Demystifying Medicine One Month at a Time

Tag: community benefit

I’m Astounded, Too

Senator Chuck Grassley of Iowa, as of this month the Chair of the Senate Judiciary Committee, has led a decade-long crusade to make our nation’s non-profit hospitals more accountable to the public.

GrassleyOfficialPhotoAfter all, the reasoning goes, non-profit hospitals are tax exempt because they provide community benefit. How this standard is defined has been the crux of the issue.

Hospitals always face a share of patients that are uninsured, who are therefore unable to meet the high costs of hospitalization. Depending on their location, some non-profits care for more non-insured patients than others. Of course, the Affordable Care Act (Obamacare) was designed in part to greatly lessen the number of uninsured among us — a win for those patients, and for the hospitals that struggle financially because of non-collected fees. The American Hospital Association (AHA) supported the passage of the Affordable Care Act under the premise that nearly all patients would become paying customers.

Since not all states (>20) have agreed to expand their Medicaid pools in spite of generous new federal funding, there are still millions of uninsured patients straining the finances of hospitals. Businesses (non-profit hospitals included) have a right to collect payment for services rendered. But how aggressive should non-profit hospitals be in pursuit of unpaid fees?

Propublica, a non-profit investigative journalism enterprise, has researched the billing practices of non-profit hospitals in six states. What they found ‘astounded‘ Senator Grassley: aggressive collection practices including lawsuits, wage garnishing, and the placement of liens on personal property. These practices are legal, but skirt the ethical notion of helping our fellow humans. If sick people are rendered health care services but then put into collections, the results can be emotionally, financially, and even physically catastrophic. To me it certainly seems counterproductive to bully members of your community, who more than likely will continue to be customers.

Stay tuned to find out if Sen. Grassley and his committee do anything to rein in these practices. My guess is we’ll see an attempt made to more clearly define the community benefit standard and put limits on what extent hospitals can go to for collecting unpaid bills. One option: taking away a hospital’s non-profit status if it continues engaging in such aggressive collection practices.


RIP: EB (1931-2015)

“Let’s play two!”

"Let's play two!"


Good news/bad news from the world of medicine last week. Both stories from the business section of the NY Times and “business of health care” reporter Reed Abelson.

The bad news first: Huron Hospital, a community hospital in East Cleveland, will be closed down by its corporate overlord, the Cleveland Clinic. Like many community hospitals, Huron has declining numbers of admissions and isn’t staffed or equipped to provide the cutting edge care [e.g. transplant, cardiac surgery, or interdisciplinary cancer treatment] favored by behemoth academic medical centers.

I’m sentimental about Huron’s closure for many reasons:

  1. One man's ceiling is another man's floor?

    Further evidence of Cleveland’s decline. After all, Cleveland ranked #5 on Newsweek’s list of dying American cities.

  2. Huron was originally built on part of the estate of John D. Rockefeller, one of America’s original “robber barons.” Rockefeller also bequeathed a nice sum to start a university on the south side of Chicago.
  3. I rotated at Huron as a medical student, working in the ER; I learned a thing or two about suturing and triage.

The Cleveland Clinic makes it clear that closing the inpatient hospital is a business decision. CEO Toby Cosgrove acknowledges that the decision is a difficult one. The hospital is not only considered a local public resource; it’s the largest employer in the community of East Cleveland.

The news is not entirely bleak, however: The Clinic plans to open an outpatient family health center on the site. “When we took over the hospital, we signed up to look after this community,” Cosgrove said.

Contrast the Clinic’s decision with that of Blue Shield of California. The non-profit health insurer made news by unilaterally declaring that it will limit its annual “profit” to a maximum of two percent of revenues. Monies earned over that figure are plowed back to the company’s members, most often in the form of credits on premium payments.

This in effect helps subsidize the cost of insurance for members of that plan.

Sounds good, but you have to wonder:

If a non-profit insurer is making enough “profit” to offer premium credits, you’d think they could just charge lower premiums in the first place. After all, when we talk about annual double digit inflation in health care, isn’t our insurance premium the first place we feel the pain?

Whither Charity Care?

The Illinois Supreme Court issued a fascinating ruling last week, upholding a decision to strip a downstate non-profit hospital chain of its tax-exempt status for failing to provide sufficient charity care to its patients.

Provena Covenant Medical Center is a chain of six Catholic hospitals. Provena will now in effect owe millions of dollars in property taxes having lost said tax-exempt status. USA Today ran both a story and an editorial on the decision. From the story:

The justices found that Provena Covenant is not a charitable organization because the vast bulk of its income comes from charging for medical services, not from charitable donations; because it didn’t dispense charity care to all who needed and applied for it; and because it placed obstacles in the way of those seeking charity by not advertising its charity program while aggressively pursuing unpaid bills.

The justices also found the hospital’s campus was not used for charitable purposes because both the number of patients and the dollar value of the free care those patients received were minuscule compared to the hospital’s revenues and patient population.

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