Nonprofit hospitals admit they sent $2.7 billion in bills over the course of a year to patients who probably qualified for free or discounted care.

This article was first published on Monday, October 14, 2019 in Kaiser Health News.

By Jordan Rau

When Ashley Pintos went to the emergency room of St. Joseph Medical Center in Tacoma, Wash., in 2016, with a sharp pain in her abdomen and no insurance, a representative demanded a $500 deposit before treating her.

"She said, 'Do you have $200?' I said no," recalled Pintos, who then earned less than $30,000 at a company that made holsters for police. "She said, 'Do you have $100?' They were not quiet about me not having money." But Pintos, a single mom with two kids who is now 29, told state officials St. Joseph never gave her a financial aid application form, even after she asked.

Pintos said she was examined and discharged with instructions to buy an over-the-counter pain medication. Then St. Joseph sent her a bill for $839. When she couldn't pay, the hospital referred the bill to a collection agency, which she said damaged her credit and resulted in a higher interest rate when she applied for a mortgage.

St. Joseph denied erecting barriers to charity care. But the hospital's owner settled a lawsuit from the state attorney general earlier this year alleging such practices and agreed to pay more than $22 million in refunds and debt forgiveness.

Under the Affordable Care Act, nonprofit hospitals like St. Joseph are required to provide free or discounted care to patients of meager incomes — or risk losing their tax-exempt status. These price breaks can help people avoid financial catastrophe.

And yet nearly half — 45% — of nonprofit hospital organizations are routinely sending medical bills to patients whose incomes are low enough to qualify for charity care, according to a Kaiser Health News analysis of reports the nonprofits submit annually to the Internal Revenue Service. Those 1,134 organizations operate 1,651 hospitals.

Together, they estimated they had given up collecting $2.7 billion in bills sent to patients who probably would have qualified for financial assistance under the hospitals' own policies if they had filled out the applications.

These written-off bills, known as bad debt, represented a tenth of all nonprofit hospital bad debt reported to the IRS in either 2017 or the most recent year for which data is available. That sum may represent an undercount because it is based on self-reported estimates from hospitals and is not independently audited. And it does not include money that financially struggling patients eventually paid.

"People, including me, had the impression that these new protections under the ACA would prevent people who should be getting help from being financially devastated," said Sayeh Nikpay, an assistant health policy professor at Vanderbilt University School of Medicine. "Clearly, this policy isn't working, and that's a major failing."

About 56% of American community hospitals have nonprofit status, which frees them of paying most taxes and allows them to float tax-exempt bonds. In return, they are supposed to provide community benefits including free or discounted care for patients who can't afford to pay.

The IRS leaves it up to each hospital to decide the qualifying criteria. A comparatively generous hospital may give free care to people earning less than twice the federal poverty level — around $25,000 for an individual and $50,000 for a family of four — and may provide discounts for people earning up to double that.

For those who do not qualify, hospitals often offer payment plans. But they can turn to aggressive tactics if bills are not resolved. Patients can be pestered by debt collectors, and some hospitals sue them or try to garnish their wages. Medical debt can damage credit ratings — one study calculated Americans had $81 billion in collections in 2016 — and forces some people into bankruptcy.

When hospitals give up on collecting a bill, they categorize it as bad debt and absorb the cost of the care, which is indirectly subsidized by the rates they charge private insurers.

It became this moneymaking system. People would be crying at registration desks, people would be upset, people would walk out.

Rachael Murphy, a former St. Joseph's Medical Center employee

Charity Options Often Thwarted

In 2017, BJC HealthCare, a large St. Louis-based system, estimated $77 million of its $134 million in bad debt was owed by patients who probably would have qualified for free or discounted care.

Hospitals now owned by Ballad Health, in Tennessee, estimated that $60 million of bad debt in 2016, or 70%, came from patients who might have been eligible for help.

The Hospital of the University of Pennsylvania said $43 million of its bad debt, or 52%, might have involved patients who could have been excused in 2016 from being billed.

While some hospitals say they write off the debt of poor patients without ever resorting to collection measures, several hospitals whose practices were highlighted in news reports this year for aggressively suing patients admitted to the IRS they knew many unpaid bills might have been averted through their financial assistance policies.

A quarter of bad debt at Mary Washington Healthcare, which sued so many patients that a Virginia court convened special sessions to hear the cases, involved candidates for free or discounted care, according to its IRS filing.

So did half of the bad debt at Methodist Le Bonheur Healthcare in Memphis, called out by news organizations for frequently garnishing wages, its filing said.

CHI Franciscan, which owns St. Joseph, said in multiple IRS filings that none of its bad debt arose from billing indigent patients. While Franciscan admitted no wrongdoing in its settlement with the Washington attorney general, the agreement bars the practice of discouraging charity care in the ways alleged in the lawsuit.

"We are exceeding the requirements of state law and providing charity care compensation to patients who may be in most need, even if they never applied for charity care or did not actually qualify at the time of service," Cary Evans, a Franciscan spokesman, said in a statement. Franciscan declined to discuss individual patients.

According to the lawsuit and interviews with former employees, St. Joseph's workers were told never to voluntarily offer patients a charity care application. If asked for one, they were instructed to insist on a deposit at least three times. Even when submitted, applications required so much documentation that half of the requests were rejected, the lawsuit alleged.

Internal hospital training documents the attorney general submitted as part of the case showed that St. Joseph workers were advised on how to best collect money from patients before they left the hospital. Instead of saying, "Can you pay today?" employees were told to use phrases like "How would you like to pay for that today? Cash, check or credit card?" according to the documents.

"It became this moneymaking system," Rachael Murphy, a former employee, recalled in an interview. "People would be crying at registration desks, people would be upset, people would walk out."

Pintos, who signed a written statement for the attorney general and was listed as a potential witness in the case, said the hospital never gave her an application even though she had qualified for charity care the previous year. "They made me feel like I wasn't good enough to be there," she said.

St. Joseph recently erased the $839 debt from her credit, but Pintos still owes $1,611 for care from the ER doctors, who have their own practice group and do not have to follow the hospital's charity care policies, according to Franciscan. That bill remains in collections.

'A Gap In Trust'

Nonprofit hospitals provide roughly $14 billion worth of charity care a year, about 2% of their operating costs. But their policies can have notable exemptions, such as excluding bills from doctors who are not on the hospital payrolls.

However, information about hospital charity care, often included in the reams of admissions documents or posted on hospital walls, can easily get overlooked by patients and families focused on medical emergencies.

"The signage might be a little hard to find, applications are complicated, documentation is complicated," said Keith Hearle, a consultant who advised the IRS on collecting hospitals' charity care data. "You could probably come up with 15 reasons people didn't apply."

In their IRS filings explaining the bad debt and in interviews, hospitals said that even when they give applications to patients, some fail to submit them or do not provide complete records of their finances, which can include tax returns and bank statements.

"There is a gap in trust where our patients must not believe that if they are willing to share information, that it will be to their benefit," said June McAllister Fowler, a spokeswoman for BJC HealthCare.

Shana Tate, senior vice president of revenue cycle at Ballad Health, said Ballad is looking to be more proactive.

"We made the assumption that, 'We give you the information. What more do you need?' But we realize a lot of patients don't read it, don't pay attention," Tate said. "They need someone to hold their hand through this process."

Methodist Le Bonheur, which erased more than 6,000 unpaid bills last month, said it is "increasing access to financial assistance information upfront and throughout the patient care journey" and "enhancing the screening process."

Penn Medicine said that, as a safety-net hospital system, it has many patients who are poor or coping with other problems. These people, Penn said, face "barriers to completing the process for aid" and their bills are typically "left unpaid."

Mary Washington did not respond to requests for comment, but after critical news reports last June it announced that it was suspending its lawsuits over unpaid bills and reevaluating its practices.

Laurie Jinkins, a state representative from Tacoma and author of legislation to strengthen Washington's charity care laws, said, "The drive for dollars in the health care system, and the drive for dollars to expand, causes our nonprofit health systems to lose sight of why they're actually here." She said St. Joseph had "really gone off the deep end" in its focus on money.

St. Joseph's practices hark back years, according to the attorney general's lawsuit and interviews with employees and patients.

After Alisha Colyer's husband went to the St. Joseph emergency room with pneumonia in 2007, she said, she tried to apply for help, but the charity care application "was like a book you had to fill out."

"I remember them asking me what make and model my car was, and I was like, 'You want me to sell my car to pay my hospital bill?' " recalled Colyer, who now works at the hospital as a dietary aide.

In a statement, Franciscan noted that St. Joseph and its other hospitals now use a simplified two-page application designed by the state hospital association and have agreed to make charity care easier to obtain. It also offers free care for medically necessary services to patients earning up to three times the poverty level, which is more than most hospitals do.

It is too early to assess how the policy changes translate into results. The most recent Washington state analysis, for 2017, found St. Joseph lagged behind the regional average in the amount of charity care it provided.

KHN data editor Elizabeth Lucas contributed to this report.

METHODOLOGY

Bad debt figures were derived from the IRS 990 tax returns filed electronically by nonprofit hospital organizations. That information was downloaded in data form from the IRS website on May 7, 2019, by Jacob Fenton, an independent consultant, and analyzed by Kaiser Health News. Returns that included Schedule H, which only hospital-owning nonprofits must file, were analyzed.

For each organization identification number, we selected the return with the most recent tax period end date. In case of duplicates such as amended returns, only the return with the most recent end date and the most recent signature filing date was selected. Because there were still a few duplicates, the one with the largest unique return identifier was selected. The most recent tax returns for 2,508 nonprofits were identified.

Organizations must report their bad debt — bills they have given up on collecting — and, separately, estimate the bad debt "that reasonably is attributable to patients who likely would qualify for financial assistance under the hospital's financial assistance policy … but for whom insufficient information was obtained to determine their eligibility." Generally, both figures are greater than the actual cost of providing the services: They are the amount the hospital expected to be paid. For our analysis, we calculated the percentage of bad debt that the organization attributed to patients who might qualify for financial assistance.

A handful of bad debt figures were reported as negative numbers. Those were converted to positives. The amounts were not significant enough to substantially affect aggregates or the analysis's conclusions.

Jordan Rau: jrau@kff.org, @JordanRau

 

 

 

HHS is taking steps to establish a National Volunteer Care Corps.

This article was first published on Thursday, October 10, 2019 in Kaiser Health News.

By Judith Graham

Imagine a government program that would mobilize volunteers to help older adults across the nation age in place. One is on the way.

The Administration for Community Living, part of the Department of Health and Human Services, is taking steps to establish a National Volunteer Care Corps.

If it's successful, healthy retirees and young adults would take seniors to doctor appointments, shop for groceries, shovel snowy sidewalks, make a bed or mop the floor, or simply visit a few times a week.

Older adults would not only get a hand with household tasks, but also companionship and relief from social isolation. And family caregivers could get a break.

Younger volunteers might get class credit at a community college or small stipends. Older volunteers could enjoy a satisfying sense of purpose.

There's no question the need is enormous, as the ranks of the oldest Americans ― those age 85 and up, who tend to have multiple chronic illnesses and difficulty performing daily tasks ― are set to swell to 14.6 million in 2040, up from more than 6 million now.

Who will care for these seniors? More than 34 million unpaid family caregivers currently shoulder that responsibility, along with 3.3 million paid personal care and home health aides. (Medicare does not pay for long-term care services or non-medical services in the home.)

According to the Bureau of Labor Statistics, more than 1.2 million new paid jobs of this kind will be needed by 2028. But filling them will be hard, given low pay, difficult work conditions, limited opportunities for professional advancement and high turnover.

This notion of a domestic Peace Corps for caregiving, if you will, has been circulating since 2013, when it surfaced in a Twitter chat on elder care. In 2017 and 2018, bills introduced in Congress proposed a demonstration project, unsuccessfully.

Now, four organizations will spearhead the Care Corps project: the Oasis Institute, which runs the nation's largest volunteer intergenerational tutoring program; the Caregiver Action Network; the National Association of Area Agencies on Aging; and the Altarum Institute, which works to improve care for vulnerable older adults.

The initial grant to the group is $3.8 million; total funding for the five-year project is expected to be $19 million, according to Greg Link, director of the ACL's office of supportive and caregiver services.

This fall, project leaders will invite organizations across the country to submit proposals to serve "non-medical" needs of older adults and younger adults with disabilities. Next spring, up to 30 organizations will get 18-month grants of $30,000 to $250,000, according to Juliet Simone, director of national health at the Oasis Institute.

The goal is to discover innovative, effective programs that offer services to diverse communities (geographic, racial and ethnic) and that can be replicated in multiple locations.

"We want the organizations that apply to be very flexible and creative," said Anne Montgomery, deputy director of Altarum's Program to Improve Eldercare. "And we're aiming to create a volunteer infrastructure that can last and be sustainable."

All volunteers will undergo background checks and training, and there will be an emphasis on evaluating program results.

"We want to be able to say, 'Here are the services that people really need, and these are the types of things that work well for specific populations,'" said John Schall, CEO of the Caregiver Action Network. Services could include preparing meals, taking seniors to church or home-based tech support for computer users, among many other possibilities.

Care Corps faces several challenges. A big one: The grant is tiny, compared with the trillions of dollars spent on health care. It could take a long time to build it into a national effort that attracts more investment.

Project leaders are optimistic. To nonprofit organizations working in the aging field, "it's a lot of money ― they can do quite a lot with these grants," said Sandy Markwood, CEO of the National Association of Area Agencies on Aging. Programs may find ways to license successful models, and local and national foundations may step in with additional support, Simone said.

Recruiting volunteers could be another challenge. At the Center for Volunteer Caregiving in Cary, N.C., which has been providing "friendly visiting," transportation and caregiver respite services for 27 years, "it's the biggest issue we face," said executive director Elaine Whitford.

Because her organization focuses on building relationships with seniors, it asks volunteers to commit to at least a year. "We get a lot of interest," Whitford said, "then people realize that this just isn't going to fit into their schedule."

Helen Anderson, 86, has sickle cell disease, lupus and chronic pain. She lives alone in a Cary apartment. Without help from the center's volunteers, three women and a man who've taken her shopping, cleaned her apartment and done her laundry since 2008, she said, "I could not live independently."

Scores of volunteer programs serving seniors and people with disabilities already exist, but most are small and many older adults and their families don't know about them. How they'll interact with the Care Corps is not yet clear.

One of the largest is Seniors Corps, run by the Corporation for National and Community Service. Through its Senior Companion program, volunteers age 55 and older visit needy older adults and help them with tasks such as shopping or paying bills. About 10,500 volunteers spend 15 to 20 hours a week, on average, serving 33,000 seniors through this program.

Recent research from Senior Corps demonstrates that volunteers receive benefits while giving to others ― a finding confirmed by a large body of research. After two years of service, 88% of Senior Corps volunteers reported feeling less isolated, while 78% said they felt less depressed.

To learn if Service Corps' companion program is available near you, use this new tool on its website. The group also offers less intensive services to 300,000 older adults and people with disabilities through its Retired Senior Volunteer Program.

To learn about other volunteer programs in your community, contact a local senior center, a nearby Area Agency on Aging or your county's department of aging, experts suggest. ACL's Eldercare Locator can help you identify these organizations.

Another source is the National Volunteer Caregiving Network, which lists about 700 programs, most of them church-based, on its website.

"Volunteer caregiving can make the difference between someone having quality of life and not having any at all," said Inez Russell, board chair of the organization. She's also the founder of Friends for Life, a Texas program that offers volunteer aid to seniors trying to live independently and that reaches out to seniors who don't have family members on birthdays and holidays, among other services. Altogether, the two programs reach about 4,000 people a year.

In Montpelier, Vt., Joan Black, who's 88 and lives alone in a one-bedroom apartment, has been a member of Onion River Exchange ― a time bank ― for 10 years. Onion River members contribute goods and services (a ride to the airport, a homemade casserole, a newly knit baby sweater) to the time bank and receive goods and services in exchange. For years, Black gave out information about the exchange at farmers markets and other community events ― her way of banking credits.

"It's a form of volunteerism that "creates a sense of community for many people," said Edisa Muller, chairwoman of the Onion River board.

For Black, who lives on a small fixed income and can't vacuum, scrub her tub, dust her wooden furniture or shovel the driveway that leads to her apartment, participating in the time bank has become a way to meet new people and remain integrated with the community.

"I like a tidy house: When things are out of order, I'm out or order," she said. "I don't believe I'd be able to do everything I do or live the way I do without their help."

Judith Graham: khn.navigatingaging@gmail.com, @judith_graham

Of the eight University of Kansas Medical School graduates, just three chose to go where the shortages are most evident.

This article was first published on Wednesday, October 9, 2019 in Kaiser Health News.

By Lauren Weber

SALINA, Kan. — The University of Kansas School of Medicine-Salina opened in 2011 — a one-building campus in the heart of wheat country dedicated to producing the rural doctors the country needs.

Now, eight years later, the school's first graduates are settling into their chosen practices — and locales. And those choices are cause for both hope and despair.

Of the eight graduates, just three chose to go where the shortages are most evident. Two went to small cities with populations of fewer than 50,000. And three chose the big cities of Topeka (estimated 2018 population: 125,904) and Wichita (389,255) instead.

Their decisions illustrate the challenges facing rural recruitment: the lack of small-town residencies, the preferences of spouses and the isolation that comes with practicing medicine on one's own.

But the mission is critical: About two-thirds of the primary care health professional shortage areas designated by the federal Health Resources and Services Administration in June were in rural or partially rural areas. And it's only getting worse.

As more baby boomer doctors in rural areas reach retirement age, not nearly enough physicians are willing to take their place. By 2030, the New England Journal of Medicine predicts, nearly a quarter fewer rural physicians will be practicing medicine than today. Over half of rural doctors were at least 50 years old in 2017.

So Salina's creation of a few rural physicians a year is a start, and, surprisingly, one of the country's most promising.

Only 40 out of the nation's more than 180 medical schools offer a rural track. The Association of American Medical Colleges ranked KU School of Medicine, which includes Salina, Wichita and Kansas City campuses, in the 96th percentile last year for producing doctors working in rural settings 10 to 15 years after graduation.

"The addition of one physician is huge," said Dr. William Cathcart-Rake, the founding dean of the Salina campus. "One physician choosing to come may be the difference of communities surviving or dissolving." 

The Draw Of Rural Life
 

By placing the new campus in Salina (population: 46,716), surrounded by small towns for at least 50 miles in every direction, the university hoped to attract and foster students who had — and would deepen — a bond to rural communities.

And, for some, it worked out pretty much as planned.

One of the school's first graduates, Dr. Sara Ritterling Patry, lives in Hutchinson (population: 40,623). Less than an hour from Wichita, it isn't the most rural community, but it's small enough that she still runs into her patients at Dillons, the local grocery store.

"Just being in a smaller community like this feels like to me that I can actually get to know my patients and spend a little extra time with them," she said.

After all, part of the allure of a rural practice is providing care womb to tomb. The doctor learns how to deliver the town's babies, while serving as the county coroner and the public health expert all at once, said Dr. Robert Moser, the head of the University of Kansas School of Medicine-Salina and former head of the state health department.

He would know — he worked for 22 years in Tribune, Kan. (population: 742).

For another of the original Salina eight, Dr. Tyson Wisinger, that calling brought him back to his hometown of Phillipsburg (population: 2,486) after his residency. His kids will go to his old high school, where his graduating class was all of 13 people, and he'll take care of their baseball teammates. Plus, they'll grow up living minutes away from generations of extended family.

"I can't have imagined a situation that could have been more rewarding," Wisinger said.

The Rural Challenge
 

The Original Salina Eight

Three went the urban route:

Dr. Erik Dill decided to be a pathology specialist in more urban Wichita.

Dr. Claire Hinrichsen Groskurth, who intended to practice in a more rural area, is now in Wichita working as an OB-GYN.

Dr. Rany Gilpatrick wanted a more flexible, outpatient schedule as a pediatrician instead of the on-call in-patient life, so she works in Topeka.

Two work in smaller towns:

Dr. Sara Ritterling Patry practices internal medicine in Hutchinson, Kan., to help accommodate her husband's farming business.

And Dr. Kayla Johnson stayed in Salina as a pediatrician. 

And the final three might as well be poster children for the movement:

Dr. Tyson Wisinger returned to his Kansas hometown of Phillipsburg to practice family medicine.

Drs. Daniel Linville and Jill Corpstein Linville married each other and were recruited to Lakin, Kan., by a rural practice to work in family medicine.

But the road to rural family medicine also includes a thing called "windshield time" — the amount of time needed to travel between clinics or head to the closest Walmart.

Then there's figuring out just how far their patients will need to drive to get to the nearest hospital — which for Drs. Daniel Linville and Jill Corpstein Linville is a solid four hours for more advanced care from their new practice in Lakin, Kan. (population: 2,195).

Their outpost in southwestern Kansas can feel a little bit like a fishbowl. "We do life with some of our patients," Corpstein Linville said.

Already, the Linvilles have delivered babies and handled a variety of ailments there.

The pair met and married during their four years in Salina — they jokingly call it a "full-service med school." They completed a family medicine residency in Muncie, Ind. Then they were recruited by a rural practice that helped them avoid what Moser calls the most dreaded words in rural medicine: "solo practice."

New doctors don't want to practice alone, especially as they develop their sea legs, due to the strains of constantly being on call and having singular responsibility for a town. Telemedicine, where doctors can easily consult with other physicians around the country via web video or phone, is helping, as are physician assistants.

Diverging From The Path
 

Dr. Claire Hinrichsen Groskurth, another member of the first graduating class, always intended to return to a small town similar to where she grew up.

"The first thing that threw me off was I fell in love with surgery and OB-GYN," she said. "Then the second thing that threw me off was marrying another doctor," whose life goals headed in a different direction.

She'd been a member of the Scholars in Rural Health program at Kansas University that seeks out rural college students who are interested in medicine. She also had committed to the Kansas Medical Student Loan program, which promises to forgive physicians' tuition and gives a monthly stipend if they agree to work in counties that need physicians, or in other critical capacities.

But when she realized she might specialize, she decided to take out federal loans for her final years. She had to pay back the first year of the special loan with 15% interest.

Plus, her now-husband, who went to Kansas University's Wichita campus, needed to be in a large enough city to accommodate further training to become a surgeon. So Hinrichsen Groskurth delivers babies as she thought she would — but in Wichita.

The spousal coin can flip both ways: Ritterling Patry needed to find a place that worked for her husband's farming of corn, sorghum, soybeans and wheat. So the smaller city of Hutchinson it was.

Flaws In The Pipeline
 

Most medical school students come from urban areas and are destined to stay there, said Alan Morgan, the head of the National Rural Health Association. Producing doctors for the vast swaths of rural America needs to be more of a priority at every step in the education pipeline, experts said.

Many academic centers sell students on the party line that they'll be overworked, underappreciated and underpaid, according to Dr. Mark Deutchman, director of the University of Colorado School of Medicine's rural program. "They take people who are interested in primary care or rural and beat it out of them throughout their training," he said.

And that kind of rhetoric often influences the opinion of their medical school peers, which those in rural health might resent.

"Small does not mean stupid," Moser said.

Medical students everywhere should be exposed to rural options, according to Dr. Randall Longenecker, who runs Ohio University Heritage College of Osteopathic Medicine's rural programs.

"If a medical student never ever goes to a rural place, they never find out," he said. "That's why students need to meet rural doctors who love what they do."

The federal government recently allocated $20 million in grants to help create 27 rural residency programs — programs where newly minted doctors go for practical training before they can be fully licensed. That's a big jump from the 92 programs now active.

For Jill Corpstein Linville, the pipeline also needs to start at more schools like Salina that are promoting rural medicine from Day One.

"So when you hear rural medicine, you know that it's a thing and don't kind of cringe," she said. "You don't think it's someone taking care of a cow."

Lauren Weber: LaurenW@kff.org, @LaurenWeberHP

Hospitals cannot discharge patients if they have no safe place to go, so patients who are homeless, frail, living alone, or experiencing an unstable housing situation, can occupy hospital beds long after their acute medical problem is resolved.

This article was published by Kaiser Health News on October 4, 2019.

By Markian Hawryluk, KHN

DENVER — One patient at Denver Health, the city's largest safety net hospital, occupied a bed for more than four years—a hospital record of 1,558 days.

Another admitted for a hard-to-treat bacterial infection needed eight weeks of at-home IV antibiotics, but had no home.

A third, with dementia, came to the hospital after being released from the Denver County Jail. His family refused to take him back.

In the first half of this year alone, the hospital treated more than 100 long-term patients. All had a medical issue that led to their initial hospitalization. But none of the patients had a medical reason for remaining in the hospital for most of their stay.

Legally and morally, hospitals cannot discharge patients if they have no safe place to go. So patients who are homeless, frail or live alone, or have unstable housing, can occupy hospital beds for weeks or months—long after their acute medical problem is resolved. For hospitals, it means losing money because a patient lingering in a bed without medical problems doesn't generate much, if any, income. Meanwhile, acutely ill patients may wait days in the ER to be moved to a floor because a hospital's beds are full.

"Those people are, for lack of a better term, stranded in our hospital," said Dr. Sarah Stella, a Denver Health physician.

To address the problem, hospitals from Baltimore to St. Louis to Sacramento, Calif., are exploring ways to help patients find a home. With recent federal policy changes that encourage hospitals to allocate charity dollars for housing, many hospitals realize it's cheaper to provide a month of housing than to keep patients for a single night.

Hospital executives find the calculus works even if they have to build affordable housing units themselves. It's why Denver Health is partnering with the Denver Housing Authority to repurpose a mothballed building on the hospital campus into affordable senior housing, including about 15 apartments designated to help homeless patients transition out of the hospital.

"This is an experiment of sorts," said Peg Burnette, the hospital's chief financial officer. "We might be able to help better their lives, as well as help the financials of the hospital and help free up capacity for the patients that need to come to see us for acute care."

Spending To Save Money
 

Denver Health once used the shuttered 10-story building for office space but opted to sell it to the housing authority and grant a 99-year lease on the land for a minimal fee.

"It really lowers the construction costs for us," said Ismael Guerrero, Denver Housing Authority's executive director. "It was a great opportunity to build additional housing in a location that's obviously close to the hospital, close to public transit, near the city center."

Once the renovation is complete in late 2021, the housing group will hire a coordinator to assist tenants with housing-related issues, including helping those in the transitional units find permanent housing. The hospital will provide a case manager to help with their physical and behavioral health needs, preparing them for life on their own. Denver Health expects most patients will be able to move on from the transitional units within 90 days.

The hospital will pay for the housing portion itself. That will still be far cheaper than what the hospital currently spends.

It costs Denver Health $2,700 a night to keep someone in the hospital. Patients who are prime candidates for the transitional units stay on average 73 days, for a total cost to the hospital of nearly $200,000. The hospital estimates it would cost a fraction of that, about $10,000, to house a patient for a year instead.

"The hospital really is like the most expensive form of housing," Stella said.

Growing Interest
 

A recent report from the Urban Institute found that while most hospital officials are well aware of how poor housing affects a patient's recovery, they were stymied about how to address the issue.

"It's on the radar of almost all hospitals," said Kathryn Reynolds, who co-authored the report. "But it seemed like actually making investments in housing, providing some type of financing or an investment in land or something that has a good amount of value seems to be less widespread."

The report found housing investment has been more likely among hospitals with their own health plans or other types of arrangements in which they were receiving a fixed amount of money to care for a group of patients. Getting patients into housing could lower their costs and increase their operating margins. Others, particularly religiously affiliated and children's hospitals, sought housing solutions as part of their charitable mission.

Reynolds said the trend is due in part to the Affordable Care Act, which requires hospitals to perform a community needs assessment to help guide their charitable efforts. That prompted more hospitals to consider the social needs of their patients and pushed housing concerns up the list. Additionally, the Internal Revenue Service clarified in 2015 that hospitals could claim housing investments as charitable spending required under their tax-free status. And provisions included in the 2017 tax cut bill provided significant tax savings for investors in newly designated opportunity zones, increasing their interest in affordable housing projects.

Some hospitals, she said, may use their cash reserves to invest in housing projects that generate a lower return than other investment options because it furthers their mission, not just their profits.

In other cases, hospital systems play a facilitator role—using their access to cheap credit or serving as an anchor tenant in a larger development—to help get a project off the ground.

"Housing is not their business," Guerrero said. "It's not an easy space to get into if you don't have the experience, if you don't have a real estate development team in-house to understand how to put these deals together."

Cutting Costs
 

In the southwestern corner of Colorado, Centura Health's Mercy Regional Medical Center has partnered with Housing Solutions for the Southwest to prioritize housing vouchers for frequent users of the emergency room.

Under a program funded by the Catholic Health Initiatives, Mercy hired a social worker and a case manager to review records of frequent emergency room patients. They quickly realized how big an issue housing was for those patients. Many had diabetes and depended on insulin—which needs refrigeration. Kidney failure was one of the most costly diagnoses for the hospital.

Once patients received housing vouchers and found stable housing, though, costs began to drop.

"We now knew where they were. We knew that they had a safe place to live," said Elsa Inman, program coordinator at Mercy Regional. "We knew they would be more effective in managing their chronic conditions."

The patients with stable housing were more likely to make it to their primary care and specialist appointments, more likely to stay on top of medications and keep their chronic conditions in check.

The combination of intensive case management and patient engagement helped to halve ER visits for the first 146 patients in the program, saving nearly $495,000 in Medicaid spending in less than three years.

"Hospitals are businesses and nonprofits are businesses," said Brigid Korce, program development director for Housing Solutions. "They are bottom-line, dollars-and-cents people."

Inman acknowledged that the hospital might have missed out on some revenue by reducing ER use by these patients. Hospitals are still largely paid by the number of patients they treat and the number of services they provide.

But most of those patients were covered by Medicaid, so reimbursements were low anyway. And the move freed up more ER beds for patients with more critical needs.

"We want to be prepared for life-threatening conditions," Inman said. "If you've got most of your beds taken up by someone who can be receiving patient care outside in the community, then that's the right thing to do."

That was less of an issue for the inpatients at Denver Health. Because hospitals are generally paid a fixed amount for a given diagnosis, the longer a patient stays in the hospital, the more money the hospital loses.

"They've basically exhausted their benefit under any plan because they don't meet medical necessity anymore," Burnette said. "If they had a home, they would go home. But they don't, so they stay in the hospital."