A series of sharp knocks on his driver’s side window startled Jason Burt awake.
It was the middle of the night on a Saturday in 2016. Burt was sleeping in his pickup truck in the parking lot of St. Jude Children’s Research Hospital in downtown Memphis, Tenn., where his 5-year-old daughter was being treated for brain cancer. He’d driven more than 500 miles from his home in Central Texas to visit her.
A St. Jude security guard peered into the truck and asked Burt what he was doing. Burt explained that his daughter and her mother, his ex-girlfriend, were staying in the hospital’s free patient housing. But St. Jude provides housing for only one parent. Burt, a school bus driver making $20,000 a year, told the guard he couldn’t afford a hotel. The guard let the exhausted father go back to sleep.
St. Jude would do no more to find him a place to stay.
“They were aware of the situation,” Burt said. “I didn’t push anything. I was just grateful she was getting treated and I was doing what I needed to do.”
St. Jude is the largest and most highly regarded health care charity in the country. Each year, the Memphis hospital’s fundraisers send out hundreds of millions of letters, many with heart-wrenching photographs of children left bald from battling cancer. Celebrities like Jennifer Aniston and Sofia Vergara sing the hospital’s praises in televised advertisements. This year, St. Jude’s fundraising reached outer space. The SpaceX Inspiration4 mission in September included a former St. Jude patient as a crew member.
Last year, St. Jude raised a record $2 billion. U.S. News & World Report ranked it the country’s 10th-best children’s cancer hospital, and St. Jude raised roughly as much as the nine hospitals ahead of it put together. It currently has $5.2 billion in reserves, a sum large enough to run the institution at current levels for the next four and a half years without a single additional donation.
St. Jude makes a unique promise as part of its fundraising: “Families never receive a bill from St. Jude for treatment, travel, housing or food – because all a family should worry about is helping their child live.”
But for many families, treatment at St. Jude does not relieve all the financial burdens they incur in getting care for their children, including housing, travel, and food costs that fall outside the hospital’s strict limits, a ProPublica investigation has found.
While families may not receive a bill from St. Jude, the hospital doesn’t cover what’s usually the biggest source of financial stress associated with childhood cancer: The loss of income as parents quit or take leave from jobs to be with their child during treatment. For many families, the consequence is missed payments for cars, utilities, and cellphones. Others face eviction or foreclosure because they can’t keep up with rent and mortgage payments.
Parents at St. Jude have exhausted savings and retirement accounts, borrowed from family and friends, or asked other charities for aid. ProPublica identified more than 100 St. Jude families seeking financial help through the online fundraiser GoFundMe, with half of the campaigns started in the past two years. We counted scores of other events like concerts and yard sales organized to help St. Jude families in need.
One family relied on a mixed martial arts fighter to help raise money for expenses like car repairs and cellphone bills, items that St. Jude would not cover. Another spent $10,000, originally saved to purchase a home, on costs related to treatment at St. Jude.
Only about half of the $7.3 billion St. Jude has received in contributions in the past five fiscal years went to the hospital’s research and caring for patients, according to its financial filings with the Internal Revenue Service. About 30% covered the cost of its fundraising operations, and the remaining 20%, or $1 of every $5 donated, increased its reserve fund.
Further, ProPublica found, a substantial portion of the cost for treatment is paid not by St. Jude but by families’ private insurance or by Medicaid, the government insurance program for low-income families. About 90% of patients are insured, bringing in more than $100 million in reimbursements for treatment a year. If a family shows up at St. Jude without insurance, a company hired by the charity helps them find it. St. Jude does cover copays and deductibles, an unusual benefit.
St. Jude spends about $500 million a year on patient services – a figure that includes all medical care and other assistance. Very little of what St. Jude raises from the public goes to pay for food, travel, and housing for families, the investigation found. Last year, it was 2% of the money raised, or nearly $40 million.
In written responses to ProPublica, lawyers for St. Jude and its fundraising arm, the American Lebanese Syrian Associated Charities, or ALSAC, emphasized that countless families have benefited from the charity provided since the hospital opened its doors in 1962.
“ProPublica should be celebrating St. Jude and ALSAC for their commitment to finding cures, saving children’s lives, and optimizing patient outcomes,” one of their letters said.
It is unquestioned that St. Jude has helped thousands of children and their families over the decades. Patients have offered scores of testimonials about the hospital’s generosity and care.
“This often comes as a huge relief to families who often expect to sell all their belongings just so their children can get the medical care and treatment they need to save their lives,” the hospital’s lawyers wrote. “St. Jude and ALSAC understand that this arrangement cannot cover all financial obligations of all families, nor can St. Jude or ALSAC shield families from all the financial and emotional effects” of a child’s illness.
St. Jude said it discloses the limits of its aid to families on its website and in material provided to those whose children are admitted to the hospital. That includes the rule Burt ran into, that the hospital covers the travel and housing costs of only one caregiver and one patient. For many families, the daily food budget is capped at $50. In some cases, hotel stays en route are provided only if families travel more than 500 miles to get to St. Jude.
St. Jude said its assistance is “based on guidelines to ensure fairness and responsible use of donor funds” and on remaining compliant with a federal anti-kickback statute that makes it a criminal offense to offer something of value to induce a medical referral. St. Jude declined to explain how the law affects the amount or type of financial assistance it provides to families.
“St. Jude has never promised anyone – neither patients nor the public in general – that it can solve all financial problems,” the letter said.
When parents need additional financial help, St. Jude’s social workers often send them to smaller charities or in some cases suggest that they apply for government aid.
They refer many to the Andrew McDonough B+ Foundation, which gives more than $2.5 million a year in grants to thousands of families of pediatric cancer patients at hospitals across the country to help cover rent, utilities, and other urgent expenses.
Joe McDonough, the foundation’s founder and president, said St. Jude families have the same money problems as families of patients at other children’s hospitals, even though he said St. Jude’s marketing creates the public perception that it alleviates these burdens.
“People say to me, ‘Why are you helping St. Jude families?’ ” McDonough said. “Well, what happens when a family lives in Augusta, Georgia, and they’re being treated at St. Jude? They still have to pay the rent on their apartment back in Augusta, Georgia. They still have to make their car payment. And it’s not my position to say whether St. Jude should be paying for all those expenses or not. I’m just explaining that it’s not a totally free ride.”
The help St. Jude provides to families may soon be increasing.
After ProPublica provided St. Jude with the findings of its reporting, the hospital informed families of a dramatic expansion in the assistance it will give to parents and other relatives during their kids’ treatment in Memphis.
Among the most significant changes are increasing travel benefits to two parents instead of one and covering regular trips to Memphis for siblings and other loved ones. St. Jude’s letter to parents said the changes take effect Nov. 15.
That would’ve made a big difference for Burt.
Burt’s daughter, whom ProPublica is not identifying at her mother’s request, was originally diagnosed with cancer in early 2015, when doctors discovered a tumor pressing against her brain stem. She had successful emergency surgery to remove the mass at Dell Children’s Medical Center in Austin, Texas. Medicaid and Dell Children’s covered the bill, but the family was still faced with the cost of her ongoing treatment.
“At that point I’m thinking: ‘What am I going to do? I guess I’m selling my house, whatever it takes,’” Burt recalled. “Honestly, that was probably a big deciding factor for St. Jude.”
St. Jude accepted Burt’s daughter into a clinical trial, and the family moved to the hospital’s patient housing in Memphis for several months. Both parents stopped working for a time, and people in their hometown raised cash to pay their bills.
Her cancer relapsed the following year with several new, inoperable brain tumors. Burt and his daughter’s mom broke up during that round of treatment, and financial problems piled up.
Burt said his credit score dropped so low that utility companies refused to set up service unless he first paid a deposit. One of the family’s cars was repossessed, he said. Burt’s 2005 Chevrolet Colorado pickup has 300,000 miles on it, many of them logged on trips from Texas to Memphis. When Burt’s daughter was at St. Jude for treatment or exams, he’d work all week, then visit on many weekends where he would spend Saturday night sleeping in the hospital parking lot.
He asked hospital officials if he could sleep in St. Jude’s housing, but they turned him down, he said.
Burt said he was happy with the care St. Jude provided. His daughter’s health is stable, he said, and brain scans taken during her September exam confirmed her two remaining tumors haven’t grown. But he’s still trying to recover financially.
“It’s five years now,” Burt said, “and I’m not completely caught up yet.”
A fundraising giant
St. Jude began with a fledgling entertainer praying for a career break.
When Danny Thomas, a comic and actor best known for the TV sitcom “Make Room for Daddy,” was struggling to earn a living in the late 1930s, the devout Roman Catholic went to church and asked for help from the patron saint of desperate cases, St. Jude Thaddeus. If he made it big, Thomas promised to build “a shrine where the poor and the helpless and the hopeless may come for comfort and aid,” according to a history published by ALSAC.
Within five years, Thomas became a star and worked to fulfill his promise by building a children’s hospital named after St. Jude and a fundraising organization to support it. Thomas, whose parents were Lebanese immigrants, recruited others who shared his Middle Eastern roots to help.
He used his fame to raise the hospital’s profile, appearing in ads for St. Jude and hosting fundraising events starring the likes of Elvis Presley and Sammy Davis Jr. Thomas’ daughter Marlo, herself a TV star, succeeded him in championing St. Jude.
Today, St. Jude is a specialty treatment and research center with about 5,700 employees and 73 beds. Other top children’s hospitals have more staff and beds, and they also treat more conditions.
Though St. Jude raises money across the world, most of its patients come from Tennessee and surrounding states. Patients from elsewhere are usually enrolled in clinical trials.
ALSAC, which handles St. Jude’s fundraising and investments, has 2,188 employees in Memphis and in 36 regional offices across the country. More than 400 of the fundraising arm’s employees are paid over $100,000, according to IRS filings. The charity takes in so much money each year that it regularly steers hundreds of millions of dollars in donations to reserve accounts, the filings show.
Overall, St. Jude’s reserve has grown by 58% over the past five fiscal years, during which it has added $1.9 billion to its investment accounts and shifted its portfolio toward financial products designed to generate bigger returns than stocks, bonds, and mutual funds traditionally deliver. The charity stowed more than a third of the new surplus, $688 million, in riskier private equity investments.
IRS rules do not limit the size of a nonprofit’s reserves, and experts on charitable finance differ on best practices.
St. Jude meets Better Business Bureau guidelines, which call for charities to maintain reserves of less than three times total expenses, but other experts expressed alarm that the hospital had accumulated such a large sum of money.
The size of the St. Jude reserve is “staggering,” said Laura Otten, the director of LaSalle University’s master program in nonprofit leadership. She said a typical reserve for a nonprofit the size of St. Jude is one to two years of expenses. Donors generally want to know their dollars are being put to work, she said.
The hospital said it needs a large reserve because its unique operating model relies on donations to fund annual operating costs. “[W]e are highly donor-dependent and subject to the economic driven vagaries of charitable giving,” the hospital said in a written response to ProPublica questions.
But the hospital’s reserve is already more than large enough to buffer against recessions and potential drops in donations, said Ge Bai, a professor of accounting and health policy at Johns Hopkins University. “They should be spending the money as aggressively as they raise it, but they seem to be hoarding,” Bai said.
The hospital said it is also raising billions to fund the construction of new housing and research space, although its plans do not currently include spending any of the reserve on new facilities.
St. Jude’s reserves have ballooned at a time when researchers, oncologists, advocates, and families complain about a dearth of funding for pediatric cancer studies nationally.
Dozens of other children’s hospitals across the country have research divisions devoted to pediatric cancer and enroll their patients in clinical trials for new drugs and procedures. They pay for research staff and studies in part with donations from their local communities, often competing directly against St. Jude. ALSAC has regional offices in several U.S. cities with elite pediatric cancer centers of their own, including Atlanta, Chicago, Denver, and Seattle.
Coury Shadyac, an ALSAC vice president and daughter of the organization’s CEO, Richard Shadyac Jr., oversees a team of 45 fundraisers along the West Coast “raising $300 million annually” for St. Jude, according to her LinkedIn profile. That’s $100 million more in donations than either Children’s Hospital Los Angeles or Seattle Children’s Hospital, two of the nation’s leading pediatric cancer institutions, received in fiscal year 2019, IRS disclosures show. But it’s only a small part of St. Jude’s fundraising haul.
ALSAC’s ubiquitous fundraising has led to concerns that it undercuts other hospitals’ campaigns. Some doctors interviewed by ProPublica said they have encouraged donors to give their money to hospitals closer to home.
David Clark, a pediatrician and former longtime chairperson of pediatrics at Albany Medical Center in New York, said St. Jude raises tens of thousands of dollars in his region that does little to benefit the children with cancer in his area since almost all are treated locally. ALSAC has a fundraising office located a few miles from Albany Medical.
“They think of every way they can to make money and the least amount of ways to spend it,” Clark said. “They deceive people into supporting something that is totally dishonest.”
Nearly all St. Jude solicitations feature the hospital’s patients – the children usually smiling and bald from treatment – along with the familiar promise that it never sends families a bill.
It’s a message that ALSAC has tested and researched to maximize donations. Donors appreciate the promise to never bill families, said Mary Kate Tolan, an ALSAC executive, in a podcast last year. She added that no parent should have to take out a second mortgage or lose their job because their child is being treated at St. Jude.
Alternative messaging to the no-bills promise did not “perform as well,” said Tolan, who develops emerging technologies for ALSAC. Tolan did not return requests for comment.