Why hospital charity care requires more intensive coverage


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Multiple reports published this week show why health care journalists need to spend more time covering the charity care that nonprofit hospitals are required to deliver to patients but mostly fail to provide.

Each report cited below outlines how to cover this important story on hospital care and how the nation’s health care system so often fails to deliver equitable care to low-income Americans.

The first two examples came from a multi-part, aptly named series, “Profits Over Patients,” that The New York Times started publishing on Sept. 24. In both articles, New York Times’ journalists included shocking details on how nonprofit hospitals short-changed low-income patients and yet still paid out substantial sums in salaries and other non-care-related expenses. The third example comes from an article that JAMA Open Network published earlier this week, “Comparison of US Hospital Charity Care Policies Before vs After Onset of the COVID-19 Pandemic.”

In one article from The Times, “They Were Entitled to Free Care. Hospitals Hounded Them to Pay,” journalists Jessica Silver-Greenberg and Katie Thomas explained that consultants McKinsey and Company advised executives at the nonprofit Providence hospital system to train the staff to wring money out of patients, even low-income people eligible for free care. In 2018, McKinsey recommended a program called “Rev Up” and was paid $45 million in 2019, the Times reported.

For every journalist covering a nonprofit hospital, here’s the assignment, as Silver-Greenberg and Thomas explained: “More than half the nation’s roughly 5,000 hospitals are nonprofits like Providence. They enjoy lucrative tax exemptions; Providence avoids more than $1 billion a year in taxes. In exchange, the Internal Revenue Service requires them to provide services, such as free care for the poor, that benefit the communities in which they operate.”

Providence employees were told to ask patients how they wanted to pay their bills, telling those workers that soliciting money is a required part of the job, Silver-Greenberg and Thomas wrote.

“If patients did not pay, Providence sent debt collectors to pursue them,” they explained. “The result, in the case of Providence, is that thousands of poor patients were saddled with debts that they never should have owed, The Times found.”

One of the largest nonprofit health care systems in the United States, Providence operates 52 hospitals in Alaska, California, Montana, Oregon, and Washington state and more than 900 clinics. Founded by nuns in the 1850s, Providence reported revenue last year of more than $27 billion, the Times reported.

In response to the reporting, Providence issued this statement, “Our commitment to caring for the poor and vulnerable has never been stronger.”

Profiting from 340B drug program 

In the second article, Silver-Greenberg and Thomas focused on Richmond Community Hospital in Virginia, which they described as a financially struggling, hollowed-out facility in a predominantly Black neighborhood. In the article, “How a Hospital Chain Used a Poor Neighborhood to Turn Huge Profits,” they explained that the hospital in Richmond closed its intensive care unit in 2017 and does not have a maternity ward or any kidney or lung specialists on staff. The hospital “consists of little more than a strapped emergency room and a psychiatric ward,” they added.

Despite these shortcomings, the hospital is part of Bon Secours Mercy Health, one of the largest nonprofit health care systems in the United States. Among all hospitals in Virginia, the Richmond Community Hospital has the highest profit margin, generating as much as $100 million a year according to financial data, Silver-Greenberg and Thomas reported.

Two former executives at the facility who asked to remain anonymous said that most of the hospital’s profits come from the federal 340B drug program. The 340B drug program allows hospitals to get a windfall from buying certain drugs at a discount and getting paid much more from health insurers for each of the drugs the hospitals dispensed to patients. Under 340B, the hospitals are supposed to reinvest those windfalls into their facilities, improving care for poor patients, the Times reported.

“But Bon Secours, founded by Roman Catholic nuns more than a century ago, has been slashing services at Richmond Community while investing in the city’s wealthier, white neighborhoods, according to more than 20 former executives, doctors and nurses,” Silver-Greenberg and Thomas wrote.

Included in the article is this startling quote: “Bon Secours was basically laundering money through this poor hospital to its wealthy outposts,” said Dr. Lucas English, who worked in Richmond Community’s emergency department until 2018. “It was all about profits.”

Bon Secours responded with this statement published in the Virginia News Times.

A large need for charity care 

The authors of the article in JAMA Network Open noted that the Affordable Care Act requires tax-exempt hospitals to establish and publicize their eligibility criteria and services covered when providing charity care (which regulators call financial assistance policies). Failure to do so could mean hospitals would lose their tax-exempt status.

Tax-exempt and safety-net hospitals have a significant role in serving low-income communities and is one way federal health policies help cut the financial burden of rising health care costs for uninsured and underinsured patients, the JAMA authors explained. In 2020, 13.9% of nonelderly adults were uninsured, meaning they were potentially eligible for charity care. Federal regulations require hospitals to provide certain types of charity care, but hospitals determine patients’ eligibility and the scope of those services, the authors noted.

Also, this week, the Commonwealth Fund published findings from its biennial health insurance survey in this report, “The State of U.S. Health Insurance in 2022” showing that almost half (43%) of working-age adults had inadequate health insurance coverage this year. Those adults were uninsured (9%), had a gap in coverage in the past year (11%), or were insured all year but were underinsured (23%). Being underinsured means their coverage didn’t cover affordable access to care. The report also revealed that:

  • 29% of consumers with employer coverage and 44% of those with coverage from the individual market and the ACA marketplaces were underinsured.
  • 46% of those who responded to the fund’s survey said they skipped or delayed care because of cost.
  • 42% said they had problems paying medical bills or were paying off medical debt.
  • Just under half (49%) said they could not afford to pay an unexpected $1,000 medical bill within 30 days, including 68% of low-income adults, 69% of Black adults, and 63% of Latinx/Hispanic adults.

Two other reports may be useful when covering tax-exempt hospitals and charity care. One is from The Lown Institute, which published an analysis last year showing that 72% of the nation’s nonprofit hospitals failed to meet their obligations to invest $17 billion in their communities. The other is from the Nonprofit Quarterly. Although it’s almost five years old, the authors ask an important question that journalists can pose: “Will Nonprofit Hospitals Have to Defend Their Tax Exemptions Next?”

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Joseph Burns

Joseph Burns is AHCJ’s health beat leader for health policy. He’s an independent journalist based in Brewster, Mass., who has covered health care, health policy and the business of care since 1991.