Fellowship Story Showcase
Tenet shoulders majority of care for less fortunate
Despite being for-profit institutions, Sierra Vista and Twin Cities Community Hospital lead the way in providing care to those less fortunate in the region.
When Brian Salzberg correctly suspected he was having a heart attack last month, the Los Osos auto mechanic headed for the hospital, though he dreaded going because he lacked health insurance.
Nearly one in five people in the county lack health coverage. When San Luis Obispo General Hospital closed in 2003, leaving the county without a public safety-net hospital, many worried about people like Salzberg and where they would receive care.
A Tribune analysis of hospital-reported data from 2002 to 2006 shows all four local hospitals share the burden of providing care for the county's poor and uninsured in the wake of General's closure.
But the county's two for-profit hospitals provide more care to those patients than the two not-for-profit hospitals--which receive significant tax breaks on the condition they provide community benefits, including free or reduced "charity" care.
There is a misperception in the community that the not-for-profit hospitals here provide the bulk of care to the county's least fortunate, while the opposite is true, said Candace Markwith, chief executive officer at Sierra Vista Regional Medical Center in San Luis Obispo.
Sierra Vista and Twin Cities Community Hospital in Templeton are owned by Tenet Healthcare Corp., a publicly traded, national hospital chain.
"Sierra Vista and Twin Cities are huge contributors to the safety net in this community," Markwith said.
The two not-for-profits, French Hospital Medical Center and Arroyo Grande Community Hospital, are owned by Catholic Healthcare West.
In 2006, Sierra Vista and Twin Cities treated 65 percent of all patients who had been discharged from a local hospital, according to annual financial reports filed with the Office of Statewide Health Planning and Development.
Their portion of Medi-Cal, uninsured and county indigent patients that year was higher -- at 73 percent, state data show, meaning their share of the county's poor and uninsured patients was higher than their share of all local patients.
By comparison, French and Arroyo Grande hospitals treated 27 percent of the county's poor and uninsured patients -- less than their share of all local patients, which was 35 percent.
Audited figures for 2007 are not yet available.
Hospitals lose money when treating uninsured patients, who generally can't pay the full cost of their care, and Medi-Cal and county indigent patients because the government typically reimburses less than the cost of care.
They absorb the losses primarily by charging private insurers more. That translates into higher premiums for individuals with private insurance coverage.
Alan Iftiniuk, president of French in San Luis Obispo, said the data show that his hospital and Arroyo Grande admit and treat fewer poor and uninsured because the Tenet hospitals get twice as many people visiting their emergency rooms. Most uninsured patients access hospital care through the emergency room and the law requires hospitals to treat them, he said.
Sierra Vista also sees more Medi-Cal patients, Iftiniuk said, because it has the county's only neonatal intensive care and pediatrics units.
"(The numbers) might look skewed, but those services aren't offered somewhere else," he said.
Markwith agrees that her hospital's critical care services attract more low-income patients, but doesn't know why Sierra Vista's share of such patients is increasing.
Both French and Arroyo Grande are committed to providing charity care to patients who come to their hospitals, Iftiniuk said.
"We give a lot of dollars to provide free or discounted care to indigent patients," he said.
CHW took over the local hospitals when they were losing millions annually. As the hospitals get stronger, Iftiniuk said, their ability to provide for the county's least fortunate will increase. The hospitals will provide more charity care, and French may expand its emergency room, he said.
In 2006, Sierra Vista's net income was $1.9 million and Twin Cities' was $4.3 million. By comparison, French then reported a negative $3.8 million and Arroyo Grande reported a negative $2.6 million, according to state reports.
French and Arroyo Grande say they are now profitable.
Because not-for-profit hospitals do not pay property or income taxes, tax laws require them to funnel their income back into the hospital and provide "community benefits."
The definition of community benefits varies by hospital, but it often includes the unreimbursed costs of Medicare, Medi-Cal and uninsured patients plus community health education, promotion and outreach programs, such as flu clinics and health fairs.
California requires not-for-profit hospitals to report their community benefit plans annually, but there is no set amount they must provide to receive their tax breaks.
For-profit hospitals aren't required to file such reports, so it is impossible to compare their total "community benefit."
What truly distinguishes the Catholic Healthcare West hospitals and makes them deserving of their tax breaks are their expansive community benefit plans, said Rick Castro, president of CHW's Arroyo Grande Hospital.
French and Arroyo Grande provide free health education, screening and outreach programs, as well as grants to local nonprofits and Cuesta College's School of Nursing, he said.
"We are what we say we are," Castro said.
The Tenet hospitals provide similar community programs, such as free farmworker clinics and donations to community nonprofits, said Rick Lyons, CEO at Twin Cities.
In addition, Sierra Vista paid $450,000 in local property taxes last year and $650,000 in sales tax. Twin Cities paid a total of $800,000 in property and sales taxes.
State and national research shows little difference in the amount of charity care that not-for- profit and for-profit hospitals provide, especially in smaller communities such as San Luis Obispo County, where hospitals face the same market conditions.
Concerned that not-for-profit hospitals aren't doing enough to merit their tax breaks, government agencies and patient watchdogs have scrutinized hospital community benefit and charity care policies in recent years, said Maribeth Shannon, hospital program director at the California HealthCare Foundation, a nonpartisan think tank.
The IRS released stricter reporting requirements late last year, and California lawmakers passed a law in 2006 that requires hospitals to inform patients about their charity care policies and post them online.
The Tenet and CHW hospitals both offer free care to individual patients with monthly incomes less than $1,700 and discounts to those earning less than $2,977 a month.
CHW has a second level of discounts for individual patients earning up to $4,250, and Tenet's policy offers discounts on a case-by-case basis to individuals with monthly incomes over $2,977.
This increased transparency related to charity care helps uninsured patients, who now can compare hospitals' generosity and may feel more empowered to negotiate the price of their care, Shannon said.
"The pressure leads hospitals to be more conscious of charity care," Shannon said.
A big bill
That's important for patients like Brian Salzberg, 40, who may need to negotiate a discount on the bill for his five-day hospital stay.
Doctors found one of his main arteries nearly blocked and gave him treatment that probably saved his life.
Four weeks later, Salzberg said he feels better than ever. He still doesn't know the total cost of his care, though. Generally, a stay like his costs between $2,000 and $4,000 a day, not including the doctors' charges and heart lab procedure, a hospital spokesman said.
Salzberg applied to the county medically indigent program and Medi-Cal and is now waiting to see if he qualifies. If he doesn't, he hopes Sierra Vista will discount his care and work out a payment plan.
"Hopefully things get worked out so I can pay this bill and live for another day," he said.