Report: Non-profit NC hospitals didn’t ease financial burden of some patients

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RALEIGH, N.C. (WNCN) – A new report released Wednesday finds some non-profit hospitals in North Carolina are receiving tax breaks while providing insufficient financial help to those struggling to afford care.

Republican State Treasurer Dale Folwell’s office released the report on charity care provided by hospitals, after working with researchers at Johns Hopkins University.

“All that profit was made on the back of a sick person,” Fowell said.

The report found “one in five North Carolina families had medical debt in collections in 2020. In the same year, our hospitals reaped more than $1.8 billion in tax breaks. Charity care spending did not surpass 60% of the tax exemption’s estimated value across the majority of our largest systems.”

Folwell’s office oversees the State Health Plan, which provides coverage to nearly 750,000 state employees, retirees and their dependents. He has called for greater transparency and accountability for hospitals, saying Wednesday that North Carolina is on an “unsustainable path in terms of the cash flow for the State Health Plan.”

Bills have been filed in the General Assembly this year and in years past aimed at improving transparency in pricing so patients are better informed about the cost of their care.

“When they’re asked about what this product may cost, they’re looked at as if they have three eyes. And then, when they’re not told what it cost and they get a bill in the mail they don’t pay, their credit gets destroyed,” said Folwell.

Dr. Ge Bai, a professor at Johns Hopkins who prepared the report, said it raises issues that should concern taxpayers.

“Hospital profitability has been increasing steadily in recent years, nationwide as well as in North Carolina,” she said. “Some non-profit hospitals might not behave in accordance with their charitable mission.”

The North Carolina Healthcare Association, which represents hospitals across the state, pushed back on some of the report’s conclusions.

“North Carolina’s non-profit hospitals annually submit audits to state and federal tax regulators who determine each year that hospitals meet their tax status obligations. Today’s report, based on 2019 data, does not reflect the millions spent each year on investments such as disaster preparations that equip community hospitals with the resources to survive a pandemic. Year after year, hospitals answer the call to respond to unplanned community needs such as natural disasters, mass incidents, and of course, a pandemic. In addition, being in good shape financially allows non-profit hospitals to continue to operate and employ staff at appropriate levels to provide patients with the safe, high-quality care they need and deserve,” wrote Cynthia Charles, a spokesperson for the NCHA, in an email.

The report highlights eight of the largest healthcare systems in the state, all of which we contacted, finding most spent less on charity care than the estimated value of the tax exemptions they received.

WakeMed is an exception to that, having spent about $21 million more on charity care than the estimated value of their tax exemptions from 2019-2020.

“Our community benefit disclosure, which includes the unreimbursed costs of charity care delivered, is a direct reflection of WakeMed’s commitment to the community it serves. The rate of charity care growth year after year is significant – up 51% over the past five years,” wrote WakeMed spokesperson Debra Laughery in an email. “Charity care costs alone are greater than the tax benefit received as a nonprofit entity, not to mention other direct community benefit provided.

UNC Health was critical of the report, as a spokesperson questioned the accuracy of the data. Spokesperson Phil Bridges wrote:

“UNC Health hospitals provide hundreds of millions of dollars in uncompensated or ‘charity’ care every year.

“UNC Health will never turn a patient away because they can’t pay for their care. We maintain a number of programs to provide financial assistance to patients in need.

“Interestingly, the numbers cited in this report do not match up with any of our figures. Even more puzzling, the researchers who produced this report did not reach out to UNC Health to confirm their data. If they had, we would have reported that owned UNC Health hospitals provided nearly $253 million in uncompensated or ‘charity care’ in Fiscal Years 2019 and 2020 combined.

“It is important to note that this total includes only our five owned hospitals and not the other nine hospitals which UNC Health manages.”

Officials at Duke Health noted the steps they’ve taken during the COVID-19 pandemic in with mass vaccinations as well as establishing testing and treatment sites. In a statement they wrote:

“A tenet of our mission is to build healthy communities, and Duke Health has long worked to ensure access to high quality health care for the people and communities of North Carolina, regardless of any individual’s ability to pay.

“Our most recent report on community benefit and investment clearly demonstrates our dedication to our mission, with $753 million provided in FY 2020 — a 26% increase from the previous year.

“Of that community investment by Duke, $133 million represents direct financial assistance for 275,752 patients, most of whom live in Alamance, Durham, Granville, Orange, Person, Vance and Wake counties. Another $514 million includes unreimbursed expenses arising from Medicare and Medicaid, which pay hospitals a rate for services that is lower than their actual costs.

“This suggestion of unfair advantage by not-for-profit hospitals and health care systems comes as we remain in the midst of the COVID-19 pandemic. From the first days of the outbreak in 2020, Duke has provided COVID-19 tests (more than 320,000), stood up mass community vaccination, diagnostic, and treatment sites, and cared for more than 30,000 patients with COVID, including more than 5,500 who required hospitalization in our facilities. The health system has also been committed to achieving equitable health outcomes for those hospitalized for COVID-19, ensuring no disparities in care, treatment, or outcome among white, African American, or Latinx patients.”

Vidant Health spokesperson Brian Wudkwych wrote:

“Vidant Health serves a vast, underserved region of more than 1.4 million people, many of whom face high rates of chronic diseases, lack access to care and are uninsured. As a mission-driven not-for-profit health system, Vidant treats all patients regardless of ability to pay and prides itself on providing charity care to community members in-need. With a reliance on a high government payor mix (Medicare, Medicaid), Vidant operates with a thin margin and any profits realized are reallocated to create access to quality care, hire high-quality doctors and nurses, and create health infrastructure needed to support the communities we are proud to serve.”

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