Nothing is more indicative of the U.S. healthcare system being off the rails than expecting uninsured patients to pay significantly more for hospitalization than those with private insurance. Such is the case throughout the country and highlighted in the case of Advocate, a Chicago-area non-profit healthcare organization sponsored by the Evangelical Lutheran Church and United Church of Christ. According to Jonathan Cohn’s New York Times Magazine piece last Sunday:
“When the Service Employees International Union, which is trying to organize Advocate workers, analyzed Advocate’s billing in 2001, it found that uninsured patients were being asked to pay 140 percent more than those with private insurance.”
How did non-profit healthcare get to this point? During the late 1800s and early 1900s a veritable boom occurred when churches established hospitals to provide healthcare for America’s burgeoning urban immigrant population, most of which was destitute. While the hospital building boom eased off, hospitals associated with religious orders continued to serve the urban poor through the 1970s by way of a system that could only be called a skim. “Every time a health insurer, whether private or a government provider like Medicare, wrote a check to a hospital for a medical service,” writes Cohn, “it was in effect paying more than the actual cost of that service; hospitals could then use the extra money to finance care for those people who had no way to pay.” By the 1980s healthcare costs began to spiral out of control and the federal government reduced the amount Medicare would pay to these hospitals. In the 1990s healthcare costs broke out of the spiral and soared on a breathtakingly near-vertical trajectory and the federal government put Medicare on a perilous race to the bottom at a nearly as breathtaking path in the other direction.
But the skim notwithstanding, the non-profit healthcare systems continued to enjoy other subsidies, not the least of which were waived property taxes, government support, and corporate tax breaks. Meanwhile, nun and priest administrators were replaced with professionals who were paid multi-million dollar annual salaries and bonuses to make the hospitals more attractive to the moneyed classes. The professional managers brought the singularly foul concepts of managed care and retail pricing to healthcare, the latter changing the way hospitals billed patients. With the emergence of managed care, hospitals could no longer charge a single set price for services and large private insurers demanded negotiated discounts. So, an insurer paid only US$500 (the negotiated wholesale price) for a hospital service for which an uninsured patient paid a whopping US$1,500 or US$2,000 (the retail price). And every year the retail prices rise while the negotiated discounts get steeper. The result is as astonishing as it is predictable, according to Gerard Anderson, director of the John Hopkins University Center for Hospital Finance and Management, quoted in Cohn’s New York Times article, “charges for something like an operating room can be four times as much as what insurance companies actually pay when their beneficiaries are treated.”
In the 21st century, non-profit healthcare has gotten even meaner. In the Cohn article, union organizers say that hospital managers have been fighting to limit nonemergency treatment of uninsured patients for the last three years (federal law prohibits hospitals from denying emergency treatment to the uninsured). According to American Federation of State, County, and Municipal Employees (AFSCME) organizers cited in Cohn’s piece, Chicago-based Resurrection Health Care “instructed its employees to offer financial assistance only to those living within certain local ZIP codes and to require 50 percent prepayment from uninsured patients seeking nonemergency care.” Meanwhile Resurrection’s president and CEO, Joseph Toomey’s 2002 compensation was US$2.3 million.
Employees of non-profit healthcare providers insist that these vignettes distort and mislead the amount of care they provide to the uninsured, gratis. The Illinois Hospital Association told Cohn that the state’s hospitals, most of which are non-profit, provide US$2 billion in uncompensated care each year. Resurrection, for example, is said to provide hundreds of thousands of dollars worth of uncompensated care. Charity is apparently relative; the AFSCME organizers point out that last year Resurrection dispensed six-tenths of one percent of uncompensated care while the “average for other private hospitals in Cook County was more than twice as much.”
Here on the far edge that is Minnesota, the healthcare providers are simply taking money they claim is owed them from patients’ bank accounts. So says Glenn Howatt’s report in the Minneapolis StarTribune that ran on the same day as Cohn’s New York Times piece.The non-profit provider in this case, Fairview Health Services, is subject of both a review by the state attorney general and a class-action alleging it “overcharged the uninsured and harrased debtors.” “In Minnesota, unlike most other states,” Howatt reports, “it is legal for debt collectors to gain access to bank accounts—the legal term is garnishment—without filing court papers or getting approval from a judge, even in cases of medical debts.
Minnesota attorney general Mike Hatch’s office, after a yearlong investigation, has “uncovered problems with Fairview’s charity-care and debt-collection practices.” Fairview maintains that providing healthcare to the uninsured is central to its mission, but claims to have problems identifying those who can’t pay. Hatch’s full report is expected within a month.
Some evidence suggests a backlash against the non-profit healthcare providers is fomenting. As stories like Cohn’s become more frequent, tax-wielding communities and lawsuit-wielding patients are starting to fight back. Illinois, for example, has “already revoked property-tax exemptions for the Provena Covenant Medical Center in Urbana, after a Wall Street Journal article documented the hospital’s use of ‘body attachments’—court orders authorizing the police to haul unresponsive medical debtors into court, by force if necessary.” Elsewhere, patients that are being sued for nonpayment of medical bills have started cross-suing under consumer-fraud statutes and the obligations that attach to tax exemptions. Cohn, writing in the New York Times, sounds the patients’ battle cry:
“In perhaps the most ominous sign for the hospitals, a group of litigators led by Richard Scruggs, the Mississippi attorney whose pursuit of the tobacco industry famously yielded a $206 billion settlement, have filed class-action lawsuits naming more than 400 nonprofit hospitals around the country.”
It seems to be working. Again from Cohn:
“... the spectacle of nonprofit hospitals suing the indigent may provoke the courts and lawmakers to intervene—a possibility some of the hospital industry’s most powerful friends have already considered. ‘I cannot overstate the level of concern this chain of events has given some of the more sophisticated people in the credit-granting area,’ said James Unland, president of the Chicago-based Health Capital Group, which assesses hospital finances on behalf of would-be creditors. ‘I can’t have a whole bunch of hospitals being sued in class-action lawsuits and being threatened with huge property-tax bills and reasonably predict the cash flow of the hospitals.’”
0 responses. Comments closed for this article.