Poor Patients Eligible for Free Care Pursued for Payment

September 26, 2022

Summary: The patients are poor. The hospital chain is not-for-profit. Thus, no question about charging them, they get free care. Nope. Advised by business consultants, they devised a system to aggressively pursue payment. Result: debt, debt collectors, & financial hardship.

Profits over Patients: They Were Entitled to Free Care. Hospitals Hounded Them to Pay.
The New York Times
September 24, 2022
By Jessica Silver-Greenberg and Katie Thomas

In 2018, senior executives at one of the country’s largest nonprofit hospital chains, Providence, were frustrated. They were spending hundreds of millions of dollars providing free health care to patients. It was eating into their bottom line.

The executives, led by Providence’s chief financial officer at the time, devised a solution [guided by the consulting firm McKinsey & Co.]: a program called Rev-Up.

Rev-Up provided Providence’s employees with a detailed playbook for wringing money out of patients — even those who were supposed to receive free care because of their low incomes, a New York Times investigation found.

If patients did not pay, Providence sent debt collectors to pursue them.

More than half the nation’s roughly 5,000 hospitals are nonprofits like Providence. They enjoy lucrative tax exemptions; Providence avoids more than $1 billion a year in taxes. In exchange, the Internal Revenue Service requires them to provide services, such as free care for the poor, that benefit the communities in which they operate.

But in recent decades, many of the hospitals have become virtually indistinguishable from for-profit companies, adopting an unrelenting focus on the bottom line and straying from their traditional charitable missions.

Previously, when treating patients who were on Medicaid, Providence eventually waived any outstanding portion of their bill. In 2019, Providence stopped doing that. Medicaid patients were sent to debt collectors instead.

“They just want to make sure that they never come back to that hospital and they tell all their friends never to go back to that hospital,” said Dean A. Zerbe, who investigated nonprofit hospitals when he worked for the Senate Finance Committee under Senator Charles E. Grassley.

Comment by: Don McCanne

Those who believe that charity provided by our nonprofit hospitals is one major reason that we do not need a humanitarian method of funding health care in our nation should read in full this New York Times exposé. It provides a compelling example of how the US health care system places profits – oops since Providence is not-for-profit, “operating margins” and high executive salaries – over patients. As if medical suffering is not enough, we compound that with financial suffering.

The solution is really simple. We can establish a single, efficient, publicly administered fund that pays for all of our health expenses based on medical need. We can fund that pool equitably based on ability to pay through progressive taxes. There would be no need for a hospital administrative staff to sic bill collectors on the indigent nor for any of the other inhumane medical business practices prevalent in our society merely because we have failed to adopt this simple, humanitarian approach:  single payer through an improved version of Medicare that applies to All. It is astonishing that we haven’t adopted it long ago.

Ed note: The NYT just published a second article on the harmful profit-maximizing behavior of not-for-profit hospitals. HJM will return to this topic soon … – JGK