October 27, 2005 | Read Time: 2 minutes
Nonprofit health-care organizations generated 8.2 percent on their investment assets last year, compared with 14.1 percent the previous year, according to a new report by the Commonfund Institute.
The gains correspond to the performance of the stock markets. The Standard & Poor’s 500 stock index rose 9 percent last year, compared with nearly 21 percent in 2003.
The report analyzed data provided by 197 health-maintenance organizations, health-care systems, and other nonprofit health groups that together held $91-billion in operating funds and $37-billion in pension funds.
The Commonfund Institute is the research arm of Commonfund, a company in Wilton, Conn., that manages approximately $34-billion in assets for more than 1,600 educational institutions, foundations, and health-care and other nonprofit organizations.
The Commonfund report also found that health-care organizations shifted more of their funds away from the domestic stock markets into other types of investments such as international stocks and hedge funds.
Jay Pieper, vice president for corporate development and treasury affairs at Partners Healthcare System, in Boston, said his organization earned 14.4 percent last year on the $4-billion in operating and endowment funds it invested.
Partners, the organization that operates Massachusetts General Hospital, Brigham and Women’s Hospital, and several other health-care institutions in the Boston area, is among the largest nonprofit groups in the health-care field, with $4.9-billion in income last year.
Mr. Pieper said fund managers can adjust where they place their assets to take advantage of differences in how those markets perform.
While domestic stocks “in 2004 didn’t have a terribly good year,” an investment manager who shifted some assets into international or smaller company stocks would have done better.
That, he said, explains Commonfund’s finding that health-care organizations were shifting funds out of the stocks of large American companies and into other investments.
Mr. Pieper added that while returns in 2004 were down from the previous year, that does not mean it was a bad year for the performance of investments held by health-care institutions.
“The bad news is that it was not as good as 2003,” he said. “The good news is that 2003 was an exceptionally good year.”
Nonprofit organizations can obtain free copies of the Commonfund Benchmarks Study Healthcare Report 2005 by sending an e-mail message to the institute’s executive director, John S. Griswold Jr., at jgriswol@cfund.org. Commonfund charges $250 per copy for other organizations and individuals not affiliated with a nonprofit group.
