HCAO Asks Secretary of State for Investigation of Regulations for Nonprofit Medical Providers

Letter to Secretary Akins

Events & articles which alerted HCAO to potential nonprofit problems

Much of the information below refers to a particular hospital. We do not expect the behavior of this hospital is atypical, so this is not intended primarily to call attention to this specific apparent misbehavior. Rather we are citing stories of behavior that is probably legal in Oregon, but that suggest regulatory changes are needed.

In a December 14, 2015 Register Guard op-ed, PeaceHealth executive Rand O’Leary made the following statements which affirm the changing landscape for community benefits from nonprofit hospitals:

“The Affordable Care Act was intentional in reducing charity care costs and giving health care organizations more dollars to spend on upstream efforts to keep people well and out of hospitals.”

“With the decreased need for charity care comes the opportunity to expand our community benefit work.”

“We have multiple financial assistance and financial counseling services for both insured and uninsured patients. Patients can get a reduction of anywhere from 10 percent to 100 percent of their portion of the bill. While we have seen a reduction in our financial assistance applications as more patients become insured under Cover Oregon and the Oregon Health Plan, we remain committed to making these resources available to patients who experience difficulties.”

Within the same week in the same newspaper, Bonny Cappa, a PeaceHealth emergency roomemployee, wrote in a December 19 op-ed that she and another PeaceHealth employee had to file for bankruptcy due to medical bills they owed to their nonprofit employer.

An exploration of medical debt and bankruptcy in Lane County claims that the net income ofPeaceHealth’s hospitals in Lane County totaled $94 million in 2014, PeaceHealth held 39% of the medical debt disclosed in County bankruptcy filings, and the total medical debt from all entities was worth $5.6 million or 6% of PeaceHealth’s net income. According to state filings concerning hospital community benefits and audited financials, PeaceHealth Sacred Heart spent $7 million less in charity care in 2014 than it did in 2013, and $13 million less in community benefits. Yet for the same time period its net income more than doubled.  In return for the many tax breaks afforded to nonprofit healthcare providers, a community benefit that one would expect could be efficiently provided is healthcare to those unable to afford it. A medical bill from a nonprofit hospital with excess income should not be the cause of bankruptcy.

Other states, e.g. California, Illinois, and Pennsylvania, have much more specific rules regarding the public benefit required of nonprofit hospitals.