FOR-PROFIT HOSPITALS: CU Reports Drop In Charity Care After Conversion
California hospitals that convert from not-for-profit to for- profit status show a striking decrease in charity care, according to a new Consumers Union report . In a study fiercely disputed by the hospital industry, CU found that in the year following conversion, charity care decreased 94% at United Western Medical Center of Santa Ana; 88% at Good Samaritan Medical Center in San Jose; 84% at United Western Medical Center of Anaheim; and 31% at Riverside Community Hospital. The Los Angeles Times reports that charity care increased only at Pacific Hospital of Long Beach, which saw a 71% boost. CU also noted that hospitals' "bad debt soared, suggesting that for-profit institutions are billing patients, and pursuing payment, for care that used to be offered as charity."
It's an Accounting Thing
Hospital groups called the study's accuracy into question. Harry Anderson, spokesperson for Tenet Healthcare Corp. --which owns the United Western Medical Centers -- "said hospitals these days generally don't provide much charity care in the classic sense," when there is "no bill generated and no expectation of payment." Hospital officials said that for tax purposes, for- profits "have an incentive to keep track of how much debt they incur," so "uncompensated care" -- charity care plus unpaid bills -- would be a "better measure of hospitals' generosity." Federation of American Health Systems CEO Tom Scully said, "It's just an accounting issue. I'd be stunned if a true academic came up with these results" (Marquis, 5/11). Analyst James Ensign of New Century Healthcare said "the distinction between 'charity care' and 'bad debt' is often just a question of accounting categories. In either case, care is being given away." He added, "No one expects Ford Motor Co. to give cars away. Why expect for-profit hospitals to give care away?"
Consumers Union's Julio Mateo said that while the difference between debtors and charity care recipients may be academic to for-profit hospitals, the "experience is likely to be different for patients": People who are billed but cannot pay "may be hounded by debt collectors or suffer the consequences of a bad credit rating." He worried that uninsured patients might "think twice about deciding to get treatment or ... seek help at a different hospital" (Krieger, San Jose Mercury News, 5/11). The report also examined the effects and implementation of AB 3101, which addressed hospital conversions, and found "that not only is the [state] Attorney general not required by law to make certain information public, but that when it is released, it is done sporadically, and in a fashion not likely to maximize public input." CU proposed further regulations to enable community participation in for-profit conversions, and recommended that hospital's health-impact statement "identify any unprofitable services that are needed by the community but are likely to be cut by the new for-profit owner" (CU report, 5/10).