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On Wednesdays, charity care patients with broken bones gather for orthopedic check-ups in the emergency waiting room at St. Anthony Hospital outside Denver. It is 7:45 a.m., and the patients have been advised to put aside the entire morning, although they will probably spend fewer than two minutes with a medical professional. Balancing on crutches and leaning on walkers, they stand in line. At the front they’re drawn into an open-door office or to a cashier’s window.

“Same phone? Same address?” a clerk asks. “How do you want to pay your $50 this morning?”

They need not pay the full amount today, patients are told. Just $50. The hospital will bill later for the remaining balance.

The payment amount varies, according to St. Anthony spokeswoman Loralee Sturm.

But for some patients, charity care costs more than insurance co-pays.

“A $50 deposit is requested from self-pay patients at the time of service. Based on each patient’s financial circumstances, our Patient Access representatives work closely with patients to determine if they qualify for financial assistance programs and/or charity care,” Sturm told 100Reporters.

Ultimately, portions of these $50 payments are tiny capillaries feeding into the layers of Catholic Health Initiatives’ for-profit and nonprofit entities: St. Anthony is owned by Centura Health, which is under Catholic Health Initiatives-Colorado, which is under Catholic Health Initiatives. Perhaps even just a nickel from each $50 payment will combine with nickels from dozens of other entities owned by C.H.I.: 81 healthcare businesses in Colorado alone; such businesses throughout the country as Alverna Apartments in Little Falls, Minnesota; Franciscan Foundation in Tacoma, Washington; Mercy Healthcare Foundation in Valley City, North Dakota.

The revenue trickles eventually become a gushing stream feeding, among many other accounts, C.H.I.’s $6.2 billion asset fund. “That sum represents the cash and investments of all C.H.I. entities, which are pooled and collectively invested through the organization’s operating investment program,” C.H.I. spokesman Michael Romano said. “The C.H.I. entities that participate in the operating investment program pay applicable U.S. taxes on the taxable income earned through that program.”

New Clarity

Some nonprofit hospitals go to great lengths to collect the nickels of poor people, although the Affordable Care Act ratchets back some of those efforts, no longer allowing liens, jail time or the passing of adverse information to credit reporting agencies.

The new federal health care law also requires hospitals to make their financial assistance policies publicly available, and to limit the bills for poor and uninsured patients to what Medicare fee-for-service would pay, or an estimate of what Medicare would pay.

As a result, the new health care law will, for the first time, bring some uniformity to public reporting on the value of charity care that nonprofit hospitals provide.

“Healthcare is characterized by great informational (and power) asymmetries between provider and patient, as well as providers and payers,” said Urban Institute Senior Fellow Brad Gray. “Also between payers and patients. Making the system trustworthy is one of the great challenges.”

In a review of dozens of nonprofit hospital annual financial statements to the Internal Revenue Service, 100Reporters has found a wide range of policies toward charity care.

Jacobson Memorial Hospital in Elgin, North Dakota, insists that even the poorest of the poor pay at least 10 percent of their hospital bills, regardless if it takes years. The hospital did not respond to a request for comment.

Occasionally, policies hint at compassion.

Beaumont Hospital in Royal Oak, Michigan, says it  “continues servicing patients even after the patients have generated significant bad debt, and this is evidence that the care is given for community benefit motivations. Beaumont cannot and does not refuse service to patients that generated bad debt.”

Adds Beaumont spokeswoman Colette Stimmell in an email: “We do not turn away patients who owe us money from previous hospital visits. We offer a discount on services for patients without insurance. We also offer payment plans for patients who do not have the resources to pay their hospital bill.” (Beaumont reported total revenues of $2.1 billion in its 2011 report to the I.R.S.)

Spectrum Health Hospitals in Grand Rapids, Michigan, reports that it cares for patients with incomes below the poverty level, currently $23,850 for a family of four, at no charge.

“An evaluation is not used for discounted care, as applicants that qualify for any assistance receive free care,” the hospital reported to the I.R.S. “The organization’s collection policy that applies to the largest number of its patients during the tax year contains provisions to ensure collection activity occurs only for those who are unwilling to pay, not to those unable to pay.” Spectrum also posts many of its prices online.

In 2006, Spectrum Health was among the first health systems in the country to begin listing average prices on the Web, spokesman Bruce Rossman said in an email. The hospital posts its quarterly and year end financial statements online. “We also hold an annual public meeting where we discuss our budget for the next year,” Rossman wrote. Spectrum’s total revenues for FY 2011-2012 were $1.6 billion.

Bedside Collection

Such stories illustrate the differences among large medical organizations, but even for nonprofits, revenue can trump all.

Intermountain Healthcare in Utah maintains that patients take their medical treatment and instructions more seriously if they have to dip into their own pockets. The health care system has come under fire for such debt collection practices as embedding collection agents bedside and in emergency rooms prior to treatment. In an online comment following one news account of Intermountain’s practices, a mother described struggling with a collection agency for three years before saving enough money to pay off an Intermountain hospital bill. An Intermountain spokesman says his organization has no knowledge of these incidents.

Yet in 2011, Intermountain Health earned revenues of $4.15 billion and gross receipts of $10.8 billion, and it told the local press that it would stick with its collection policies. (Intermountain also reported to the I.R.S. more than half a billion dollars invested overseas.)

The hospital’s 2011 I.R.S. 990 says that a dozen Intermountain executives have compensation packages exceeding $1 million apiece, but an Intermountain spokesman says 990s are confusing to read, and only three actually earned more than a million dollars.

Texas physician Merle Lenihan focused her doctoral dissertation in 2013 on charity care. “No one wants ‘charity,’” she said in an email, “an idea that was expressed more than one hundred years ago when national health insurance was first brought up. Keep in mind that not all tax funded services are considered charity: think of public schools, police and fire departments. It is only when low-income people are separated from others that services are considered charity.”

“Underneath the blanket of moral goodness that comes from ‘charity care,’ there is a lot of needless suffering,” she says.

The suffering takes various forms.

Move Along

After the underground cartoonist S. Clay Wilson, a contributor to Zap comics, fell and hurt his head in 2008, he spent a year recovering at a public charity hospital in San Francisco, which at one point had a $2 million patient fund to provide such amenities as candy bars, trips to ballgames, slippers and birthday presents for the many poor and dying patients housed in open wards. But Drs. Derek Kerr and Maria Rivero, who worked at Laguna Honda Hospital, were shocked to learn that the fund was “bankrupt” when they asked for $100 to buy tacos for patients.

A new administrator, “trying to buy loyalty from the staff,” said Kerr in an email, used Patient Gift Fund monies for catered meals. These included “an $8,000 barbecue for the employees and several fancy lunches for nursing executives,” Rivero added.

At the hospital one day, Wilson and his wife Lorraine Chamberlain spotted a buffet, but were told to “move along” because the salmon filets with papaya and mango salsa were for staff only. Meanwhile, dementia patients taken on monthly bus trips to parks ate boxed lunches of cold chicken, chips and Fig Newtons.

Kerr and Rivero blew the whistle, were called liars, and then lost their jobs. They eventually settled with the hospital.

A hospital spokeswoman said funds designated for the patient gift fund and Friends of Laguna Hospital were not used for employee activities. “The unsubstantiated allegations included in this article have been resolved some time ago. It is troubling that they continue to be circulated,” Judith Klain said in an email.

But the two doctors refuse to back down. “It was shocking that they took money donated for patients from a charitable trust — sacred funds for the poor — and used it to provide the employees with lifestyle enhancements,” Rivero said. “When we discovered that the Gift Fund money was being used to pay for the doctor pizza parties, I went to my colleagues and asked them to boycott these parties, and they all refused.”

Abuses of the powerless and the poor have produced calls for systemic reforms, with patient advocacy groups emerging nationwide. In 2012, the Minnesota attorney general barred a large hospital finance corporation, Accretive Health, from working in her state for at least two years. Accretive was accused of asking hospitalized sick people for their credit cards or checks or suggesting that they get money from friends and relatives, sometimes insinuating that care would be delayed until they paid. The company, said the attorney general, preyed upon patients “in the dawn of life, the eve of life and the shadows of life.”

Yet the American Hospital Association continues to cast charity patients as threatening the very existence of hospitals: “While most Americans have insurance coverage,” the A.H.A.’s billing and collections policy says, “nearly 50 million people do not. Until there is adequate insurance coverage for all, America’s hospitals must find ways to both serve and survive.”

Rita Healy

Rita Healy

Rita Healy's first article for 100Reporters was published in October 2013 (http://100r.org/2013/10/the-63000-broken-leg-or-how-hospitals-make-money-off-charity-care/). The experience formed the basis for her interest in producing this series.

1 COMMENT

  1. As hospitals become corporatized, they never acknowledge their errors or lapses. Instead critiques and complaints are labeled “unsubstantiated allegations”. Whistleblowers are driven out. In the case of our complaints about misappropriations from the Laguna Honda Hospital Gift Fund, they were substantiated in a November 2010 audit by the San Francisco Controller’s Office. And $350,000 was returned to the Patient Gift Fund by the hospital.

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