In recent months, government disclosures of hospital charges have parted the curtain on vast disparities in the cost of routine services and procedures, from X-rays to aspirin.
But a two-night hospital stay for a broken leg offered me unwelcome entry into a whole other realm of hospital overcharges that remain secret and invisible to taxpayers–despite costing the U.S. hundreds of millions of dollars in tax revenues. These are the charity write-offs taken by nonprofit hospitals, used to justify their tax-exempt status.
I was just 11 months shy of being eligible for Medicare when I fell and ended up at St. Anthony, a new $375 million hospital outside Denver that is part of the 15-hospital Centura Health Network.
St. Anthony is a faith-based nonprofit organization. I trusted “faith-based.” To me it represented the hand of God.
But I had no insurance and only a small home and a 1994 Subaru as assets. In my emergency room cubicle, bean counters bumped elbows with healers. Expert eyes diagnosed me immediately as an inconsequential pauper.
The surgery to fix my leg was repeatedly delayed for nearly a day. No food, no drink, Ice Chip City. But the well-oiled medical machine kept me tanked up on painkillers and oxygen, checked on me regularly and treated me well. I walk now with barely a limp, and for that, I am grateful.
After leaving the hospital, I was given the opportunity to prove my poverty. The bill plunged from $63,000 to $1,300. I sobbed with relief.
But then I started wondering: How had my bill become so large?
Centura has $2 billion in annual revenues, and says that because St. Anthony is a nonprofit, the hospital pours all of its revenue into its various health care and community benefit operations. In 2011, Catholic Health Initiatives-Colorado, Centura’s parent nonprofit, reported to the Internal Revenue Service that it provided $63,873,673 in uncompensated care for the poor. Centura’s mission is “not merely a business, it is a calling,” the organization’s website states. But I found nothing sacred in what I discovered: outrageous pricing, esoteric coding and disturbing accounting procedures.
St. Anthony charges $400 for X-rays, while an industry web site says that X-rays cost $2.50 to provide. My bill listed $22,000 in pharmacy charges alone, but that didn’t sound right. A web site devoted to medical costs by Zip Code said a broken leg, surgical repair and five nights in a hospital should run around $16,000. I spent only two nights, despite being pressed hard to stay longer.
The bill was baffling, studded with numbers that supposedly explained my treatment and its cost. I asked the hospital for something in plain English and instead received a duplicate of the original bill.
A friendly man at the American Medical Association offered to review the bill, but confessed confusion. He and his colleagues didn’t recognize the codes and said that charges labeled as procedures appeared to be supplies instead. “This bill needs a serious dose of transparency,” he said.
Through payment and negotiation, I got the bill for my care down to $775. Still, the hospital repeatedly pressured me to raise my monthly payments.
Robo-calls from the hospital were followed by emails from credit rating agencies warning that they had received negative information about me. When I called, Centura admitted that it had sent three of my five “accounts” to a collection agency. But it could “call them back” if I’d increase my monthly payment to $50.
Unfortunately, my Social Security check went down to $550 when I turned 65, a $110 monthly deduction to pay for Medicare. “You want me to send you $50 of this $550 monthly income?” I asked a patient representative.
Silence.
“Is there were anything else I can help you with?” she asked.
A look at Centura’s annual IRS filing shows that the nonprofit’s president collects an annual salary of $1.5 million, while the CFO receives $740,000 in compensation. The organization spends $1 million a year to a Swiss-based debt collection service, specialized at tracking down former patients across borders.
I contacted St. Anthony for comment on this essay. Within hours, my accounts were withdrawn from the collection agency, as were negative credit reports, and the hospital accepted the reduced payment plan. A later email reported that St. Anthony abides by all applicable rules and prices its services competitively.
Now it seems to me that St. Anthony — which kicks off each day with a reflective comment or prayer over the hospital intercom — takes advantage of the trust of its faith-based customers. The nonstandard codes are puzzling, the accounting games debilitating: The hospital’s leverage increases if it can send one “account” at a time to a collection agency, like a slow IV drip playing on the nerves of the consumer.
Most troubling is the exaggeration of charitable work, which gives St. Anthony tax advantages that ordinary taxpayers must subsidize. Hospitals sometimes get in trouble for this.
But as a hospital association executive put it: “One million charity patients? One million pieces of paper. Who’s going to look at them all?”
Rita Healy is a freelance writer based in Colorado. A version of this essay appeared in The Denver Post on 18 October 2013.
Rita Healy
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RitaHealy this is a fascinating story. I’m wondering if you would be willing to a redacted copy of the bill for use in a classroom activity I do asking students to explore a bill from the healthcare system today, comparing it to a bill a century ago.
Hi Brian. Your comment is almost 2 years old now and I don’t know if you have gotten ahold of what you were searching for but I ended up at this article due to a similar situation. I am an insured graduate student and I broke my leg requiring an ambulance ride to the ER and surgery to insert a metal strap and screws. Thus far the claims being processed on my insurance webpage are at $70,000 and I was “inpatient” for less than 24 hours. My wife is a teacher also, it sounds like a neat activity for your students and I wouldn’t mind sharing a redacted copy of my bill if/when I get an itemized bill.
Doesn’t seem the hospital made any money off you. Fairly clear they were in the red on your case…no?
No, they were well in the black. They claimed $63,000 in charity care and tried to get me to stay a few more days, either in the hospital or at a hospital-owned rehab facility. Given estimates that not more than a half million U.S. patients qualify for charity care annually, hospitals are lucky when one stumbles in off the streets. HOORAY, a charity care patient! Our tax exemption is safe for awhile longer!
I guess my question would be how you know for a fact that they were truly reimbursed $63,000? Having been in a number of hospitals with large charity case loads, I can speak to the low glamour, no frills amenities. Trust, me, they would prefer paying patients.
Well, they TRIED for $63,000, anyway. I’ve read that these outrageous markups are because no hospital administrator wants to miss the opportunity to overcharge a sick sheik with a suitcase full of cash. That’s the industry ideal. Very hard for mere Americans who have suffered financially from the Great Recession to compete with sick sheiks. But as a hospital person, you already know that.
Pray tell, where have you read about these ulterior motives of hospital administrators going hard after “sick sheiks”? The sheiks that do come to the States for medical treatment, I can assure you, aren’t seeking out their care in charity hospitals.
See this recent NEJM article on the economics of charity-based care….and his it’s certainly not a money-making venture.
If you had been on Medicare, all of the individual charges would have been ignored when it was time to pay the bills. Medicare pays hospitals based on the DRG (Diagnostic Related Grouping). While the total of your charges were 63K, Medicare would have said that based on the DRG for a broken leg, (it might be #480 “Hip and Femur Procedures) the total amount to be paid would be around 10K (ballpark guess). Medicare would then pay about 8K of the bills and the patient would be on the hook for only about 2K, which could be paid by supplementary insurance if the patient had it. If you had been on an insurance plan like United, United would have previously negotiated a contract with the hospital system giving them a large discount for any of their patients. The discounts would be not as good as what Medicare gets, but very substantial–probably reducing the bill to maybe 13K to 16K depending on the insurance company and how good of a contract that they had negotiated. On the other hand, let’s say that you were a visitor from Illinois and had insurance with a local Illinois company that did not have a contract with the Centura. In this case, the Illinois insurance company would be stuck with the full 63K bill as would be the case with someone not having any insurance at all. (It isn’t fair, but that is how the system works.) When I last worked for a hospital system 6.5 years ago, I was aware of non-insured people being able to negotiate a 60% discount if they paid the amount due immediately. To get your bill reduced from 63K to less than 2K is simply amazing given that almost all hospitals are losing money on Medicare reimbursements which would have been considerably higher than the 2K bill that you ended up with.