Five Healthcare Leaders Weigh-In on Rising Charity Care

Nearly 80% of hospital financial leaders surveyed in the HealthLeaders Media Industry Survey 2010 expect uncompensated care numbers to worsen in the next year. It's hardly a bad case of pessimism on their part. With the sharp rise in unemployment that accompanied the recession, uncompensated care and bad debt have indeed spiked at hospitals nationwide bringing another slew of challenges to the already financially beleaguered healthcare system.

Lay aside that it's illegal not to treat a patient due to their ability to pay when they arrive in the ER, the fact is that treating those in need is generally written right into the mission statements of most hospitals. Nevertheless, realistically facilities need to earn a profit to stay open.

So with no signs that healthcare reform legislation will pass anytime soon, what are financial leaders to do when they see their costs rise while their revenues decline? Moreover, how do you strive to improve your patient-centered care and customer services when you have fewer resources to use?

In part one of this two-part series I asked CEOs how they and their teams are addressing uncompensated care at their facility. In part two, these same healthcare leaders will offer their thoughts on how they remained patient centered in the midst of rising charity care and are still prospering.

Though the healthcare industry took its share of knocks during the recession, the auto manufacturers took an outright beating over the last three years. When the automotive industry began laying off plant workers in record numbers, Detroit was one of the hardest hit. When the jobs dried up, so too did the healthcare benefits for many.

With more than 93,000 patients admitted annually, non-profit Henry Ford recorded $3.7 billion in revenues in 2008 while providing more than $160 million in uncompensated medical care. The health system recorded $8.5 million in net income in 2008.

Their uncompensated care numbers are growing dramatically, Schlichting says, going from 12% to 20% over the last two years. "We have a mission to serve our community. So [when it comes to the bottom line] we've got to be creative," she explains.

Schlichting chairs an uninsured task force with other stakeholders in Detroit, with the goal of seeking ways to improve access to care. Additionally Henry Ford established the Community Health and Social Services Clinic to provide primary care services to more than 3,500 uninsured Detroit residents every month. Henry Ford Health System physicians staff the two clinics, located in southwest Detroit and in the New Center Area. "It improves patient care and they are less likely to be admitted if they are getting preventative care," she notes.

To help improve access to specialists, the task force asked all the specialists in the area to agree to take on equal shares of the uncompensated care, "so none of these physicians are hit too hard and they are all able to help," she notes.

"We have a real partnership with all the area CEOs and CFOs to strive to improve the access to care and the coverage and to make sure that everyone that needs care gets it," she says.

(To hear more from Schlichting regarding this topic, visit www.healthleadersmedia.com/audio.)

Echoing similar sentiments as her Detroit counterpart, Young, the CEO of St. Joseph Hospital, a 167-bed acute care hospital in Kokomo, IN, knows all to well how unemployment can drive up uncompensated care. At one point in 2009 Kokomo, an area where the dominant employers include car manufacturers General Motors and Chrysler had the highest unemployment rate in the nation. The hospital estimated that 14,820 people received care that was uncompensated, costing them over $3.8 million. Nevertheless, with rising uncompensated care rates, St. Joseph's continued on a course to provide the best patient experience in Central Indiana.

"We've had a significant change in our economy and this town, so it's been a challenge," says Young. "We decided to look at ways to get preventive care to those people who would choose not to seek it to save money."

And so they did—launching more community outreach and community care to screen for high blood pressure, diabetes and the like. They also instituted a new charity care policy to review what the patients who don't have the means should actually be paying for. In addition to these efforts, St. Joseph's has been actively educating the community about when to seek the different levels of care.

"We've tried to educate them about the differences between the emergency room, urgent care and primary care so they don't just go to the emergency room because they don't have to pay up front," she says. So far, the number of trips to the ER by patients is down, however the program is still too fresh to gauge whether it will have a significant impact on their ER admissions or uncompensated care.

Montefiore is an academic medical center working in conjunction with the Albert Einstein College of Medicine. "We do everything we can do to teach new techniques and new knowledge, and we do that while at the same time taking meaningful responsibility for a very poor community," says Safyer.

Montefiore rests in the heart of the Bronx, a borough of nearly 1.5 million people with an unemployment rate of approximately 15%. The health system has nearly three million ambulatory visits in four hospitals with 1,500 beds making it the 6th largest facility in the country. And if its growing uncompensated care rates weren't troubling enough, Safyer says Montefiore also has an 80% Medicaid payer mix. Still, the hospital has managed to maintain a 1.5% margin.

"Every penny counts for us. What we've been witnessing over the last two years is a 40% increase in bad debt and charity care," explains Safyer. "For our uncompensated care we employ a contingent of people that costs us about a million a year. They work to get everybody that's eligible onto insurance, and if they aren't eligible, then that's the residual that we submit to the state."

In addition to an all-out effort to qualify those patients for insurance, Montefiore, which has roughly 40% of the market share in the area, is also using outreach efforts such as the medical home and encouraging access to primary care for preventive treatment.

"You want to get the best outcomes and prevent the admission to the ER," he notes.

For the 13-plus hospitals that make up Hospital Sisters Health System, serving those in need of charity is as much a part of their mission statement as it is for the Franciscan ministry. "We have a special concern for the poor and we have to report to our board of directors how we are achieving that mission," explains Ronstrom.

With rising numbers of charity care they are achieving that mission. From 2008 to 2009 charity care increased just over 10% of total gross charges from $9.2 million (2008) to $10.4 million (2009). "It's still at a manageable level, but we're watching it," says Ronstrom.

Ronstrom says to offset the uncompensated care numbers Hospital Sisters Health System takes a strategic growth strategy approach, "For us to help we have to grow across the state, strengthen our volumes, and run efficiently."

But they also strongly believe that community outreach is key. The health system is concentrating efforts on a variety of community programs to help feed the poor as well as establishing free clinics in some of the hardest-hit areas—their free clinics have already seen a 30% increase in demand for services.

"We use the need assessments to figure out what the needs of the poor in the community are and then we work to accomplish those goals," he notes.

In sunny California, the uncompensated care picture is no less gray than anywhere else in the country. UCLA Health System is one of the largest health-science centers in the country and encompasses nearly all of the university's patient care, clinical education and research programs and facilities.

"Our community has people who just don't have insurance now, but there's still no one more important than the next patient," says Feinberg.

At UCLA, Feinberg and his team have worked to make patient-centered care the driving force behind their organization's success—even when the levels of uncompensated care are on the rise.

"Right now you have people deciding between paying their COBRA or their mortgage, it's a whole different situation," he says. This shift in economic circumstances is just another reason that UCLA has decided to continue to emphasize their patient experience and they have seen their patient referral numbers rise from 30% to nearly 99% as a result of their diligence.

"We have figured out patient-centered care in a big way," he says.

To learn more about how UCLA Health System and all of these facilities tackled patient satisfaction while simultaneously addressing their uncompensated care, check out part two of my column next week.