The Steward Health debacle may be nearing an end, but critics worry some of the arrangements in place to keep the chain's hospitals and 5,000-person doctors group up and running could trigger another fiasco. Some argue there were systemic problems related to private equity ownership and risky sale-leasebacks of properties that still loom over the surviving entities. Critics say the upshot is that 15 hospitals — located in Arizona, Florida, Louisiana, Ohio and Texas — are once again set up to face inflated rent charges and could ultimately fail.
The Consumer Financial Protection Bureau on Tuesday issued a consumer advisory to combat families being targeted by 'illegal medical debt collection tactics.' The CFPB's cited tactics violating federal law that debt collectors have employed when it comes to medical bills, including double billing for services covered by insurance; collecting amounts that exceed federal or state caps; falsifying or exaggerating charges; collecting on unsubstantiated bills; and misrepresenting payment obligations and consumers' ability to contest bills. The Biden administration earlier this year moved to ban medical debt from being included on credit reports.
St. Joseph Medical Center could soon have a new owner as the saga involving its current owner, Steward Health Care, continues to play out in bankruptcy court and Congress. Healthcare Systems of America, an affiliate of California-based American Healthcare Systems, took over management of Houston's only downtown hospital as part of an interim settlement agreement approved earlier this month in U.S. Bankruptcy Court. The company intends to assume full ownership of St. Joseph once all the necessary agreements are completed, possibly as early as next week. The interim settlement agreement transferred day-to-day management of St. Joseph from Steward, the nation's largest private for-profit hospital chain that filed for Chapter 11 bankruptcy earlier this year.
California Gov. Gavin Newsom has vetoed a bill that would have given his state the ability to block private equity acquisitions of most healthcare facilities and service providers. This likely kills the idea on a national level, where it was proposed by Sen. Ed Markey (D-Mass.) in response to the Steward debacle. Newsom is a top surrogate for Kamala Harris, and there's no way that a Trump administration would take up this mantle. The vetoed legislation would have required the AG to give written consent at least 90 days before transactions valued at $25 million or more.
The nation's nearly 3,000 nonprofit hospitals collected billions in tax breaks but paid less than half that amount in charity care to low-income patients. In exchange for not paying income, property, sales or other taxes, these hospitals are expected to provide free or reduced-cost care to low-income patients as well as other community benefits. A new study estimates the enormous size of this collective tax break. The study reported the nation's nearly 3,000 nonprofit hospitals were spared $37.4 billion in federal, state and local taxes in 2021, a reflection of how lucrative these tax benefits can be for medical centers. Medicare filings show hospitals paid out $15.2 billion in charity care in 2021.
Within a few days of one another, two teams of accountants released separate estimates on the value of nonprofit hospitals' tax exemptions. Their wildly different findings underscore the degree to which who's counting and what they count matters. The first, a JAMA study published Thursday, pegged that number at $37.4 billion. It factored in the value of forgone federal and state income taxes, sales tax, property tax, federal unemployment tax, charitable contributions from donors, and savings from issuing tax-exempt bonds. The second, the AHA's annual snapshot of how hospitals' federal tax exemption compares to the benefits they provide their communities, included just three of the categories JAMA studied. The lobbying group's final number: $13.2 billion.