By Ames Alexander, Joseph Neff and Karen Garloch
In 2009, as the debate about health care reform picked up steam in Washington, D.C., an editor at The News & Observer in Raleigh, N.C., posed a question: Should the newspaper take a deep look at the cost of health care?
A series of interviews and some database work led to a memo and a key decision. From the memo: “We should focus on hospitals. I’ve seen little written on hospitals – lots on insurance companies and pre-existing conditions and defensive medicine/malpractice and big pharma and politics, but little on hospitals.”
The key decision: Ask our colleagues at The Charlotte Observer to join. North Carolina’s two biggest hospital systems were based in Charlotte. The biggest, Carolinas HealthCare System, was suing thousands of its patients each year for payment. If we worked together, we could pull off a series that could run statewide, with more reach and impact.
Investigative reporters Joe Neff and Ames Alexander began collaborating on the project in early 2010, but both were diverted by other time-sensitive stories. They resumed their work in early 2011. Karen Garloch, The Charlotte Observer’s medical writer, joined the team later that year, bringing sources cultivated over 25 years on the beat and deep knowledge of U.S. health-care trends.
The early stages
Early in our reporting, we read many academic studies, talked with many hospital experts around the country and developed a few fundamental questions:
- How profitable were North Carolina’s nonprofit hospitals?
- Were they giving back to the community as much as they were getting in the form of tax breaks?
- And how were hospitals treating those who couldn’t afford to pay their bills?
How we measured hospital profits
To answer the profit question, we made great use of the American Hospital Directory. AHD draws financial data from Medicare cost reports, which hospitals must file each year with the federal Centers for Medicare and Medicaid Services. It also makes its data available for free to reporters, and can even do custom data runs. That can be a tremendous – and affordable – research tool.
(You can get more detailed Medicare cost report by going to another site called costreportedata.com. That site also provides free subscriptions to the media.)
By examining audited financial statements, we were also able to determine the profit margins of larger systems. Audited financials for large hospital systems can often be obtained through the Municipal Securities Rulemaking Board’s EMMA site.
How we gauged hospital charitability
To examine how charitable the state’s hospitals were, we relied on a different set of data: the “community benefit reports” that N.C. hospitals filed with the state hospital association.
It was important for us to know how much hospitals are actually spending on charity care as opposed to what their full charges would have been. That’s because the full charges are usually about three times higher than costs, and bear little resemblance to what hospitals actually spend. Fortunately, our state hospital association asked its members to report the cost of charity care in a uniform way.
That, coupled with the data we got from AHD, allowed us to determine the percentage of expenses that each hospital devoted to charity care. The range was wide – from less than 1 percent at some hospitals to more than 10 percent at others. Most hospitals were spending less than 3 percent of their budgets on charity care.
In most communities, those charity care percentages were dwarfed by the percentage of people without jobs and health insurance. That sort of data, along with a lot of shoe-leather reporting, made it pretty clear that hospital charity care in many communities wasn’t sufficient to meet the need.
Measuring the value of hospital tax exemptions isn’t easy. No group or agency keeps those figures, and there’s not enough publicly available data to calculate the numbers precisely. We came up with estimates by examining the taxes paid by three large for-profit hospital chains. For most North Carolina hospitals, the estimated tax breaks exceeded what was spent on charity care.
Most hospitals have charity care policies. But they don’t always take great pains to share them with patients. We heard from many uninsured patients in the Charlotte and Raleigh areas who told us they were never informed about the availability of charity care.
We checked the websites for all 100-plus general hospitals in North Carolina, and found that more than a third of them didn’t post key details about their charity care policies.
How we examined the way hospitals treated patients who don’t pay
To understand how hospitals were treating patients who didn’t pay their bills, we got data from the North Carolina Administrative Office of the Courts on bill collections lawsuits filed by hospitals. We then visited various courthouses and hand-checked hundreds of the lawsuits to learn more of the details. Our data and field checks showed us that North Carolina hospitals had filed more than 40,000 bill-collections suits over a five-year-period. We also found that just two entities – a hospital chain called Carolinas HealthCare and Wilkes Regional Medical Center, one of the individual hospitals it manages – had filed most of those suits.
Finding people
Real people and their stories were crucial to the series, to put a human face on what threatened to be data-heavy stories.
The lawsuits filed against patients pointed us to many who had tragic stories to tell.
We also obtained consumer complaints filed with the Consumer Affairs Division of the state Attorney General’s office, and at the state Department of Insurance. We requested all complaints against hospitals and collection agencies. These were a great way to find patients.
We asked patient advocates to send cases our way.We canvassed lines at food pantries to ask people if they had problems with hospital bills. We also did put out a fetcher on the Observer’s Public Insight Network, a database of readers who have agreed to share their knowledge for Observer stories.
Many patients were kind enough to share their hospital bills with us. We used Document Cloud to annotate several of those bills, and to illustrate the large markups on some drugs and procedures.
We built a spreadsheet to capture key data about each patient: Were they insured? Were they informed about charity care? Were they sued? Did they appear to qualify for charity care?
How we got the industry’s take on things
We took great pains to make sure we accurately and thoroughly reported the hospital industry’s perspective on what we were hearing and seeing. That involved many interviews with hospital CEOs and CFOs. We also asked the state hospital association to weigh in on each of seven proposals that patient advocates said could help address the problems we identified.
How we collaborated
Working with another newspaper was not easy because of the distance and different newsroom cultures.
But reporters and editors generously shared their interview notes and findings. We met in person several times at a halfway point between Charlotte and Raleigh, and we had weekly teleconferences during the last few months of reporting.
The newspapers published some of the same stories, but the lead stories on most days were individualized with emphasis on hospitals in the local markets. For example, a Charlotte hospital system was filing most of the lawsuits against non-paying patients, so that story led the Charlotte paper on day three, and Raleigh’s mainbar that day focused on patients facing collection agencies.
We hashed out a few differences based on newsroom culture.For example, the News & Observer (in Raleigh) tends to be more provocative in its headlines than The Charlotte Observer. The day one headline in Raleigh was “Major Hospitals Pile Up The Cash.” In Charlotte, it was “Nonprofit Hospitals Thrive on Profits.”Both papers used the title “Prognosis: Profits” but the Raleigh paper added a daily subtitle “Hospitals Prosper at Patients’ Expense.”
The reaction
We’ve been flooded with tips, calls and emails from appreciative readers and health-care experts. It’s clear we have our work cut out for us in the months ahead.
