N.C. Nonprofit Hospitals – For Profit Or Community – Part 3

Published On: 5.4.2012 Charlotte, NC

N.C. Nonprofit Hospitals – For Profit Or Community – Part 3

On behalf of Charles G. Monnett III & Associates

 

In the first two posts on nonprofit hospitals in our community, we established what nonprofit hospitals are and how the nonprofit hospitals in our community have become more focused on profits than their charitable commitment to the community. In this final section we will look at what actions can be taken to try to correct this system.

The Charlotte Observer suggested seven ways to try to alleviate the growing problems with healthcare in N.C.:

  1. Require hospitals to post their charity care polices in prominent places so all patients are aware of its availability,
  2. Make it easier to apply for charity care,
  3. Set state rules on who gets charity care,
  4. Require hospitals to report their charity care spending to the state,
  5. Prohibit hospitals from putting liens on the homes of patients with few resources,
  6. Require credit agencies to remove medical debts from reports after the bill is paid and,
  7. Make hospital prices more transparent so patients more easily find affordable care and to pressure hospitals to cut prices.

While a majority of the suggestions by the Charlotte Observer sound great, a practical application of some may not be quite as simple or effective. Making charity care easy to apply for may not be the most beneficial solution. Its understandable that hospitals that require extreme amounts of documentation, including tax return documents from 5 years ago, can be extremely burdensome and often difficult for some people to produce. However, it is necessary to verify a person’s qualifications. If hospitals are required to post their charity care policies in prominent locations, as they should be, then it is likely that more people will apply. Getting anything for free is a big deal these days and many would jump through hoops to get the opportunity. This means both people that qualify and those who do not would be willing to produce almost anything to get help. With hospitals providing minimal charity care, it is important to make sure that those in need reap the benefits and not anyone slipping through the cracks. Perhaps requiring only a certain amount of documentation would be helpful, but making it “simple” might cause more problems than benefits.

The state setting rules on who can receive charity care could possibly help this situation as well. By setting the guidelines on who can receive charity care they could also include what documentation is required to prove eligibility. This would also make health care more consistent across the state. The problem is that not all areas across the state are equal. In some areas the hospitals are more prosperous and in other areas they are not. The same goes for those living in the community. While it maybe easy for a more prosperous hospital in a more prosperous area to afford giving charity care to all patients under a certain income bracket, it maybe more difficult for less prosperous hospitals to do the same. This could undermine the hospital’s ability to keep its doors open and continue providing care for the community. However, if these lower income hospitals are part of the same large system as the prosperous ones, then why can’t the system budget more money for the suffering hospital?

Another solution that may not be very effective is prohibiting hospitals from putting liens on the homes of patients with few resources. While this sounds like a great idea, I think the application of it is unfair. I think it would be unfair to allow a hospital to put a lien on a middle class person’s house, but a person with the same debt, that has a few less resources will be spared. I think the only way this would be fair is if nonprofit hospitals were barred from putting liens on the homes of all patients. It seems very uncharitable for a nonprofit hospital to sue a patient. However, hospitals, nonprofit or not, do need funds to keep their doors open. If they cannot collect from any of their patients the prices for health care would soar for everyone.

While limiting a hospital’s ability to put a lien on a patient’s house would help, the hospital can still send bills to collections, which can destroy credit. To help with this issue, The Charlotte Observer suggests that credit agencies should be required to remove medical debt from reports once the bill is paid. This could be very helpful to some patients, but I do not think it would be safe to do this for every patient. Lenders need to know this kind of information when trying to make a decision whether or not to lend. If a person had a very large medical debt that was in collections for a long time and they just paid it off, chances are that person is not financially ready to take on a loan. However, if a person had a smaller bill in collections and just forgot to pay it, that shouldn’t be allowed to affect their credit score for seven years. I think it is a good idea to remove some medical debt from credit reports after it is paid off, but not in all situations. I think certain criteria would have to met before the decision could be made.

The rest of the suggestions by The Charlotte Observer would be very helpful in creating an environment where nonprofit hospitals are giving back to the people in the community. I think it would be fairly easy for nonprofit hospitals to make their charity policies known and it would be easy for hospitals to report their care spending to the state. Also, making hospital prices more transparent would be beneficial to both patients and the hospitals. Ultimately, nonprofit hospitals need to get back to their roots and focus more resources on the community. Profits are needed to keep the hospital’s doors open, but they should never out shadow the hospital’s commitment to it’s patients and community.

Posted by Charles Monnett

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