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Using data, reporter shows how for-profit hospitals provide much less charity care than nonprofits Date: 04/05/18

Sean D. Hamill

By Joseph Burns

In December, Pennsylvania published a new definition of charity care that requires hospitals to notify patients of their eligibility for such care, even if the hospital determined eligibility without the patient’s cooperation.

Sean D. Hamill (@SeanDHamill), a reporter for the Pittsburgh Post-Gazette, explained that the new definition is important because hospitals previously used presumptive eligibility, a practice that helped drive up spending on charity care at Pennsylvania hospitals over 10 years because hospitals were shifting patients’ unpaid accounts from bad debt to charity care. In a Post-Gazette series, Hamill reported that many hospitals in Pittsburgh and across the United States did not tell patients that they qualified for charity care when the hospital used presumptive eligibility. PPG published the series, "Counting Charity Care: How hospitals provide care to the uninsured," in 2016.

Patient advocates criticized the failure to inform patients, saying that presumptive eligibility could be detrimental because patients might not return for follow-up care if they believed they still owed money, he wrote.

The issue of how hospitals classify bad debt and charity care is critically important to journalists assessing whether hospitals are doing the work most of them were founded to do: care for the poor, the uninsured and the underinsured. “Hospitals were created to provide care to the poor,” Hamill told me. “They were not for the rich, but for some reason that mission has been mostly forgotten. Today, many of the most lucrative hospitals in Pennsylvania provide very little care to the uninsured. Yet all hospitals want to say they provide charity care. That’s why we should all look at this data and report it.”

In the Counting Charity Care series, Hamill reported on how in 2015, the year after the Affordable Care Act went into effect, hospital spending on charity care and bad debt started to fall nationwide. “Both bad debt and charity care fell overall, and it fell dramatically in states that expanded Medicaid,” he said. “For many people, this was proof of the success of the ACA. It was driving down the bills that had previously gone unpaid. You could almost make it causative although no one would definitely say that.”

The data in the series show, for example, that on average, for-profit hospitals provide much less charity care then nonprofit hospitals. The data also show that when a hospital operates as a nonprofit, it will provide charity care, but when it’s sold to a for-profit company, charity care often will drop off sharply.

Hamill invited other journalists to use the PPG numbers. “Our data is open source,” he said. “Everyone could use it.” In the series, PPG included a link to a searchable data from the federal Centers for Medicare & Medicaid Services and a link to a searchable data set showing annual averages by state and by year.

At Health Journalism 2018 in Phoenix, Hamill will moderate a session, “How to evaluate hospital charity care and bad debt,” on Saturday, April 14, at 3 pm. On the panel will be Dan Diamond, a reporter for Politico; and Susan Sherry, deputy director of Community Catalyst.

In an interview, Hamill explained the importance of the series and how the data from state and federal sources revealed how hospitals characterize bad debt and charity care.

AHCJ: How did you identify bad debt and charity care as worthy of a series for PPG readers?

Hamill: The series on charity care grew out of another series we did, "Poor Health," about how hospitals provide care to the poor. We wanted to know if they were doing a good job or not and why they provided care to this population. For the first series, we wanted data on our local hospitals and got the best numbers from the Pennsylvania Health Care Cost Containment Council (PHC4). This agency is one of the few organizations anywhere that requires hospitals to report extensive data on hospital care.

AHCJ: What did the PHC4 data show?

Hamill: PHC4 reported the amounts spent on uncompensated care, which was a combination of bad debt, bills that patients didn’t pay, and charity care, bills that patients didn’t have to pay because they qualified based on their financial situations under the hospital’s policies. Pennsylvania allows each hospital to set its own policies. Every nonprofit must provide some form of charity care, but for-profit hospitals do not have to provide charity care even though every for-profit hospital in our state says they do so.

The PHC4 numbers actually told a story themselves in that most of the hospitals that closed in recent years had very high levels of uncompensated care. After seeing that, I learned that it’s like that all over the country, which, by itself, is interesting. But I wanted to know what hospitals reported about uncompensated care. When I looked into that, I saw that the numbers were all over the map.

A bit later, I read the PHC4 annual report and noted that uncompensated care was broken out in two parts. One was an overall number for uncompensated care and one was an overall number for bad debt for each hospital.

AHCJ: Was it an important revelation for you to have these numbers broken out for each hospital?

Hamill: Yes, it was, and so I asked PHC4 if it had data for all hospitals and for each hospital by building. Having data on each building is important because then you can compare one facility against another. It turns out that PHC4 had the numbers for charity care and bad debt for every hospital and every building going back 25 years. Because the numbers went back over 25 years, I had had to adjust them to come up with real charity care and not charges because you can’t use charges. In our series, we have graphs on how to do this conversion. The result of collecting and reporting these numbers was that we now have a great database on charity care in real dollars for charity care as a percentage of revenue for every Pennsylvania hospital so that we can compare apples to apples.

AHCJ: What did those numbers tell you?

Hamill: The data show that there really was no rhyme or reason for why some hospitals provide a lot of charity care and some provide very little. Some high revenue hospitals provided a lot of charity care and some high revenue hospitals provided very little charity care. Some struggling hospitals provided a lot and some provided very little. The bottom line was that the data gave us good numbers for Pennsylvania, and from that, it looked like hospitals were providing very little charity care overall, something like less than 2% for all hospitals in the state.

From there, I wanted to know how hospitals here compare with how much hospitals in other states spent on charity care, at least for one year, which was 2015, or at least what hospitals in other states around us were spending. I found data from a few states but not all. But then while working on data from the University of Pittsburgh Medical Center’s Mercy Hospital, I heard from a source that there was data on Mercy’s charity care that it was providing under the ACA.

The ACA requires all hospitals that get Medicare or Medicaid funding to report bad debt and charitable care since 2011, That data reporting requirement was unbeknownst to every expert I interviewed, which means the data had gone completely unanalyzed or undocumented.

AHCJ: Was learning about the data required under the ACA a turning point of sorts?

Hamill: The CMS data meant I could compare Pennsylvania’s hospitals to those in every other state, and doing that confirmed my thesis that we had very low levels of charity care in our state. So, that was one story. A second story was about how for-profit hospitals compare in charity care to nonprofit hospitals. That’s a big issue because in some parts of the country there are many more for-profit hospitals than there are nonprofit hospitals especially in the south and the southeastern parts of the country. In Pennsylvania, we didn’t have any for-profit hospitals until about 18 years ago. Now we have about 36 for-profit hospitals, which is about 20 percent of the total number of hospitals.

The numbers show that, on average, for-profits provide much less charity care then nonprofits provide, and that was true in Pennsylvania, it was true for every state around us, and it was true nationally except for some states in the south. Also, you can see that in some communities the for-profits push the poor patients down the road to nonprofits.

Under federal law, all hospitals are required to provide emergency room care. But some hospitals tell uninsured patients that they will get care but that the hospital will come after them to collect for the cost of that care. They do the minimum work required in the ER, but they pursue those patients, as court filings show. Some of the largest for-profit hospital companies filed civil suits for less than $1,000.

AHCJ: What else did the data show that stood out in your reporting?

Hamill: We saw that some for-profit hospitals tell their doctors to provide a minimum of care to the uninsured. The data show that when a hospital was a nonprofit, it provided charity care, but after it was sold to a for-profit company, the charity care dropped off to almost nothing. Usually, for-profit hospitals don’t build new buildings. Instead, they typically buy a struggling nonprofit that’s looking to sell. In that case, you need to look back over years of data so that you have at least a year or two before the struggling nonprofit was sold, the year it was sold, and the year after it was sold.

It’s incredibly powerful to view the data in this way. Every time one for-profit hospital company bought a hospital, it would promise to provide the same level of charity care as the previous owner provided. So, let’s say the hospital was providing care to patients who were at 300 percent of the federal poverty level. Maybe they would continue to do so for patients in the ER, but they didn’t let their physicians do elective procedures for these patients. I had some advocacy groups tell me that patients who were uninsured had to pay $300 dollars in cash before they could get care. If they didn’t have the $300 or if they were uninsured, the patients would just walk away.

The problem is that no one tracks how many uninsured patients walk away, which means it’s a difficult story to do even though patient advocacy groups know it happens.

AHCJ: Did you have any help in crunching the data?

Hamill: Yes, you need highly skilled data people to dig into the numbers, and CMS provided no help. We paid a third party close to $500 to get the data for us, and they did it in one day. That saved us a lot of time. We have a link to their site in the story. Once we had the numbers, we just used Excel spreadsheets to manipulate the data to show charity care and bad debt as a percentage of revenue or as a percentage of expenses.

Editor’s note: After the series ran, Pennsylvania Gov. Tom Wolf and Department Human Services Secretary Ted Dallas called for a review of how the state defined charity care used in reimbursing hospitals for such care.

For more information, see these articles from the series: