Sept. 21--Michael Tarwater, the CEO of one of the nation's largest hospital chains, enjoys a rarely discussed perk: the freedom to fly planes owned by the nonprofit system for business and pleasure.
Flight logs provided by Carolinas HealthCare System show Tarwater took at least 29 personal flights on the system's planes from 2008 through 2012. During that time, he also has been on board 101 flights that the system said were for business.
Tarwater's personal flights are counted as part of his compensation, which totaled $4.8 million in 2012, according to the hospital system.
Widely recognized for guiding Mecklenburg County's largest employer through a period of remarkable growth, Tarwater has also honed another skill: He's an accomplished pilot.
Tarwater served as co-pilot on more than half of the Carolinas HealthCare flights he was aboard during the five years ending in 2012, system records show. He holds an Airline Transport Pilot certificate, the highest license issued by the Federal Aviation Administration.
The hospital system owns five planes and three helicopters, which are used mainly for transporting patients and organs.
Tarwater declined to be interviewed, but he told the Observer that since 2008, he has reported an average of $2,475 per year as income attributable to his personal flights. The personal travel was reported in accordance with IRS guidelines, officials said.
But IRS rules allow Tarwater to value those flights at amounts far lower than the cost of operating the planes. Had he chartered the flights from a private company, he likely would have paid roughly $20,000 a year, on average, the Observer found.
A number of Tarwater's personal trips were to Dothan, Ala., where his daughter and grandchildren live. Others were to Gulf Shores, Ala., near Pensacola, Fla., where his father lives.
In one typical case, Tarwater flew from Charlotte to Dothan on Sept. 28, 2012, and returned two days later. SkySouth, a charter company based in Burlington, would have charged about $4,900 for the trip, the company's general manager said.
Calls to five other systems suggest the practice of using hospital planes for personal travel isn't common. A number of systems -- including Novant Health, Duke University Health System, UNC Hospitals and the Mayo Clinic -- say they do not allow executives to use their aircraft for personal flights.
'It seems inappropriate'
Some experts believe the practice is rare -- and questionable.
"It seems inappropriate for them to use (planes) for personal purposes, given that they are being supported via tax exemption," said Gerard Anderson, director of the Johns Hopkins Center for Hospital Finance and Management. "So we are all paying for the vacation the CEO is taking."
As nonprofits, Carolinas HealthCare hospitals in Mecklenburg, Cabarrus and Lincoln counties get tax exemptions worth more than $100 million a year, the Observer estimated. CHS, the state's largest hospital system, owns more than $1 billion in tax-exempt property and pays no corporate income taxes or sales taxes.
The system, which brings in about $7 billion in annual revenue, says it earns its tax exemptions by providing extensive benefits to the community, including more than $280 million last year in free and discounted care for uninsured patients who can't afford to pay their bills.
Tarwater's personal trips accounted for fewer than 1 percent of the flights taken by CHS planes, the system said.
All personal use of the system's airplanes "follows IRS guidelines and Carolinas HealthCare System policies," the system said in a written statement.
With CEO approval, other senior CHS executives are also allowed to use the planes for personal travel, the system said. CHS did not identify other executives who have done that. Such flights are "very rare," and are reported as income in keeping with IRS guidelines, said system spokeswoman Amy Murphy.
The vast majority of Carolinas HealthCare's business travel is booked on commercial airlines, the system said. But from 2008 to 2012, executives boarded about 9 percent of CHS flights.
"Business" flying - defined as trips where operators are piloting themselves - accounted for about 14 percent of general aviation activity in 2005, according to the Federal Aviation Administration.
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