Opportunistic Practices Based on Profits Not Patients in U.S. Hospitals

Hospital corporations are misusing subsidized patient care programs to generate profits at the expense of the public. There are many methods that huge hospital groups like Providence use to generate profits, which unlike their advertisements, are not wholly plowed back into the communities they serve, but into its venture capital fund which had 300 million in 2019. (Reed, 2019) Saturday’s New York Times had not one but two articles on mercenary and unethical practices used by hospital corporations seeking greater profits. (Katie Thomas, 2022)  This article addresses some of the primary methods hospital groups pad their revenues at the patient’s and public’s expense, while highlighting what some states have done to combat egregious behavior by healthcare corporations.

Discouraging Development in High-need Low-income Locations

Large hospital groups use a variety of long-term profit driven methods to reduce their footprints in low-income locations and move clinics, practices, and facilities to areas with higher private-sector insurance reimbursement rates. Typically, a campaign is developed explaining why the existing community hospital, often built with public dollars is obsolete, which is preceded by an aggressive build out of clinics and facilities in wealthier areas. Case in point, Bremerton, Washington a city of 38,000 had its hospital closed after operations were moved to an unincorporated suburb. Bremerton has the highest concentration of low-income residents in the county, many of whom are veterans, in part because of previous county legislation mandating the financially disenfranchised live in that community. And the community hospital was built with public funding, but acquired and then closed by St. Michaels Hospital Group. The New York Times front page featured Bon Secours hospital in Richmond, Virginia, built specifically for the Black population which was acquired by Mercy Healthcare and subsequently bled of resources. Death via hospital closure ensued following a slow strangulation of the intensive care unit, maternity ward, and cardiac care. (Katie Thomas, 2022)

 Noncompliance With Charitable Care Standards

People of low to moderate incomes are eligible for free or reduced care at hospitals in the United States, but this standard has not been routinely enforced. Case in point, behemoth hospital group Providence, hired McKinsey Group to aggressively reduce its charitable (free or reduced cost) care in order to generate more profits. (Katie Thomas, 2022) As a result of the thug-like bill collecting tactics, where hospital employees went to patients in their hospital beds to extract money, Providence reduced its charitable care from the industry standard of 2% to 1%. Keep in mind these nonprofit hospitals receive federal and state funding for patient care, pay no taxes, and generate huge profits, for a measly 2% of aid.  Providence is by no means the only hospital group that pursues profits this way. Some states have interrupted this opportunism by enacting laws standardizing what income level and family size engenders eligibility for free or reduced cost charitable care. Even in the face of this, Providence still abused the state standards and was charged by Bob Ferguson, Washington Attorney General, for which it settled with a twenty-four million dollar fine. (Hagar, 2022) Another Catholic Hospital-St. Josephs in Tacoma was also sued by Washington State for failure to offer financial aid and predatory collection practices. (Bosco, 2021)

 Promotion of Procedures Linked to Financial Incentives as Opposed to Patient Care

There are many examples of financial incentives gone awry, but include procedures, especially in geriatric patients that do not improve health but generate revenue. For example, the Washington State Attorney General’s case against Providence Hospital for unnecessary neuro procedures at St. Mary’s Hospital, which resulted in two surgeons losing their privileges after an internal whistleblower reported the practice. Not only were the procedures dangerous and harmful, the propensity for these types of surgery were directly related to a financial incentive program which paid executives handsomely for increased volume in the complex surgeries. (Winter, 2022)

 Misuse of Federal Programs to Generate Profits

The federal government established the 340-B drug program which provides reduced drug costs to hospitals in urban areas, like public hospitals and trauma centers. The idea was to provide lower costs to those facilities and their patients, which provide services to the vulnerable. But, the financial gurus in the hospital corporations figured out they could acquire a public hospital, get the federally subsidized 340-B drug prices and then have an affiliated hospital in a wealthier suburban location also have access to the discounted drugs. The hospital would then charge the private sector companies a multiplier for the same medications, resulting in profits of $40,000 per patient for one drug. (Katie Thomas, 2022) In the case of Bon Secours Mercy Hospital in Richmond, Virginia, Mercy acquired the facility and used the urban designation of a 340B facility to buy discounted drugs and gouge the private sector for payments. This is a classic example of how profit making in healthcare is not in the best interests of the public or the patients.  

 What You Can Do to Avoid Opportunistic Behavior by Hospital Groups

1.  Know your rights, do not sign blanket releases when agreeing to procedures.

2.  Ask for an estimate of the cost of the procedure in advance and understand what you are expected to pay. Be careful about signing installment payments which can have unfavorable terms.

3. Know what your state’s standards are for charitable or reduced cost health care.

4. Write to your elected representatives to let them know about your concerns over treatment at a healthcare facility, especially financially.

Ths table shows existing state laws of elegibility for lower cost or free health care for which hospitals must comply.

State	State Mandates for Charitable Care at Hospitals (Bosco, 2021)
California	Families without medical insurance, those with high medical costs, and people within 400% of the federal poverty rate are eligible for financial assistance.
Colorado	A 2022 law strengthens protections from medical debt and requires all hospitals to provide medical assistance.
Connecticut	Requires all hospitals to screen for financial aid, but only mandates aid consideration for persons not covered on Medicare, Medicaid, or other coverage and whose income is below 250% of the federal poverty rate.
Illinois	Hospitals must offer financial assistance to families within 600% of the poverty rate, free care is mandated for those within 200% of the poverty rate, and hospitals are prohibited from collecting more than 20% of a patient’s income for payment in a twelve-month period.
Massachusetts	Families whose incomes are within 200% of the federal poverty rate are eligible to receive financial assistance.
New Jersey	Specifies families without medical insurance and those with low reimbursement from insurance plans are eligible for charity care. Also stipulates that healthcare providers can only collect a portion of patient income for repayment and the law stipulates what that payment ceiling is based on income.
Oregon	Requires hospitals provide full financial aid for those within 200% of the federal poverty rate and a sliding fee scale for those within 400% of the poverty rate.
Texas	Requires financial aid for those within 21%-200% of the federal poverty rate.
Washington	Families with incomes below 100% of the federal poverty rate must receive free care; families within 200% of the poverty rate are eligible for financial assistance.

 A 2015 study by Rutgers University found that only 44% of hospitals are informing patients of their rights for financial assistance nationwide (Susan Singer, 2022). Even worse, in states with no regulations for offering charity care, like Virginia or Tennessee, up to 40% of people carrying medical debt were eligible for financial assistance, but the hospital did not offer it to them. And of course, the twelve states that did not expand Medicaid eligibility with the passage of the Affordable Care Act are denying state residents access to federally subsidized free health care.  It is time for regulatory reform for hospitals, distinguishing the community based public hospitals from the behemoth hospital groups for tax exemptions. Now do your part to get what you deserve in the inequitable US healthcare system by understanding your state laws and demanding access to publicly mandated benefits to reduce the cost of your care. Patients should not be concerned about profits for hospitals, but of their health and wellbeing.

 And this is the healthpolicymaven signing off. Roberta Winter is a healthcare analyst and freelance journalist who accepts no money for this column. Opinions here are her own and are not meant to provide medical advice. She is the author of a guidebook to the US healthcare system, which was published by Rowman & Littlefield in 2013. https://www.amazon.com/Unraveling-U-S-Health-Care-Personal/dp/1442222972 

References

Bosco, A. B. (2021). An Ounce of Prevention-A Review of Hospital Financial Assistance Policies In the States. National Consumer Law Center. Retrieved September 24, 2022, from chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.nclc.org/images/pdf/medical-debt/Rpt_Ounce_of_Prevention.pdf

Hagar, S. (2022, September 24). More details emerge on Providence St. Mary Medical Center's $22.7 million insurance fraud settlement. Union Bulletin. Retrieved April 13, 2022, from https://www.union-bulletin.com/news/courts_and_crime/more-details-emerge-on-providence-st-mary-medical-centers-22-7-million-insurance-fraud-settlement/article_9ef81200-bab2-11ec-9bf3-03450d16ba13.html

Katie Thomas, J. S.-G. (2022, September 24). Profits Over Patients-How a Hospital Chain Used a Poor Neighborhood to Generate Huge Profits. The New York Times. Retrieved September 24, 2022, from https://www.nytimes.com/2022/09/24/health/bon-secours-mercy-health-profit-poor-neighborhood.html

Reed, T. (2019, January 18). Providence St, Joseph Health Announces New 150 Million Health Care Fund. Fierce Health.com. Retrieved September 25, 2022, from https://www.fiercehealthcare.com/hospitals-health-systems/providence-ventures-closes-150m-healthcare-fund

Susan Singer, E. W. (2022). Understanding Required Financial Assistance in Medical Care. Consumer Financial Protection Bureau, United States Government. Retrieved September 24, 2022, from https://www.consumerfinance.gov/data-research/research-reports/understanding-required-financial-assistance-in-medical-care/#6

Winter, R. (2022, April 14). Nonprofit Hospital Defrauds State of Millions. Straight Talk On Health Care. Retrieved from https://healthpolicymaven.blogspot.com/2022/04/nonprofit-catholic-hospital-group.html