Nonprofit Hospitals Face Scrutiny Over Practices

[Judi Lynn]

Nonprofit Hospitals Face Scrutiny Over Practices

By ROBERT PEAR
Published: March 19, 2006
WASHINGTON, March 18 — Congressional leaders, concerned that many nonprofit hospitals are not providing enough charity care to justify their tax-exempt status, say they will set standards for the industry if it does not do so itself.

The chairman of the Senate Finance Committee, Charles E. Grassley, Republican of Iowa, who had already been examining nonprofit groups like United Way and the American Red Cross, is broadening his focus to include nonprofit hospitals, with an eye to legislation that would clarify standards for their tax exemptions. Representative Bill Thomas, Republican of California, the chairman of the House Ways and Means Committee, began investigating the financial practices of nonprofit hospitals last year.

The commissioner of internal revenue, Mark W. Everson, said tax officials often found little difference between nonprofit and for-profit hospitals "in their operations, their attention to the benefit of the community or their levels of charity care."

Huge changes have reshaped the health care industry in recent years, Mr. Everson said, but the basic standard for granting tax exemptions to hospitals has changed little since 1969.

Since 1969, Mr. Thomas said, "less and less has been required for hospitals to maintain tax-exempt status."
(snip/...)

http://www.nytimes.com/2006/03/19/politics/19health.html?_r=1&oref=slogin

[bemildred]

1. So what, not enough going bankrupt to suit the for-profit hospitals? nt

[liberalhistorian]

8. Apparently not!

And that's enough to make you truly sick. Although non-profits are acting more and more like for-profit hospitals, so a lot of this scrutiny is their own damned fault.

[kevsand]

14. No, the problem is that many non-profits do virtually no

charity care. The non-profit status is supposed to be a recognition of the comunity benefits of the institution. When charity care is less than one percent of the total, as is the case at many non-profits across the country, it is perfectly reasonable to re-evaluate that status.

[bemildred]

16. Our health care system is a giant clusterfuck.

Singling out the non-profits for blame is a recipe for continuing the clusterfuck.

[kevsand]

17. Nobody's singling out non-profits for blame.

The health system is awful, you're right about that. And non-profits as a group used to be about the only bright light in the darkness. Unfortunately, over the last twenty years, most of the "non-profit" hospitals either went out of business or got acquired by holding companies or adopted for-profit business models.

A significantly large number of the non-profits that remain have no charity care to speak of; charge the uninsured two to three times what they charge the insurance companies; and practice draconian collections tactics when these uninsured patients (many or most of whom should have been charity cases) are unable to pay. Poor people are going to jail just for getting sick. These ain't your grandfather's non-profit hospitals any more.

I'm not saying they are all like this, but way too many are, and the ones that suck should have had their non-profit status revoked a long time ago. They're paying administrators six and seven figure salaries, outsourcing vital services like ER and med tests to for-profit third parties, and driving up property tax rates for everyone else in their communities. Unfortunately, the only way to tell the good ones from the bad ones is to establish standards and oversight for all of them.

[bemildred]

19. On the contrary ...

That is exactly what the "congressional leaders" in the OP are up to.

[kevsand]

20. That's a complete and total non-response.

Care to address any of the issues involved?

[bemildred]

21. No. I expect haggling with you would be quite tedious,.

Have a nice day.
:hi:

[kevsand]

22. I'm having a wonderful day.

Thanks for the kind thought. :toast:

I am, however, increasingly frustrated when otherwise well-intentioned and compassionate people like yourself fail to address the underlying issues of a serious problem. You're falling for a classic bit of misdirection from the corporate health care system.

Many so-called "non-profit" hospitals are not-for-profit in name only. They farm out their essential services to out of town for profit companies that reap massive windfall profits while dodging their fair share of local taxes. These for profit providers are using the non-profit umbrella as a shell game, and are some of the worst pirates in the health care field.

If it walks like a duck, and quacks like a duck, and smells like a duck, it's a duck. If a non-profit hospital insists on conducting its business and screwing poor people like a for profit enterprise, then they no longer deserve the special benefits of non profit status. You and I are subsidizing some of the worst abuses in health care with our tax dollars as a result.

I've been a public advocate of single payer for over thirty years, and universal care is obviously still the only long term solution. In the meantime, for profit providers are hiding behind non-profit facades and playing both you and the local communities they operate in for chumps.

[bemildred]

24. I'm of the "a pox on both their houses" school.

And I agree that single-payer (government via taxation and regulation) is the only solution.

Having confessed that, I see little point in haggling over the "profit" vs "non-profit" issue, they both have to go, or be re-regulated in an entirely new way.

I can see why you might feel more involved in that issue, but to me it looks like a distraction.

Now I really must have done with this.

[kevsand]

25. I think we're basically agreeing here.

And I'm not more involved in one aspect than another. I attack them all equally, and have always done so. (So many inequities, and so little time... ;))

The non-profit hoax is just something that I think can be fixed sooner, rather than later. In fact, here in Illinois our state Attorney General (a prominent Democrat; daughter of our state party chair/Speaker of the Illinois House) is now addressing this very issue.

Hopefully, we are still slowly but surely moving to a point where both the general public and the business sector will recognize the benefits of single payer...

[bemildred]

27. I ought to add ...

That what you say does put paid to my original speculation that this is an effort to serve the "for-profits" at the expense of the "non-profits". It suggests that the distinction is somewhat phoney. It seems more likely that what Congress intends is an effort to fiddle with the existing system, what is called "a demonstration of concern", so as to avoid the fundamental reforms that are required. In other words, a stall. The Clintons did an expert stall on national health care 10 years back, after being elected on that platform.

[davsand]

23. I consider the non-profits to have an obligation to the local communities.

Call me radical if you wish to--I really am not terribly worried about that title. I put my professional standing on the line for this issue at a time when it wasn't "the thing" to do, and knowing what I do a few years later, I'd do it all over again.

Non-profit hospitals ned to be accountable for what they do. We all support those hospitals with tax exemptions, and I do not consider it to be unreasonable to ask WHAT, exactly, we get in return for it.

It seems to me that if you are claiming to be a "charity" you should have to demonstrate it with some numbers that can be verified by the local community. I'm not asking them to singlehandedly provide charity to anyone and everyone. I'm asking that they be held fiscally responsible to the ones that support them.

When we, as local taxing officials, ASKED for an accounting--an actual breakout of what "charity" the local hospitals provided--we got lied to, blown off, and attacked for it. They asked US to grant them tax exemption and then refused to even tell us why they deserved that special treatment.

Seems pretty straightforward to me that the local hospital execs have very little concern about trying to be anything except a profit center when they refuse to even honor their own stated charity policies.

Most hospitals have "charity care policies" in place. I'll grant you--the presence of those policies is a "benefit" to the communities, at least on paper. What makes this all SO very maddening is the fact that many of the hospitals won't even live up to their stated policies, let alone do outreach to let people KNOW those policies exist.

I'm talking about POOR people who are being victimized on a regular basis--and that is DEAD WRONG.

Let me be specific here: We are discussing the fact that poor people are in a situation where they have to make a decision about seeking medical care and then being financially raped and harassed by the system that our communities have supported with tax exemptions.

People are dying without medical care because they can't afford insurance or even treatment--let alone the over inflated billing that the uninsured face at the hands of those same "non-profit" hospitals.

Meanwhile, those SAME hospitals provide salaries and deferred compensation packages to the Execs that are in the hundreds of thousands of dollars. The actual CARE providers don't make the big salaries--the EXECUTIVES do. We are not talking about what the docs and nurses make. We are talking about what the policy guys--the ones in the boardrooms make.

This has been an issue for the progressives and the folks who actually DEAL with the health care system for a while now. The GOP involvement comes, now, at a time when the public disgust at the abuse has reached a point that it can't be ignored.

Bernie Sanders' website has a copy of the WSJ article by Lucette Lagnado about hospital collection practices. You can read it here:

http://bernie.house.gov/documents/articles/20031031155424.asp

THIS is what opened this entire discussion about what hospitals do to poor people who dare to seek care.

If you want to get a further education on the subject you can go here:

http://www.healthbusinessandpolicy.com/TaxChallenge.htm

If you are curious, that website is run by a man who is a risk analyst and financial adviser for hospitals. If you actually take time to READ what he's written, he explains exactly why this is not only terribly unfair, but also terrible business sense for the hospitals.


I am confused how this is supposed to be such a "GOP" issue. Is this a "GOP" thing only because the current Ways and Means Committee is looking at it? Is it a "GOP " issue only because the current administration is ready to start putting pricing information out on the internet so consumers can make informed decisions about health care and its pricing?

I sure as hell am not a Republican and I was there to help open this particular can of worms a few years ago in Champaign County Illinois.



Laura

[preciousdove]

2. Start with Mayo Clinic, more money than God, no free care! n/t

[liberalhistorian]

6. Or the Cleveland Clinic, for that matter;

in the 32 years I lived there all I ever heard about, especially from the Clinic PR machine, was how great they were with their world-wide reputation and rich sheiks and corporate head honchos always coming there for the best treatment and Cleveland should be so proud, etc., etc. What a line of bullshit! ALL they care about is money. ALL. People without insurance or enough money aren't even permitted to darken their doors. You go just a few blocks from the clinic and you're in a neighborhood whose residents will never see the inside of the clinic no matter how bad their condition is. It's enough to make you truly sick.

[davsand]

18. There was an excellent article in the Cleveland Plain Dealer on the issue:

http://www.nonprofithealthcare.com/documentView.asp?docID=257

Ruling presents new challenge to hospitals' tax-exempt status
Sunday, November 27, 2005
Sarah Treffinger
Cleveland Plain Dealer

A recent ruling denying tax exemption to a Cleveland Clinic facility may be a turning point in the tug of war over tax dollars between nonprofit hospitals and school districts.

Last month, Ohio Tax Commissioner William Wilkins ruled that the Clinic's family health and surgery center in Beachwood must pay property taxes because it provides "minimal, if any, charitable care." The Clinic plans to appeal..."

snip


"The debate over hospital tax exemption also is playing out at the federal level. The U.S. House Ways and Means Committee has tackled the issue, and Senate Finance Committee Chairman Charles Grassley has sent letters to 10 hospitals, including the Clinic, asking them to account for their charitable activities..."

snip

"...In making his case for the Beachwood schools, Seed submitted a charity care survey released by U.S. Rep. Dennis Kucinich in 2003. The report estimated that the Clinic spent 1.7 percent of its revenue on charity care at the main campus in 2000, though the
Clinic's family health centers were not addressed..."

Cleveland rocks, IMO. That tax commissioner got it right in his opinion when he said the hospital was not doing enough actual charity.

-----

My really big question to lawmakers and to the hospitals is WHAT exactly is "charitable" about providing less than 2% of your budget in charity?

I don't want to smack the non-profit hospitals too hard here, but let's be real direct: The Catholic Hospital Association (up to the point that we challenged Provena Hospital here in Illinois) used to set a goal that Catholic hospital Assoc. member hospitals should "aspire" to provide 5% in charity care annually.

Yep, 5%...

THAT is a charity?

We subsidize non-profit hospitals in the form of tax exemptions--both local and federal. Now, remember--if THEY don't pay taxes somebody else pays more to cover that exempted portion.

Do YOU feel right knowing that YOU support behaviors like arresting poor people that missed a payment on a hospital bill?

Do YOU feel it is ok to subsidize the use of collection agencies to harass and abuse people that SHOULD have been given free care according to the hospital policies--but somehow got on somebody's list of deadbeats?

Do You feel it is ok to charge the uninsured rates (for identical services and products!) that are substantially higher than those charged to private insurers or even the government? (This one should be a REAL sticking point given the fact that it can be demonstrated that they know they will only collect about 5% on average of those same inflated bills they send out...)

We all are paying to support those behaviors and I have no comfort with it at all.


Do we need Universal health care? Yes. We NEEDED it a long time ago and you'll note that we don't have it yet. We also have people who are not seeking treatment (Some of them DYING as a result!) because hospitals are NOT stepping up to do their part in caring for the medically indigent and the under insured.

I've seen cases where the hospitals won't even MENTION they have a charity care program, let alone apply any kind of discount for people who need it.

I saw the auditor's statements that demonstrated the local hospitals were providing less than 1% in actual charity care. Yep, LESS THAN 1%.

Figure out how much you gave to charity last year and I'll bet you provided a greater percentage of your income in "charity" last year than your local non-profit hospital did.

I'll bet you also had to pay taxes.



Laura

[knitter4democracy]

26. I agree.

My hubby went to med school at Case. Trust me, UH was the same way. He'd do a work-up on a patient only to find they'd been sent to another hospital for not having insurance. They forced Mount Sinai to close (well, it was a long story of bad things happening, too, to be fair), and they were the only ones really treating the poor on the East side.

I talked with his residency program director when he was interviewing, and I asked him directly about whether they sent patients without insurance somewhere else, and he was shocked at the idea. See, here in Michigan, it's in our state constitution that all hospitals have to be non-profit and do charity care. I'm not saying they're all great, but Hubby was happy with what he saw in Kalamazoo compared to Cleveland. He never was pressured to deny care, patients weren't turfed, and social workers worked hard to get everyone as much coverage of their bills as possible with local, state, and federal funding.

The local docs in the area are another story, but at least the hospitals were better to their patients than the Clinic or UH.

Check out the Clinic ER--carpeted floors. Yeah, that's a real ER for ya. :eyes:

[liberalhistorian]

28. Exactly, knitter!

I went to the Clinic once to visit a friend undergoing cancer treatment (her parents had plenty of moola, which is the only reason she was allowed to be there, frankly), and could not believe what I saw. And the general attitude toward anyone without money was unbelievable.

And you're right about UH, they're the same way, too, for the most part. They're still not nearly as bad as the Clinic, though. And the Clinic is pretty openly brazen about it, too, especially when they built the new "luxury care suites" a few years ago.

Kudos to your husband, btw, who sounds like a true humanitarian. I know how hard it is for many doctors nowadays, and that many are just as disgusted with HMOs and a lot of hospitals as their patients and the general public are. If we could just get more doctors behind national health care, it would take off like a rocket.

What does your husband think about the high numbers of doctors in the pockets of the insurance and pharmaceutical companies and how that's compromising care; also the high numbers of doctors who now refuse to see any uninsured patients or, if they do, demand payments up front? I know my own doctor is very angry and frustrated with that. Needless to say, he's a fantastic doctor that I'm glad to have found.

[knitter4democracy]

30. He's pretty pissed.

Don't get him started on a national health care plan unless you have a couple of hours and like to hear someone rant. ;) He's all for at least a single payer system, and he talks with the partners at the practice where he works about it fairly often. The serious Republican is even coming around--almost anything would be better than the system we have now.

He hates Pharma, too, and the insurance companies. He's disgusted by practices that make uninsured patients pay an extra yearly fee (happened to my aunt in California, and he was mad about it for days) instead of helping them pay for it. His practice doesn't take Medicaid, but that was because they looked into it and realized they couldn't afford it, the payouts are so low. He still feels bad about that, though, as he lost a couple of patients from residency who wanted to follow him here.

He likes what he does on a daily basis, but he avoids the drug reps like the plague and deals with insurance as little as possible (which is still more than he'd like). He works to keep meds as cheap as possible (generics first, then brand names), and he's developing a good patient base because of it.

You know, almost all of the young docs we know want a national health care plan. Young docs are making less than docs did even ten years ago right out of residency and have higher med school loans to pay back. They aren't as optimistic on making the big bucks, and they're sick of the crappy care they're seeing. There's hope, I think.

[liberalhistorian]

31. I'm glad to hear that about

younger doctors; if that's truly the case then there is, indeed, hope. Your husband sounds like exactly the way a doctor should be, please thank him for me. I know that medicine is probably one of the most difficult, if not the most difficult, of professions; I don't think you could pay me enough to go through what most of them go through every day. It's good to hear what he does with generic drugs, too, there's no difference between them and the "brand" drugs; they're the same thing except for price.

As frustrating as it is when doctors don't accept Medicaid, from an economics standpoint I can certainly understand it. Doctors have to live, too, and office staff, overhead and insurance premiums must be paid and none are cheap. Medicaid doesn't even pay enough for them to break even and I would frankly consider its payment schedule to be insulting, if I were a doctor. And it's only going to get worse, I'm afraid.

When I was in labor with my son (good God, almost fifteen years ago, yikes!) I had merconium (sp?)staining, which was noticed when my water broke. I was in labor for an additional 14 hours after that before they finally decided to do a c-section, since I hadn't dilated at all for over six hours. The nurses later told me that a c-section should have been done when the staining was first noticed, and not fourteen hours later; it could have really harmed my son. They also told me that the reason the docs didn't do a c-section was because I was on medicaid at the time, and the c-section would have cost them far more than a regular delivery since it paid less for them, so they waited until the last moment until they couldn't wait anymore. Still pisses me off royally almost fifteen years later!

One thing I try to make republican doctors aware of is that, if they don't want nationalized health care for humanitarian reasons, they should at least want it for pragmatic, economic reasons. They'd actually make more money. They'd have a guaranteed income, with no more chasing of insurance companies for payment and patients for non-covered payment, and half of their income wouldn't have to go to billing and insurance paperwork and to maintaining the middleman.

[knitter4democracy]

34. Still, they should never have made you wait.

It was dangerous to wait like that, and that's why Ob/Gyns are trained to do C-sections fast and safely. They're really lucky nothing was wrong with your son, as they're liable for up until the age of 18 in some states, 21 in others. Idiots.

Someone did a study, and we literally would save billions of dollars every year if all the insurance companies would agree to use one form. Seriously. If they all had the same form, we would save billions of healthcare dollars a year. That's why we need single-payer insurance--it would save doctors lots of money and give them only one entity to argue with when it comes to reimbursement.

Medicaid is awful. Hubby's practice takes people without insurance rather than patients on Medicaid because they found that Medicaid costs them big bucks. People without insurance at least try to pay their bill most of the time (and they cut it down for them and work out a payment plan for them), but Medicaid can take months to pay, and then it's often for less than half of what the true cost was. Medicare isn't great, but it pays better.

We've considered moving to Canada. It may not be perfect, but their medical system is better than here. Hubby worked with a couple of residents from Canada who went back there to practice because they'd come here, convinced it was better only to run home with their tails between their legs to a better place to practice.

[liberalhistorian]

36. If I were your husband, I'd want to go

to Canada to practice as well. I've had many a doctor who've complained about our so-called health care system, about how they're always forced to think about money and insurance before the health and well-being of the patient, as well as constant wrangling with insurance companies that think they know better than he does, and they're sick of it. They're also just as angry with the doctors in the pockets of big pharma and insurance companies and who perpetuate the system.

[grilled onions]

3. Other places to scrutinize first...

..faith based charities...churches who do double duty in the pulpit and politics(including fund raising,handing over their flock info to others for funding and promoting candidates).

[Sadie5]

4. We have one of those here

Clairon, and when Bush was in Indy he made a point of saying how great they were, so said the Star & News. I don't know of any free care they give, but they sure get those tax abatements on a regular basis.

[kevsand]

15. None of them (as far as I know) throw poor people in jail

just for getting sick. Body attachments are a common collection practice at many non-profit hospitals in this country. It's the modern day equivalent of a Dickensian debtor's prison, and it's the non-profit hospitals' dirty little secret.

[liberalhistorian]

32. It's not just the non-profit hospitals

who are engaging in that medieval practice, the for-profits are joining in on the fun as well, many of them even more so.

[kevsand]

33. You're absolutely right.

The for-profits are no better, if not worse. It's particularly galling, however, when a supposedly non-profit institution, which is granted that status because of some alleged benefit to the community, treats people who should be candidates for charity care as though they were criminals.

[Lars39]

5. Metro General in Nashville is in a financial bind right now

and the for-profits are whining because they might have to actually take in more indigent patients.
Makes me sick.

[liberalhistorian]

7. And the for-profits will charge those patients

far more than the insured patients, and sic their bloodsucking, ultra-aggressive collectroll agencies on them to take away or put liens on what little assets they may have. Just so their CEO's and doctors can continue living in their mansions and driving their beamers. :mad: :mad: :mad: :puke: :puke: :puke:

[flordehinojos]

12. and if by indigent you mean undocumented aliens, they are being threatened

with treason and prison for providing care to them. stupid bastard bush men all.

[happyslug]

9. Non-Profit Accounting and for Profit Accounting

Are VERY Different. The big difference is non-profit can expense a lot more items than can a for profit organization (Who has to capitalize any huge expense and depreciate it over many years depending on the Tax code).

Thus a 1 billion dollar for profit Hospital is NOT the same as a 1 billion dollar non-profit hospital. For example if a non-profit builds a 1 million dollar wing, the non-profit will add that wing to its "assets" in the first year the wing is built and keep it as an asset till it is no longer worth anything. The opposite is the case for a for-profit hospital which deprecates the value of the wing over the reasonable life time of the wing (i.e. over 20 years through faster depreciation is available under the IRS code).

The above can lead to different valuation of both types of organization, the Non-profit listing the wing at full price during its whole useful life, while the for-profit hospital that fully deprecated wing is carried on the books for $1 (or less). Thus a 1 Billion Dollar non-profit hospital may be worth a lot less than a 1 billion dollar for-profit hospital. Thus the non-profit has less resources to provide care for the poor compared to the for-profit.

The opposite can also happen, the non-profit lists its assets at $1 or less and just issues statements as to its inputs and outgoes ignoring any long term capital improvements. This would overstates such a non-profits "profitability" compared to a for profit.

Now this sounds like non-profits can play games with their books, and the answer to that is yes, for the Regulations of the IRS and SEC is to protect investors who by definition can not invest in a non-profit. Most non-profits I know of expenses everything as it is spent and look only at its incomes and outgoes (Which mean a lot of non-profits have a lot of assets not listed, assets that can be sold off at a profit if it switches to a for-profit hospital which a lot of hospitals did in the 1980s and 1990s).

Now most of the Community owned hospitals became for-Profit in the above period, the remaining non-profits tend to be religiously or charity owned hospitals. The Doctors can not convert the hospitals themselves and the people who technically owned the hospital will not (Unlike many Community owned Hospitals whose municipality sold them to a pro-profit int he 1980s or 1990s).

The reason I go through the above is that what we may be seeing is manipulation by Bush of the numbers to show for-profit hospitals do as much as non-profits (Even if they don't if you adjust for the difference in Accounting methods).

[donco6]

29. Interesting.

Schools had to change to book depreciation under GASB Statement 34. Wonder if/when this will happen with not-for-profits?

[Mel]

10. Why don't they do something of some worth

for the people they work for Us and support Congressman John Conyers Jr.'s bill “United States National Health Insurance Act,” H.R. 676
http://www.house.gov/conyers/news_health_care.htm

[flordehinojos]

11. all i can say is, THANK GOD FOR HOLY CROSS HOSPITAL in Ft. Lauderdale Fla.

Thank God for the nuns who run the hospital, the doctors, nurses, and each person there who contributes in one way or another, from cleaning the floors, to delivering meals, to cooking them, to receiving people as they come in--one all, i say, THANK GOD FOR HOLY CROSS HOSPITAL, the nuns, the doctors and everyone else who is part of that hospital.

And have to addd: AND I HOPE BUSH AND HIS STUPID ADMINISTRATION AND ALL THE STUPID SENATORS WHO SUPPORT BUSH AND RUBBER STAMP HIS DAMN HIGHWAY LOOTING OF OUR COUNTRY'S NATIONAL TREASURY LEAVE HOLY CROSS ALONE. THEY--THE BUSHES AND HIS STUPID ADMINISTRATION AND STUPID SENATORS WHO GREEDILY RUBBER STAMP ALL OF HIS STUPIDITY HAVE ALREADY DONE ENOUGH DAMAGE...to our medical coverages and to any kind of developing our most human and caring parts of ourselves. Damn bastards, the bushes all!

[annofark]

35. that is surprising

Catholic hospitals are often to worst offenders, I'd say. Totally lose sight of their mission for profit.

[depakid]

13. Non-profits also engage in "Persian rug" pricing schemes

whereby they charge the uninsured much higher rates than they can bill the government or third party payers. And if they get a judgment- they can call a person in (sick or not) for a judgment debtor's exam. If that person fails to show, the court can hold them in contempt and put a warrant out for their arrest.

That should be prohibited for ALL hospitals and ambulatory clinics.