DOJ: News Release

Attorney General Releases Analysis of Nonprofit Hospital Pricing, Charity Care

HELENA – Montana Attorney General Mike McGrath Wednesday released the first Montana Hospitals Report summarizing charity care and pricing at the state’s 11 major nonprofit hospitals. The report presents information about hospital pricing, the charity care hospitals provide in return for their tax-exempt status, bad debt and collection practices, hospital surpluses and more. The report does not address hospital foundations.

McGrath made the announcement at a press conference Wednesday. McGrath’s office contracted with Lawrence White from the School of Public and Community Health Sciences at the University of Montana to analyze and compile the information in the report. White is the former CEO of St. Patrick Hospital in Missoula.

“The Attorney General’s Office has the dual role of protecting consumers and monitoring nonprofit corporations,” McGrath said. “Our goal was to gather this information and simply take a closer look.

“I am hopeful that this can be a starting point for an informed public policy discussion on the costs of health care in Montana.”

In September 2006, McGrath’s office surveyed the state’s 11 major nonprofit hospitals. The report released Wednesday includes data from:

Benefis Healthcare, Great Falls

Northern Montana Healthcare, Havre

Billings Clinic

St. James Healthcare, Butte

Bozeman Deaconess Health Services

St. Patrick Hospital & Health Sciences Center, Missoula

Community Medical Center, Missoula

St. Peter’s Community Hospital, Helena

Holy Rosary Healthcare, Miles City

St. Vincent Healthcare, Billings

Kalispell Regional Medical Center

Charity Care and Tax Benefits
In return for their tax-exempt status, Montana’s nonprofit hospitals must provide a benefit to the communities they serve.

The report assesses whether the facilities’ community benefit contributions – reflected by charity service and Medicaid cost in excess of reimbursement – are proportionate to their tax exemption.

Four of the 11 hospitals surveyed provided community benefits at a level greater than the tax benefits they received.

McGrath and White stressed that the report looked at only charity care and Medicaid costs and did not take into consideration other types of “community benefits” a hospital might provide.

“Hospitals support their communities through things like health education, free clinics, training, research and self-help programs,” McGrath said, “but charity care and Medicaid are uniformly reported and constitute the bulk of the benefits provided.”

Hospital Surpluses
The report compared each hospital’s surplus to its charity care cost, and in only one case did the hospital’s charity care exceed its surplus. In another case, charity care amounted to less than 10 percent of the hospital’s surplus.

Charity Care Policies
The survey found that each hospital had a procedure governing who is eligible for charity care, but that the income guidelines ranged between 400 and 200 percent of the federal poverty guidelines (FPG).

The report noted that for a family of four in 2007, the numbers ranged from $41,300 to $82,600.

Collections
In some cases, when there are no payments made on an account, a hospital may turn the outstanding balance over to an outside collection agency.
•For the three-year period from 2004 to 2006, the 11 hospitals surveyed had a total of $190 million in bad debts, or about $63 million per year. The average return rate on these collection efforts was 17.5 percent.
•In cases involving bankruptcies, the hospitals pursued a total of $19 million, but collected only 1 percent of the total.

Once a hospital attempts to collect an outstanding bill, the charge can no longer be considered charity. The report suggests that if a hospital’s policy can better identify charity care cases before providing services, “the collection efforts could be avoided for some and the hospital would have recorded more community benefit.”

Uncompensated Care
Hospitals can write off both charity care and bad debts, and the combined total of the two is called uncompensated care. In 2006, nationwide, uncompensated care averaged 5.7 percent of total hospital expenses. In Montana, only one of the hospitals in the survey exceeded this national average.

Pricing
Finally, the survey collected cost information for each hospital’s 10 most common medical procedures, including delivery and care of newborns, treatment of pneumonia and gastroenteritis and psychological care.

The report noted that “there is significant variability in hospital charges, but the health care consumer has no simple way to compare charges or to obtain information about the quality of services.”

“Without data on quality of care, the pricing information may not help Montana consumers identify the best value for services,” McGrath said, “but the responses from the hospitals demonstrate that pricing information is available.”

And in other states, state health departments and hospital associations sponsor web sites with some pricing information.

(For more information on consumer access to health care pricing information in other states, go to My Healthcare in Utah: http://health.utah.gov/myhealthcare/ and Texas PricePoint: www.txpricepoint.org)

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