Who should pay for South Florida's poorest patients?

Palm Beach (Palm Beach, Florida)
Charles Grassley By John Dorschner, The Miami Herald

4:47 p.m. EST, February 28, 2011
When Richards Perez Llorente, 54, arrived at Homestead Hospital last month in severe pain, doctors did a quick diagnosis: kidney stones. Three days later, he left pain-free.

"Excellent care," he says. An unemployed laborer, he had no insurance. The hospital was stuck with $17,000 in costs.

For this, Homestead will receive no government reimbursement. Miami-Dade County citizens annually pay about $350 million in taxes for indigent healthcare but all of that money goes to Jackson Health System, which is government run and owned. In Broward, public hospitals also get all the healthcare tax money — about $205 million a year.

Advisors to Gov. Rick Scott think that's the wrong way to pay for care for the uninsured and poor. They believe "tax dollars should follow the patients," meaning whatever hospital treats the uninsured should get the tax money to pay for that patient. A powerful business lobbying group, Associated Industries of Florida, agrees.

The issue is particularly timely since a for-profit Boston company's letter last week expressing interest in buying Jackson. If that happened, demands would be even louder to spread Miami-Dade dollars among many hospitals.

"Taxes are intended to provide access to care for the poor, not to subsidize inefficient operations, bricks and mortar, or lousy governance," says Alan Levine, the former head of the Florida Agency for Health Care Administration, who prepared a report for Scott on healthcare. "Irrespective of who operates Jackson, the tax dollars should go where the care is being provided."

That theory could have huge repercussions for hospitals in South Florida.

Linda Quick of the South Florida Hospital and Healthcare Association says that, in general, a hospital's location determines how much uncompensated care it provides. State data shows Cleveland Clinic in affluent Weston provides little. Homestead Hospital, in an area with many migrant workers, provides a lot.

Public hospitals pay for 65 percent of the uninsured patient-days in Miami-Dade and Broward hospitals. The remaining 35 percent of charity care is sprinkled among other hospitals including for-profit facilities, dedicated to making money for shareholders, and nonprofits with missions to help their communities. There's no discernible pattern to indicate why some of those hospitals provide more free care than others.

One example, from data hospitals submit to the Agency for Health Care Administration: Plantation General, a for-profit HCA facility near Broward Boulevard and Highway 441, had uncompensated care costs that are 7.6 percent of its total billings. That's more than twice the 2.96 percent provided by the nonprofit Catholic hospital, Holy Cross, located in affluent northeastern Fort Lauderdale.

HCA spokeswoman Lourdes Garrido says the Plantation facility "serves many communities including some of the lowest median household income zip codes in the county." Not surprisingly, given those statistics, she says HCA "strongly believes in the concept that tax dollars should follow the patient."

Holy Cross Chief Executive Patrick Taylor says the AHCA data does "not include the more than $12 million Holy Cross Hospital provides in community benefit and outreach. We turn no one away, but the demographics of the community in which we are located also play a factor." Holy Cross also supports dollars following patients so they have the "ability to choose."

Levine and some others say a better model can be found in Palm Beach and Hillsborough counties, which don't rely on public hospitals but instead give tax dollars to all hospitals that serve the uninsured.

"In theory that makes sense," says Sal Barbera, a former executive with the for-profit Tenet hospitals who earned $5 million in a whistle-blower lawsuit and now teaches at Florida International University. In practice, he says, it might be a far different story.

The problem is that charity care is "very very difficult to monitor," says Barbera. If tax dollars followed patients, for-profit hospitals would find ways to manipulate the numbers to beat that system, he says. "I'm not saying they're cheating. They're basically playing the game. They're in business to maximize profits,'' he says.

There's already a debate about how uncompensated care gets measured. State regulations define charity as care provided for free for persons and families with an annual income below twice the minimum federal poverty level — about $22,000 for an individual or $45,000 for a family of four.

But experts at the Rand Corporation, a think tank, and many other healthcare analysts believe there's little distinction between charity care and what AHCA lists as bad debt. For-profit hospitals are often motivated to say unpaid bills are bad debts, because they can then deduct those as costs from revenue, reducing their taxes. Nonprofits and government facilities, the Rand analysts said, often like to boost the amount of charity care and reduce bad debt to show how much they're helping the community.

Rand, which did an in-depth look in 2003 at South Florida healthcare tax structures and hospitals' handling of the uninsured, decided the most accurate measurement would combine charity and bad debt. The Rand authors acknowledged that bad debt might be a sign of management's poor collection estimates, but noted that a patient was supposed to be designated for charity care on admission, a time when a person's financial details might not be completely known.

There's another problem when trying to measure charity care: All state data is listed in gross charges — that means the total billed the patient and/or insurer. Most gross charges are "extremely unreal and bloated," says William Donelan, UM medical school's chief operating officer. A hospital's real costs are generally far less than that, and most make a tidy profit even when insurers pay just 15 to 30 percent of gross charges.

Donelan says state data on gross charges doesn't allow anyone to figure how much uncompensated care costs hospitals because different facilities inflate their gross charges by different amounts. Comparing gross charges to net patient revenues — the amount actually collected — shows that a hospital such as Tenet's Hialeah Hospital nets just 16 percent of the gross charges, Donelan points out. Baptist in Kendall nets 26 percent.

But for now, the only way to measure charity care is to start with gross charges and then look at two numbers: charity care alone and charity care plus bad debts. For UM's hospitals — which the state defines to also include Anne Bates Leach Eye Hospital and Sylvester Comprehensive Cancer Center — charity care is 1.8 percent of gross charges. Add in bad debt and the number rises to 3.6 percent.

The issue remains on how to measure that charity load — with its vast difference between gross charges and real costs. For example, state figures show that Holy Cross gave $12.2 million in charity care in 2009, but the hospital says its net cost was $2.8 million. And Baptist Health South Florida, which includes Homestead, reports it provided $175.2 million in charity and uncompensated care at cost in fiscal 2009 — while state data puts the number at more than $500 million.

"Charity care is an inflated figure,'' says Mike Abrams, a former Miami-Dade state representative and now a lobbyist in Tallahassee for Jackson. He recommends — and others like Donelan agree — focusing on another measure: uninsured patient-days in the hospital as a percentage of total patient days. That avoids dealing with inflated charges or fudging cost numbers.

Abrams says that when he was in the state Legislature in the early 1990s he proposed all hospitals in the state be required to provide five percent of their patient-days for charity care. The hospitals didn't like that idea, and it died.

Still, measuring charity care by counting uninsured patient-days is a way to look at the issue without inflated charges. By this measure, Homestead provides the most uninsured care in Miami-Dade — 13.5 percent of its total patient-days. That's clearly ahead of the 10.9 percent provided by Jackson. In Broward's government hospitals, 9 to 18 percent of patient-days are uninsured.

Miami Children's is an anomaly at 2.5 percent. The facility treats many poor children who arrive uninsured, but most of them qualify easily for Medicaid, which in Florida accepts kids much more frequently than it does adults.

HCA's Miami-Dade and Broward facilities run from 5.1 to 7.4 percent, Tenet's from 5 percent to 8.8 percent. Nonprofit Holy Cross is at 2.1 percent and Mount Sinai is at 3.7 percent.

That opens up another question: For years, Sen. Chuck Grassley, a Republican from Iowa, has pushed for the nation's nonprofit hospitals to provide more charity care. They often have sprawling facilities that pay no property taxes, and they pay no income tax. That means they should be doing more care for the uninsured, not less, says Grassley.

Brian Keeley, head of Baptist Health, agrees: Nonprofits should do more, and Keeley says Baptist does, spending nearly $200 million a year on charity care and other community programs — more than it would pay in taxes.


http://www.sun-sentinel.com/business/fl ... 6932.story