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Unpaid bills hurt hospitals

Wed., Dec. 20, 2006

Unpaid medical bills continue to be a financial drag on hospitals even as the region’s economy surges.

It’s a stubborn reminder of a health care system that few would say is working well. Medical care is more expensive and insurance costs are rising, pinching businesses and the working poor.

The region’s three largest hospitals, for example, have written off patient bills totaling $77 million so far this year. That’s uncollected cash that won’t be available for new equipment, training, pay raises and new hires.

Many patients try their best to pay.

Doctors told Jane Durant in early December that she had ovarian cancer and admitted her to Deaconess Medical Center on Friday.

The news of her medical condition is bad enough, but Durant is concerned about her finances and how she will pay for a five-day hospital stay, doctor bills and a battery of upcoming chemotherapy treatments.

What’s worse: She had a heart attack two years ago and had her medical bills from that episode whittled down to $500.

“I was almost there,” she said, tugging her bed sheets up to her neck and smiling.

Now, Durant knows she’ll be paying medical bills for years.

She considers herself among Spokane’s working poor, employed nine years as a full-time typesetter at rubber stamp-maker Cosco West.

Durant feels well-treated by her employer, who gave her a leave of absence and offers an insurance plan. Yet she has used up her yearly allotment of vacation and sick days – “don’t get sick in December,” she warns – meaning she’s not being paid at the same time she’s piling up more medical debt.

She lives with her mother, has two children and bristles at the thought of depending on others for care.

“I am an adult, and I don’t want to rely upon others,” she said. She intends to speak with Deaconess about a payment plan for her share of her medical expenses, which will include a $2,500 deductible and 30 percent of the overall bill.

Deaconess Chief Financial Officer Larry Loux said the hospital has written off about $19 million so far this year, about what officials there expected.

The story is different at Sacred Heart Medical Center, where the numbers far exceeded expectations, said Chief Financial Officer Kevin Walstrom.

The hospital budgeted charity care expenses of about $13 million. Instead, the charity care write-offs have reached $22 million.

At the same time, Sacred Heart anticipated about $7 million in bad debt write-offs. Instead, the hospital has written off $11 million.

Together, the $33 million hit is around 3 percent of Sacred Heart’s gross revenue projections of about $900 million.

“We’re surprised by this,” acknowledged Walstrom.

Most hospitals, including all in this region, have a charity component as part of their institutional mission. The math may be a little different, but by and large all use federal poverty guidelines to help identify uninsured patients who qualify to have all or some of their treatment provided for free.

In contrast, bad debts refer to unpaid bills that the hospital has an expectation to collect.

At Kootenai Medical Center in Coeur d’Alene, Chief Financial Officer Tom Legel said the government hospital district has recorded a total of $24.7 million in write-offs, including $20.2 million in bad debts and $4.5 million in charity care.

“We continue to see the numbers grow, but it’s consistent with what we expected,” he said.

All hospitals offer payment plans and incentives to patients in hopes they will pay their bills.

For the second year, for example, Sacred Heart is offering patients a one-time 20 percent discount if they pay their bills in full by Dec. 31.

The end-of-year discount is an effort to collect more bills from all patients regardless of treatment or dollars due.

For some, the prospect of trimming 20 percent is alluring. For the hospital, money in hand by the end of the year often beats the alternative – a scheduled stream of payments with the risk the amount will never be fully paid.

Jeff Zahir, a Washington state labor market economist based in Spokane, said the hospital’s problems shouldn’t be a surprise.

Despite a low unemployment level – currently 4.6 percent – Zahir said some 22,000 people in Spokane County made less than $8 an hour last year.

It’s a number that matches well with Spokane’s relatively high and troublesome poverty rate of 14.2 percent, he said.

Of interest, he said, is that about 74 percent of full-time workers at medical service companies such as clinics and hospitals are offered insurance. In contrast, about 90 percent of workers employed by manufacturers and finance companies are offered health insurance.

From her hospital bed, Durant said falling behind is frustrating.

“It’s difficult to understand how people like me, who pay their bills and do the right thing, in the end can have nothing else to call on” but the generosity of the hospitals.


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