So it looks as though the powerful chairman of the Senate Finance Committee, Charles Grassley of Iowa, has put New York City’s largest private employer in his sights. That’s the message we take from a letter Senator Grassley released yesterday addressed to 10 hospitals nationwide, including New York’s own New York-Presbyterian Hospital System. The letter contained 46 pointed questions about why the hospitals should qualify for tax-exempt status.

For example: “Please provide for the last three years a detailed breakdown of travel of your five top salaried employees: for trips over $1000 please provide receipts for hotel; meals; airfare and all other reimbursed items as well as the purpose of the trip. Please provide all salaries and other benefits provided to these five individuals for the last three years … Finally, please detail any payments or reimbursements made to employees for country clubs.”

And, “Please identify any money or investments that your hospital or related organization (including supporting organization or private foundation) has in offshore bank. Identify the amount in these accounts. Please explain why your organization has taken this action.”

Combined with a hearing before the House Ways and Means Committee that is scheduled for today on the topic of the tax exemption for hospitals, the letter creates on Capitol Hill a context of pressure on the nonprofit hospitals. Adding to this context is the fact that the Senate majority leader, Doctor Frist, is part of the family that founded one of the largest for-profit hospital chains in America, Columbia/HCA.

And surely part of what’s pushing this probe is the heart-wrenching reporting done by the celebrated Lucette Lagnado of the Wall Street Journal on how doggedly some nonprofit hospitals have been dunning poor uninsured patients who haven’t paid their bills.

The nonprofit hospitals make a vigorous case in their own defense. For one thing, they argue, few are making much of a surplus that could be taxed, anyway. Most are barely breaking even, largely because the reimbursements they are paid by Medicare and Medicaid don’t cover the full costs of the services rendered.

Nonprofit hospitals point out that American medicine is the most advanced in the world and that patients come here from all over the world to be treated in American hospitals. As it happens, nonprofit hospitals bear much of the cost of training physicians for the for-profit hospitals and private practices around the country. Free care is provided, especially in emergency rooms. Private citizens volunteer to serve on boards and donate their own wealth to pay for hospital buildings and services, just as in other non-profits. Lives are being saved and extended in these hospitals, and that is priceless.

But a counter-argument obtains. These “nonprofit” hospitals house doctors making a million dollars or more a year who spend some of their time doing things like performing cosmetic surgery on other millionaires. Why should they benefit from tax breaks? Ordinary taxpayers fund much of the operations of these hospitals through government subsidies – not only the tax exemption, but Medicare and Medicaid. Why then, should employees of the nonprofits make so much more than government doctors and administrators who work at fine public hospitals such as Bellevue here in New York or Walter Reed Army Medical Center or Bethesda Naval Hospital in the Washington, D.C., area?

At New York-Presbyterian alone, the president and chief executive officer, Dr. Hebert Pardes, earned $2.3 million in salary in 2003, plus $1.1 million in benefits. An executive vice president, Dr. Michael Berman, earned $1.7 million, plus $1.4 million in benefits. A senior vice president, Phyllis Lantos, earned $852,000, plus benefits of $225,000.Three other senior vice presidents, Maxine Fass, Richard D’Aquila, and Cynthia Sparer, earned more than $750,000 a year, with benefits of more than $150,000 each. And yet another senior vice president, Dr. Steven Corwin, earned $950,000 a year plus $181,000 in benefits, according to the tax returns of the hospital and its affiliates. Granted these administrators are running a sprawling hospital system with 53,000 employees and $6 billion in annual revenue, but they are earning more money than President Bush or the secretary of defense, who are saving more lives.

And that’s not even counting the practicing physicians. Columbia University’s tax return shows that one surgeon, Eric Rose, earned $1.8 million in 2002. Another, Mehmet Oz, earned $1.6 million. Another surgeon, Craig Smith, earned $1.3 million, while another, Jan Quaegebeur, earned $1.2 million, according to the tax returns. Now, surely, one wants the person operating on one’s heart to be paid well enough to assure excellence. And all these employees have to pay income taxes, even if the hospital itself does not have to.

Still, at a certain point, the Congress – and the taxpayers footing the bills for the subsidy – are entitled to ask and to rethink the question of whom these institutions exist to serve. Especially true when, as in New York State, the hospital association joins with the hospital workers’ union to form a potent lobbying force to block a governor when he tries to rein in the health-care costs that are rendering New York’s state and local taxes among the highest in the nation. While Congress tries to put Social Security on a firm footing, Medicare may be in even worse financial shape, and too often the hospitals are the ones lobbying against real fiscal discipline.

Senators Grassley and Frist and Chairman Thomas of the House Ways and Means Committee will have to be careful not to wreck the crown jewel of the American health-care system. But it’s not only Congress that could cripple America’s hospitals with clumsy or heavy-handed oversight. The doctors, administrators, and hospital trustees themselves could ruin things all by themselves by forgetting that, through Medicare, Medicaid, and tax exemptions, the American taxpayers are the ones who are paying.