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April 25, 2016

Where does $1 to Hippocrates Health Institute Go?

by Anne Paddock

The Hippocrates Health Institute (HHI) is a non-profit 501 (c) (3) that operates out of a 50-acre tropical setting in West Palm Beach, Florida that provides educational and instructional services to teach individuals how to live and eat healthier.  Specifically, HHI has been operating since 1987 and offers three programs:

  • Life Transformation
  • Health Education
  • Cancer Wellness

With 7 voting members – three of whom are related – Brian Clement, President, his wife, Anna Maria Gahns (Vice President) and Robert Clement – along with Solomon Gabbay, Shula Gabbay, Julia Loggins, and Michael Riel, the organization is not one that relies on donations but instead tuition for services.

For the year ending 12/31/14, the IRS Form 990 reports total revenue of $20.1 million, of which $17.6 million (88%) came from tuition and services (medical, therapy, and other), $1.8 million (9%) from the sale of inventory, with the remaining $0.7 million (3%) from investment income and contributions.

Functional expenses totaled $18 million (net of depreciation, a non-cash expense) or 90% of revenue, in the following categories:

  • $8.4 million: Salaries, benefits, pension, and payroll taxes including $1.5 million to the President, Brian Clement and his wife, Anna Maria Gahns, the Vice President, and nearly $600,000 to four other key employees for a total of $2.1 million to 6 key staff
  • $2.3 million: Management, Legal, Bank, and Accounting Fees
  • $2.2 million  Supplies and Food
  • $1.7 million:  Office, Occupancy, and Insurance
  • $1.5 million:  Other Expenses (no detail provided)
  • $1.2 million:  Therapists and Services
  • $0.7 million:  Advertising and Promotion and Travel

It is also important to note HHI paid the following sums (within the categories above) to three outside organizations:

  • $290,708:  Dr. Paulson Kotturan, MD: A family physician who graduated from a medical school in the Dominican Republic in 1982 (the medical school was closed in 1984) and works at Hillsboro Urgent Care. He is known as Dr. Paul.
  • $175,670:  Wellness Coaching,Inc.: A Florida corporation in Wellington, Florida whose officers are Antony and Annie Chatham.
  • $115,962:  Spectrum Healing Associates in Jupiter, Florida which appears to be Andy Bernay-Roman, LMHC (licensed mental health counselor).

The remaining $2.1 million (10% of revenue) left unspent helped strengthen the balance sheet. At year-end, HHI had total assets of $33.4 million concentrated in land, buildings and equipment ($18.4 million) and liquid assets (cash, savings, publicly traded securities) of $12.8 million. Liabilities total $6.2 million are concentrated in accounts payable ($3.9 million) and deferred revenue ($2 million). As a result, the total net assets or fund balance was $27.2 million at year-end.

HHI appears to a be an educational facility that focuses on health for both the individual and the educator. The primary or signature program is the Life Transformation Program, a 3-week course that costs $6,114 – $22,230 (or $2,038 – $7,410 per week) depending on the accommodations chosen (i.e. shared room, private villa). Based on the analysis above, $1 in revenue is spent as follows:

 $1.00:  Revenue

-$0.31:  Compensation, Benefits, Pension, and Payroll taxes

-$0.11: Compensation to key staff

-$0.11:  Management, Bank, Legal, and Accounting Fees

-$0.10:  Supplies and Food

-$0.09:  Office, Occupancy, and Insurance

-$0.08:  Other Expenses (no detail provided)

-$0.06:  Therapists and Services

-$0.04:  Advertising, Promotion, Travel

$0.10:  Revenue Remaining to Fund Balance

For the client who paid $10,000 for a 3-week stay (or approximately $3,300 per week or $500 per day), the funds was spent as follows:

$10,000: Revenue

-$ 3,100: Compensation, Benefits, Pension, and Payroll taxes

-$ 1,100: Compensation to key staff

-$ 1,100: Management, Bank, Legal, and Accounting Fees

-$ 1,000: Supplies and Food

-$   900: Office, Occupancy, and Insurance

-$   800: Other Expenses (no detail provided)

-$   600: Therapists and Services

-$   400: Advertising, Promotion, Travel

$ 1,000: Revenue Remaining into Fund Balance

In summary, HHI is overseen by a Board of seven people, three of whom are related. Of the remaining four members, two appear to be related. The President and Vice President are married and together take $1.5 million in compensation annually.  Nearly $600,000 is paid to three (3) outside organizations: a doctor who works at Hillsboro Urgent Care (which is about 40 miles south of HHI), and two therapists   (who are listed as part of the medical staff on HHI’s website).

An analysis of how each dollar is spent reveals that approximately $0.47 of every dollar is spent on staff, food and supplies, therapists and services. The remaining $0.53 is spent on the compensation for the six key staff, outside fees for management, bank, legal, and accounting, office, occupancy, insurance, and other unexplained expenses.

To review the most recent IRS Form 990, click here.

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