better serve pediatric patients,” the spokesperson added.

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Upper East Siders were pretty clear in how they feel about HSS cashing in on taxpayer money. 

A survey of readers on instagram with more than twelve hundred respondents found that a whopping 86% thought the Hospital for Special Surgery should not receive nearly million dollars in tax dollars in light of their lack of financial need. 

One Upper East Sider contacted us to say not only shouldn’t the hospital get the taxpayer money, but that it is also “ridiculous that they build over the FDR and just need to plant ten trees on the [East River] Esplanade.”

HSS Anna-Maria and Stephen Kellen Medical Tower Project Rendering
HSS Anna-Maria and Stephen Kellen Medical Tower Project Rendering

That neighbor, who also wished to remain anonymous, was talking about the $150 million dollar project HSS has undertaken to build a new hospital 12-story tower over the FDR Drive— in part funded by a single $35 million donation.

The project includes planned improvements to the crumbling East River Esplanade between East 70th to 78th Street like sound-proofing, planters and a fitness space under the pedestrian bridge.

“They are a private hospital and have plenty of donors who can cover that expense,” said another Upper East Sider who requested we not use their name, “just gotta make the call.”

Upper East Site reached out to Manhattan Borough President Mark Levine and New York City Council Speaker Adrienne Adams for comment regarding the questionable funding approved for HSS, but we did not hear back.

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One Comment

  1. Look, HSS’ proposal was accepted for funding. The City decided that taxpayer funds would be well used as per what the proposal promised.

    I am rather certain that other City medical centers received funding as well, and they, too, probably have tons of cash on hand.

    Referring emergency and pediatric cases to facilities in an affiliated center across the street makes sense. That does Not mean pediatric and emergency surgeries are never performed at HHS.

    HHS deserves support just as other hospitals do.

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