June 15, 2007 in City

Record of for-profit hospital charity mixed

Staff writer

Last year, Deaconess Medical Center wrote off $20 million in charity care to low-income and uninsured patients in Spokane – an ongoing expense that once pushed the hospital to the edge of insolvency.

Will a for-profit company that must answer to Wall Street have the same flexibility? The answer may not be as clear as people expect, experts said.

“It’s a national debate, but there is nothing definitive that has come from any source that says ‘here’s the answer,’” said Leo Greenawalt, chief executive of the Washington State Hospital Association.

For-profit hospitals tend to spend less money on charity care than nonprofits, but both pale when compared to the large percentage spent by public hospitals, according to a 2005 study of hospitals in five states by the U.S. Government Accountabilty Office.

But the results can vary. In California, for-profits actually spent slightly more than nonprofits on uncompensated care. By contrast, in Indiana, nonprofit hospitals dedicated twice as much money for such care as did for-profit hospitals, the GAO report found.

Community Health Systems Inc., the Tennessee-based company that has secured a letter of intent to purchase Deaconess and Valley Hospital and Medical Center, said Thursday that it will not comment until an agreement is in place.

The issue carries particular import in Spokane County, where more than 20,000 people earn less than $8 an hour, according to the most recent available data. Coupled with the county’s poverty rate – which remains above both the state and national averages – health care for the uninsured has become a key concern for hospitals such as Deaconess, and its parent organization, Empire Health Services.

“It was just absolutely consumed with charity care and writeoffs for the uninsured,” said state Sen. Chris Marr, D-Spokane, former chairman of Empire’s board of directors.

Spokane’s hospitals are caught between a “large uninsured population and the continued shedding of health care by companies who can’t afford the insurance,” Marr said.

One in seven people in Spokane County does not have health insurance, according to a recent community survey. Earlier this year, Washington hospitals voluntarily agreed to provide free care to impoverished patients and deep discounts to the uninsured – in part to head off potential legislation that could have made such care mandatory.

For-profit hospitals abound in the southern states but remain something of an anomaly in Washington. Of the state’s 97 hospitals, only seven are for-profit, according to a state center for health policy.

The most recent change came with the acquisition of two Yakima hospitals by Health Management Associations Inc. of Florida in 2003.

As part of the purchase, HMA agreed to donate $1 million a year to a community foundation for the next decade. In addition, Yakima Regional Medical and Cardiac Center devoted $8 million to charitable spending and community sponsorship last year.

A hospital spokeswoman said she could not determine how much the hospital had directed to similar expenditures prior to its conversion in 2003.

Amid the growing national health care crisis, critics have targeted both for-profit and nonprofit facilities.

Last year, a U.S. Senate investigation found that nonprofit hospitals had routinely overbilled or improperly denied care to low-income patients, a finding that raised questions about their ongoing tax-exempt status.

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