Merciless Charity: - Washington Community Action Network

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Merciless Charity:
Franciscan Health System leaves patients in crippling debt
Working at the hospital, in debt to the hospital
I had surgery last August for a
painful calcium deposit on my
shoulder. It was getting harder
and harder to do simple things
like pick up my children and
knew that it would start
affecting my work. I could not
go to physical therapy after my
surgery because I could not
afford the added expense.
I’ve only been able to make
minimal payments on my FHS
bills, about $25 a month. According to FHS’s own chart, my husband and I
have three children and make enough to qualify for 100 percent charity care.
It has been really difficult to even get the help I need from charity care. FHS
wants info on my bank account, 401k, what kind of car I drive. When I spoke
to a charity care representative, she said, “we just want to see if you can
liquidate any assets to pay your medical bills.”
It makes me so angry and insulted that the organization I work for doesn’t
care about me or my years of service. My husband has been putting off
going to the doctor because we chose the high deductible plan for the lower
premiums but now we only use it for emergencies. My children are on state
medical because we can’t afford to carry on paying for these plans.
Shelly Markham, Transporter, Radiology, FHS-St. Joseph’s Medical Center
Summary
When the unexpected occurs — illness, a car crash, a stroke or heart attack —
Tacoma relies on St. Joseph Medical Center (SJMC), operated by Franciscan
Health System (FHS), to give us the life-saving care we need — and we worry
about the price later. For the uninsured and underinsured, though, the cost of
care for a single incident can shackle patients with debt for years to come that
can bring harassing collections calls, ruined credit, increased budget woes, wage
garnishment, and forgone care due to cost.
SJMC is more than a “business” and as a nonprofit charity has special obligations
to our community.1 In addition, SJMC and all the hospitals in the Franciscan
Health System have an ongoing commitment to the poor and vulnerable based on
both their legacy and current affiliation with the Catholic Church.2 Recognizing
this, we grant FHS significant tax benefits because we assume that the hospital
will provide a significant benefit to our community.
Yet, documents and patient stories show that FHS is shirking its responsibility to
care for Tacoma patients:
• FHS doesn’t sufficiently inform patients about the availability of financial
assistance and has a charity care application form and process that is
extremely difficult to complete.
• FHS’s published charity care income eligibility chart excludes more patients
than its own policy requires.
• FHS bills and aggressively collects from low-income patients who would have
qualified for either full or substantial financial assistance.
• FHS has contracted with third-party collection agencies who have threatened
and harassed patients in violation of state and federal law and have assessed
fees that in some cases have more than doubled the amount patients owe.
FHS must live up to its promise to care for Tacoma and give back in a way befitting
a nonprofit charity. It must improve transparency in its charity care process, ensure
its billing is reasonable and compassionate, and give financial assistance to all who
qualify.
1 Rosenberg, C. E. (1987). The care of strangers: The rise of America’s hospital system. New York: Basic Books.
Sasso, P. (2003). Searching for Trust in the Not-for-Profit Boardroom: Looking Beyond the Duty of Obedience to Ensure
Accountability. UCLA Law Review, 50, 1485.
2 Craig, D. M. (2008). Religious Health Care as Community Benefit: Social Contract, Covenant, or Common Good? Kennedy
Institute of Ethics Journal, 18(4), 301. Retrieved from http://mtw160-198.ippl.jhu.edu/login?auth=0&type=summary&url=/
journals/kennedy_institute_of_ethics_ journal/v018/18.4.craig.pdf
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Merciless Charity: Franciscan Health System leaves patients in crippling debt
SEIU Healthcare 1199NW • September 2014
3
Shifting priorities leave patients behind
Abdominal pain leads to $60,000 in debt
Since Franciscan Health System (FHS) was taken over by national healthcare
chain Catholic Health Initiatives (CHI) in 1996, things have changed. Community
members report immense difficulty in trying to get financial assistance to help
with mounting medical bills. And workers from the hospital report that their
employer, FHS, has denied them charity care or other eligible discounts and has
even taken some of its own employees to collections.
Early on this year, I started getting really severe abdominal pain. I couldn’t
see straight and had a really hard time taking care of my little girl. I put off
seeing a doctor but eventually the pain got so overwhelming that I had to
rush to the ER at St. Joseph’s, which is only a couple blocks from my house.
Patients highlight the difficulty of making it through the FHS charity care maze:
the complex billing, the mountainous paperwork, the harassing collections calls,
and the devastating court summons or wage garnishment. In most cases, these
patients should have qualified for discounts up to 100 percent under the hospital
system’s own policies, but the hospital never alerted them to their eligibility.
FHS hospitals are anchor institutions in their communities3 and FHS is one of the
largest private employers in Pierce County.4 FHS’s actions affect the physical and
economic health of Tacoma and Pierce County. As FHS hospitals shift from being
based in the communities they serve to being affiliated with larger national chains,
the needs of our community become eclipsed by the mandates that come from
distant corporate headquarters.5
The first time I went in there was no diagnosis for my pain. The hospital
sent me home with pain killers and that was it. The second time I went
to the ER they did an ultrasound and found that I had massive ovarian
cysts that were leaking fluid into my blood stream. This time I was sent
home with pain pills and birth control pills and no further treatment.
The birth control pills weren’t fixing the cysts. They didn’t treat the
cause of my pain and I honestly felt as though I was not being heard.
Because I was uninsured, I could not see a doctor but had no choice but
to keep going to the ER every time the pain became overwhelming and
made it impossible to continue with daily life. I went to the hospital
many times, all the while terrified of the bill I knew I was racking up.
I had taken my daughter to a different hospital, where they told me about
charity care – St. Joseph’s never mentioned that to me. I knew to ask for
the paperwork and filled out my application. Because I was a stay at home
mom, I found it difficult to prove that I had no income. The application
was difficult and confusing, and the majority of the questions didn’t really
fit my situation. I tried calling them for help many times, and was never
able to get a hold of a person that could answer my questions. I filled
the application out to the best of my ability however and waited for a
response but none came. I never found out whether I was denied or why.
Instead, the first time I was contacted regarding my bills from St.
Joseph’s was through phone calls from a collector. It felt strange to
me, I did not recall receiving any bills in the first place. In all, my bills
total over about $60,000. I laugh because there is absolutely no
way my husband and I can pay them off. This brings massive stress
to me and my family. We can’t buy or even rent a bigger home for
our family; we can barely pay our bills, and keep ourselves fed.
Brea Sweeney
3 Taylor, H. L., & Luter, G. (2013). Anchor Institutions: An Interpretive Review Essay. Buffalo, NY: University At Buffalo, The State
University of New York. Retrieved from: http://www.margainc.com/files_images/general/Literature_Review_2013.pdf
4 Economic Development Board for Tacoma-Pierce County 2013 Major Employers. (n.d.). Retrieved from http://www.
edbtacomapierce.org/page.aspx?nid=5
5 Guinan, P. (2014). Catholic hospitals, are mergers the way to go? The Linacre Quarterly, 81(2), 107-110.
4
Merciless Charity: Franciscan Health System leaves patients in crippling debt
SEIU Healthcare 1199NW • September 2014
5
An obligation to serve
Approved for charity care,
yet still facing huge bills
My second child, my son, was born
two and a half months premature.
While I was in the hospital giving birth
to him, the doctors noticed my blood
sugar levels and put me on insulin.
However, after giving birth to my son,
the doctors took me off insulin and
sent me home due to my lack of
insurance. Six days later I had a blood
sugar attack and went back to the
hospital. The doctors did not run a
blood sugar test on me but instead
told me I felt sick because I was
post-partum. I told them it was from
being taken off insulin but they
wouldn’t listen.
It took about a year of having to go to the ER, telling doctors I was certain
I had type I diabetes before I got to see an endocrinologist who confirmed
what I already knew to be true. I tried to apply for charity care, but was
told I had to apply for Medicaid first. I knew I wouldn’t qualify because my
husband is undocumented, so really this process was just delaying my ability
to apply for charity care. At one point a nurse called from the endocrinologist’s office to let me
know that I was approved for a 75% discount for charity care. I scheduled
appointments and got properly diagnosed, and that’s when the bills started
pouring in. None of the bills reflected the discounted care. I was also
getting a massive amount of bills from all of the different tests from those
ER visits. The bills were sold into collections quickly, and I started receiving
harassing phone calls. I got multiple calls a day from different people. This
process lasted over a year. I’m in school now – not working – and FHS is currently billing me for
$14,000 in medical debt. This month I have to choose between being able
to spend $300 on 28 days’ worth of insulin or being able to afford rent. Rachel Bastida
6
Merciless Charity: Franciscan Health System leaves patients in crippling debt
Communities expect hospitals to serve all patients who need care6 but nonprofit
hospitals have an additional responsibility, beyond their for-profit competitors,
to provide significant community benefits to justify their tax breaks. The Internal
Revenue Service considers charity care a necessary community benefit that
all nonprofit hospitals must provide.7 In Washington state, our law requires
that hospitals provide free charity care for people with household incomes
at 100 percent of the Federal Poverty Level (FPL) and below, and at least
partial discounts up to 200 percent of the FPL.8 Any charity care above that is
discretionary based on each hospital’s policy.
Tax exemptions benefit hospitals significantly, but come with the obligation
to provide community benefit in return, including charity care for low-income
patients.9 As hospitals grow and shift their focus from the community to the
corporate boardroom, it raises a question about the cost-benefit of their tax
breaks.
As a Catholic organization, FHS professes an additional, institutional mission
to serve its community and care for those who cannot afford it. The Ethical and
Religious Directives for Catholic Health Care Services, the binding guidance
provided to Catholic hospitals by the United States Conference of Catholic
Bishops, states:
In Catholic institutions, particular attention should be given to the
healthcare needs of the poor, the uninsured, and the underinsured.10
Additionally, FHS’s mission statement identifies two “strategy pillars” that
demand providing affordable care to all: they aspire to “best stewardship” and
“best access to care.”11 Good stewards don’t cause financial harm to those who
depend on them. Charges that are unaffordable are a barrier to access to care.
6 Rosenberg (1987).
7 Internal Revenue Service Revenue Ruling 69-545, 1969-2 C.B. 117 (1969). In 1956, the Internal Revenue Service required sufficient
levels of charity care as a requirement for maintaining tax-exempt status for hospitals. This directive was later amended in 1969 to a
broader but vaguer requirement for the provision of community benefit, part of which included the provision of free and reduced care.
8 RCW 70.170 et. seq.; WAC 246-453 et. seq.
9 Penrod, JR. Gentry, WN (1998). The Tax Benefits of Not-for-Profit Hospitals (NBER Working Paper No. 6435). Retrieved from
National Bureau of Economic Research website: http://www.nber.org/papers/w6435
10 Catholic Church. United States Conference of Catholic Bishops (2009). Ethical and religious directives for Catholic health care
services. Washington, D.C: United States Conference of Catholic Bishops. Retrieved from http://www.usccb.org/issues-and-action/
human-life-and-dignity/health-care/upload/Ethical-Religious-Directives-Catholic-Health-Care-Services-fifth-edition-2009.pdf
11 Franciscan Health System - Mission, Vision and Values. (n.d.). Retrieved from http://www.fhshealth.org/About-us/Mission-Visionand-Values/
SEIU Healthcare 1199NW • September 2014
7
Generous in policy, but stingy in practice
FHS, like many hospitals, provides financial assistance at varying levels of
discounts based on household income. FHS’s sliding scale is based on the U.S.
Department of Housing and Urban Development (HUD) Geographic Very Low
Income Guidelines (VLI).12 According to the FHS charity care policy on file with
the Washington State Department of Health, the base income ceiling to qualify
for a 100 percent discount is 130 percent of the HUD VLI, or $30,485.13 Yet at
the time this paper was published, FHS was publishing a scale on their financial
assistance application that set eligibility for a 100 percent discount for a oneperson household at $24,60014. Individuals who called FHS to inquire about
income eligibility have been given the lower figures on the financial assistance
application scale. FHS is apparently violating its own policy.
Additionally, FHS requires that underinsured patients apply separately for a status
they refer to as “medical indigence:”
Medically indigent patients do not have appropriate insurance
coverage that applies to services related to neonatal care, organ
transplants, cancer, burn care, long and/or intensive care, etc., within
the context of medical necessity. Such patients may have a reasonable
level of income but a low level of liquid assets and the payment
of their medical bills would be seriously detrimental to their basic
financial wellbeing and survival. FHS shall make a subjective decision
about a patient/guarantor’s medically indigent status by reviewing
formal documentation for any circumstance in which a patient is
considered eligible for a charity care discount on the basis of medical
indigency.15
FHS charity care practice doesn’t match it’s policy
To receive 100% discount
Number of people
in household
2014 application
practice 17, 18
Stated policy 16
$24,600
$30,485
$28,100
$34,840
$31,600
$39,195
$34,100
$43,550
2014 application
practice
Stated policy
$31,980
$35,576
$36,530
$40,658
$41,080
$45,741
$45,630
$50,823
The income requirements
on FHS’s application
cover letter are 130% of
the income requirements
stated in their Charity
Care Policy.
To receive 75% discount
Number of people
in household
The income requirements
on FHS’s application
cover letter are
116.7% of the income
requirements stated in
their Charity Care Policy.
2014 application
practice
Stated policy
$37,321
$40,667
$42,631
$46,477
$47,940
$52,286
$53,250
$58,096
FHS makes no data available on how often, if ever, FHS grants the status and no
patients that we have spoken with have reported securing “medical indigence.”
Although holes in coverage frequently leave patients with a substantial
unaffordable balance, FHS requires that insured patients navigate this additional
subjective test.
The income requirements
on FHS’s application
cover letter are
133.4% of the income
requirements stated in
their Charity Care Policy.
To receive 25% discount
Number of people
in household
12 US Department of Housing and Urban Development, FY 2014 Income Limits Documentation System -- Summary for Pierce County,
WA. (n.d.). Retrieved June 1, 2014, from http://www.huduser.org/portal/datasets/il/il2014/2014summary.odn
13 Franciscan Health System. (2010?). Uninsured/Underinsured Patient Discount Policy (Charity Care);
14 Catholic Health Initiatives Financial Assistance Application form cover letter. Accessed on May 2, 2014
15Ibid.
8
Merciless Charity: Franciscan Health System leaves patients in crippling debt
17
18
To receive 50% discount
Number of people
in household
16
2014 application
practice
Stated policy
$42,661
$45,728
$48,731
$52,260
$54,801
$58,973
$60,970
$65,325
SEIU Healthcare 1199NW • September 2014
The income requirements
on FHS’s application
cover letter are 150% of
the income requirements
stated in their Charity
Care Policy.
16 Scale computed by SEIU
Healthcare 1199NW from
formula published in 2010 FHS
Charity Care policy. The 2010
charity care policy document is
the most recent one on file with
the Washington Department
of Health. Retrieved from
http://www.doh.wa.gov/
DataandStatisticalReports/
HealthcareinWashington/
HospitalandPatientData/
HospitalPolicies.aspx
17 Conifer provides in-house
contract administrative services,
such as billing and admitting to
FHS.
18 FHS Charity Care Policy (2010)
still publishes this base amount
in 2014 though it is the actual
HUD VLI for 2013 (not 2014)
and is 100% not 130% of VLI.
9
Financial assistance: FHS’s best kept secret
Loss of husband leads to crippling debt
Nearly every FHS patient we interviewed said the hospital failed to tell them
anything about the availability of charity care or financial assistance.19
In 2010, my husband’s health began
to decline and within a short span of
time we began visiting St. Joseph’s
regularly. In the next year, he
contracted pneumonia and had a
hernia repair. He and I had both
gotten laid off during that time, and
despite having insurance through
Medicare, we found our co-pays and
deductibles hard to manage.
Meanwhile, my husband Charlie’s
health struggles intensified. He began
to experience severe stomach pain and
lost 60 pounds in just a few months.
We were told that he should schedule
an appointment with a kidney specialist. When we were finally able to get in
for an appointment, the doctor ordered another blood test, we scheduled a
follow up, and that was the last procedure Charlie had at St. Joseph’s. We
were waiting to follow up with the doctor when the hospital that told us in a
letter that we have accumulated too high of a balance and that they would
have to terminate his care at this point.
Both state and federal law have long required that hospitals post a notice of
charity care availability, though postings alone reach very few patients.20 Patients
report that in registration the hospital often skips over the availability of financial
assistance or silently provides a form as part of a large stack of complex legal
papers.21 Washington law requires hospitals to offer multiple opportunities to
apply for financial assistance, including opportunities after the billing process
has begun,22 yet FHS patients state that the hospital failed to inform them about
possible financial assistance when discussing their bill.23
Obstacles abound in the path to financial assistance
Patients that we interviewed frequently found FHS’s charity care application process confusing and intimidating.
The four-page FHS application requires information about mortgage balances, home values, automobile
ownership, retirement funds, and other highly personal finances.24 It also requires applicants to attach “income
verification” and fill out a detailed monthly budget in 12 categories including food, rent, gas, and student loans.
Patients have 14 days to complete and submit the application with all the required attachments. When one FHS
patient balked at how much information was required on the application, FHS told her they “just wanted to see
if [she could] liquidate any of [her] assets.”25 Several FHS patients we interviewed for whom English is a second
language or who have challenges with literacy simply gave up on the application and braced themselves for
debt.26
The FHS application appears to be in violation of federal and state law. Earlier this year, the IRS clarified federal
law on charity care application procedures, banning cumbersome application policies.27 Washington Department
of Health guidelines limit applications to information that determines income and family size and prohibit
requesting additional information.28
FHS told some patients who did complete and submit the application that their application was either lost or
never processed, a common problem among the patients that we interviewed.29 Patients report that because
the application takes hours to complete or because they attached original documents to the application without
making copies, the futility of a lost application deters them from further pursuing needed financial aid.30
19 Personal interviews with Edwin Sarmiento (3/27/14); Anita Ramirez (3/25/14) and Jenny Melgar (5/19/14).
20 WAC 246-453-020(2); 42 C.F.R. 489.20(q)
21 Janet Laguer. Personal interview. 13 May 2014.
22 WAC 246-453-020(10)
23 Anita Ramirez op. cit.
24 Catholic Health Initiatives Financial Assistance Application form cover letter. Accessed on May 2, 2014
25 Shelly Markham. Personal interview. 27 Mar. 2014.
26 Personal Interviews. Edwin Sarmiento op. cit., Anita Ramirez op. cit.
27 Internal Revenue Service Notice 2014-3. (2014) “Proposed Procedures for Charitable Hospitals to Correct and Disclose Failures to
Meet § 501(r).” Accessed at http://www.irs.gov/pub/irs-drop/n-14-03.pdf
28 WAC 246-453-030(5); WAC 246-453-030(2)
29 Crystal Norman. Personal interview.
30Ibid.
10
Merciless Charity: Franciscan Health System leaves patients in crippling debt
Eventually, we discovered that the cause of Charlie’s pain was pancreatic
cancer; he had a golf ball sized tumor in his abdomen. We put him on a
chemo blast almost immediately, but he contracted pneumonia again and
passed away at a different hospital about a week later, after his tumor burst.
I was devastated. I had lost the love of my life so suddenly. Unfortunately,
Charlie’s debt survived him. I received endless bills and calls from collectors
for the debt Charlie acquired. The calls, the bills and my feeling of loss were
overwhelming. St. Joe’s never offered charity care assistance; they offered
us no help managing the debt that caused them to stop his care. I am still
receiving calls from collectors for my husband’s bills at St. Joseph’s.
In the year following my husband’s death, I had a medical emergency
which landed me in the hospital at St. Joseph’s for a total of six days. My
resulting bill was $48,000. At this point I knew to ask for charity care
and they gave me an application. I have found the charity care application
from St. Joseph’s extremely difficult to complete. My daughter and I sat
down together on three separate occasions to fill it out, and it was still too
much for me. I never submitted my application and braced myself for debt,
for which I am working to make payments on now. I fear it will go into
collections soon, as I am still struggling to get by. At home I have boxes and
stacks of bills from both Charlie’s and my lingering debt from the hospital
that cut off his care when he needed it most.
Toni Potter
SEIU Healthcare 1199NW • September 2014
11
Harassed by collections
Abusive practices by third-party collectors
In 2012, I was referred by my physician to see a nutritional
specialist. Before the appointment took place however, the
hospital apparently called the VA to find out whether or not the
procedure was authorized by my insurance and they were
informed that it was not. St. Joseph did not pass that information
along to me, so I went in to see the specialist twice. The bill in
total was over $900-my debt was sold to collections and I have
been doing my best to make the monthly payments.
Through this entire process of billing and communication between
the VA and St. Joseph, I was never informed of the availability of
charity care by the hospital, though my income level qualifies me
for at least a 75% discount. I should have been informed that I could
apply for charity care to cover the inpatient appointment that I had,
and certainly before my debt was sold to a collections agency.
It’s overwhelming. I feel very confused. I have been told different things by different people and I don’t
know what they are going to say next. Although I have been making payments to work down my debt,
my credit history has now been negatively impacted through no fault of my own.
Joyce Collins, Tacoma
Foot pain leads to years of debt
A few years ago, I had a bump on my foot that hurt terribly. I went
to my primary care physician twice and he told me to wait and see
if the pain subsides. The pain didn’t subside and so my doctor
referred me to a podiatrist who diagnosed it as a benign cyst and
recommended surgery. The surgery revealed that it was more than
a cyst – there was cancerous tissue and a torn tendon. I had a
second surgery for the torn tendon and then an MRI that detected
that there was still cancer remaining in my foot. Next I was
referred to two oncologists and then finally to a plastic surgeon
who removed the last of the cancerous tissue. Altogether, I saw
five physicians and had three surgeries. All of these were FHS
providers at FHS hospitals.
It didn’t take long before FHS overwhelmed me with bills, and
there was no way I could pay them all. I drained my savings trying
to pay these bills and have had to rely on my ex-husband for support even though I’ve been working
full-time for FHS. My ex has stopped supporting me, though, and now I’m in temporary housing until I
can find an affordable place to live.
I would not be in this situation were it not for the medical debt. It’s unthinkable that this is my employer,
a mission-driven Catholic non-profit, putting me in this terrible financial situation.
Anaya Thompson, Former Care Assistant, Critical Care Unit, FHS-St. Joseph Medical Center
12
Merciless Charity: Franciscan Health System leaves patients in crippling debt
Several patients told us that collections agents had contacted them regarding
FHS bills, and at times collectors harassed them, threatened them, or
used abusive language. One FHS patient reported that a collections agent
threatened her with jail time and told her to “get her daddy to pay” her bill.31
Another collections agent called a patient “scum.”32 Several FHS patients
report collections agents making multiple harassing calls, even very late at
night or very early in the morning.33
These aggressive collections practices violate federal and state law. The Fair
Debt Collection Practices Act (FDCPA) prohibits threats including false
threats of criminal prosecution, use of obscene or profane language, calling at
inappropriate times of the day or calling with unreasonable frequency.34 State
law reiterates the FDPCA in banning offensive language, threats, and claims
to having criminal enforcement powers and additionally provides some specific
thresholds for harassment. According to state law, collections agents can only
make calls between 7:30 a.m. and 9 p.m. and must not call the same account
more than three times a week.35
Collections agencies also saddle already debt-burdened patients with
additional fees. Under Washington law, collection agency fees are limited to
35 percent of the original amount of the debt,36 but the limit doesn’t apply
to court fees or interest which could amount to hundreds and even thousands
of dollars on top of an already unaffordable debt. Collections agents take
the cases to court, which in turn results in additional filing fees, service fees,
attorney fees, ex parte fees, and handling fees. One FHS patient reported
owing more in fees to the collection agency than for the original charge for
surgery.37 In one case, a debt of $544 grew to $1009 after interest and fees. In
another case, a debt of $5336 grew to $7151, including interest of $1465.38
Even though FHS uses third-party collections agencies, it is fully responsible
for its contractors’ behaviors and practices.
31 Dixie Reed-Cole. Personal interview. 02 Jan. 2012.
32 Susan McConnel. Personal interview.
33 McConnel Interview, op. cit.
34 15 U.S.C. § 1692 –1692p
35 RCW 19.16.250 et seq.
36 RCW 19.16.250 (21)
37 Suzette Powell. Personal interview. 26 Mar. 2014.
38 Merchants Credit Corporation v. Perez-Cuiriz. Pierce County District Court (unpublished). Case no. 713068. Filed March 7, 2011.;
NCO Financial Systems v. Woolnough. Pierce County District Court (unpublished). Case no. 725682. Filed August 31, 2012.
SEIU Healthcare 1199NW • September 2014
13
Medical debt: reinforcing disparities
In an economy with growing income inequality and in a city working diligently to
raise its quality of life, a corporation saddling residents with medical debt can have
a dangerous ripple effect on local economic conditions.39
A recent study found that those earning less than 138 percent of the Federal
Poverty Level (FPL), the very patients who need each dollar to make ends meet,
were spending an average of 16 percent of their income on medical debt alone.40
Nearly two-thirds of people with medical debt reported problems paying for
necessities such as food, clothing, or housing.
One in four people with medical bill problems considered filing for bankruptcy. Of
those who considered filing for bankruptcy, about one in five actually did so—or
about 5 percent of all people in families with medical bill problems.41 One national
study found that 62 percent of all bankruptcies could be attributed to medical
debt.42 And because of pressure to “pay up front” for hospital bills, high-interest
credit debt often originates as medical debt.43 In each of these cases, the economic
consequences reach into the community and hurt not just the patients but also
their neighbors, local businesses, and taxpayers who support governmental efforts
to fill the gap with food and housing assistance.
Patients also reported a disturbing trend of forgoing medical care due to debt:
• Curtis H. had a broken ankle, yet after accruing thousands of dollars of
medical bills, he did not ask for a replacement for a faulty brace because he
feared adding to his debt.44
• Shelly M. and Edwin S. couldn’t afford physical therapy after surgery.45
• Several patients told us they avoided routine examinations such as
colonoscopies and mammograms.46
A University of Michigan study found that patients who skipped needed care were
almost three times as likely to have medical debt.47 40 percent of respondents to a
Demos survey of patients with medical debt said that they “did not go see a doctor
or visit a clinic when [they] had a medical problem.”48
39 Seifert, R. W. (2006). Home Sick: How Medical Debt Undermines Housing Security. St.Louis University Law Journal, 51, 325.
40 Caswell, K. J., Waidmann, T., & Blumberg, L. J. (2013). Financial Burden of Medical Spending by State and the Implications of the
2014 Medicaid Expansions. Retrieved from http://www.urban.org/UploadedPDF/412778-Financial-Burden-of-Medical-Spendingby-State.pdf
41 Sommers A, Cunningham PJ. (2011) Medical bill problems steady for U.S. families, 2007–2010. Tracking Report No. 28.
Washington, DC: Center for Studying Health System Change. Retrieved from http://www.hschange.com/CONTENT/1268/
42 Himmelstein, D. U., Thorne, D., Warren, E., & Woolhandler, S. (2009). Medical bankruptcy in the United States, 2007: results of a
national study. The American Journal of Medicine, 122(8), 741-746.
43 Traub, A., & Ruetschlin, C. (2012). The Plastic Safety Net: 2012. Retrieved from Demos website: http://www.demos.org/
publication/plastic-safety-net
44 Curtis H. Interview by WashingtonCAN. Personal interview.
45 Shelly Markham op cit.; Edwin Sarmiento op cit.
46 For example, Anita Ramirez op. cit.
47 Kalousova, L., & Burgard, S. A. (2013). Debt and foregone medical care. Journal of Health and Social Behavior, 54(2), 203-219.
Patients who forego care also carried more medical debt than those who sought care ($8,889 vs. $2,783).
48 Traub & Ruetschlin. (2012).
14
Merciless Charity: Franciscan Health System leaves patients in crippling debt
Nearly all the Pierce County patients we interviewed were actually insured at
the time they incurred medical debt. Because they are “underinsured,”49 patients
can find themselves in debt due to inadequate health plan features such as high
deductibles, high coinsurance, or specific care that is not covered by their plan.50
Community Catalyst estimates that one fifth of all adults with health insurance —
about 25 million people — are underinsured.51 Even though medical debt among
the underinsured is growing, FHS requires that underinsured patients apply for
“medical indigence,” creating an additional burdensome barrier to assistance for
patients in need.
Characteristics of people
with difficulty paying medical bills
In 2012, the majority of people with difficulty paying medical bills had
employer-sponsored private insurance (ESI).
Difficulty paying bills
54%
4%
9%
3%
30%
Private — ESI
Private - individual
Medicaid
Medicare
Uninsured
Source: Kaiser Family Foundation analysis of 2012 National Health Interview Survey
(NHIS) data. Includes all people who reported problems affording medical bills within
the last year, and/or gradually paying past bills over time, and/or having medical bills
they cannot afford to pay at all.
49 Blewett, L. A., Ward, A., & Beebe, T. J. (2006). How much health insurance is enough? Revisiting the concept of underinsurance.
Medical Care Research and Review, 63(6), 663-700.
50 “Coinsurance” is the shared responsibility between the patient and the insurance carrier for a medical charge. When one says that
insurance pays 50% for a procedure, the other 50% is the patient’s coinsurance. This is not the same as a “co-pay,” which is a nominal
charge usually collected at the time of service.
51 Howitt K. (2009) When Coverage Fails: Causes and Remedies for Inadequate Health Insurance, Community Catalyst. Retrieved
from http://amcp.org/WorkArea/DownloadAsset.aspx?id=12588
SEIU Healthcare 1199NW • September 2014
15
Without warning, the Franciscan
Medical Group (FMG), which is the FHS system of outpatient clinics, sent
my account to Puget Sound Collections (PSC), a collection agency that
contracts with FHS. I worked with PSC to create an affordable payment plan
given my income and budget – $50 a month. It was working out so well that
I decided to voluntarily double my payments to $100 a month. While this
stretched my budget to the limit, I would be able to pay off my debt sooner.
Just before I started making $100 monthly payments, though, I mistakenly
missed one of the $50 payments without knowing it. PSC began charging
me fees and interest based on the single missed payment of $50 even
though I kept sending $100 checks. Suddenly, PSC mailed me a wage
garnishment notice.
I called PSC, explained my situation, and offered to pay the missed payment
and get my account back up to date. PSC was unsympathetic and told me
it was too late for that now. Due to fees and interest, my remaining $1200
debt spiked to $2500 even though I had continued paying all but that
one missed month. PSC began garnishing $300 a month from my wages,
stretching my budget to its limit.
It doesn’t seem right that I qualified for financial assistance for the hospital
bills but wasn’t able to get assistance for the other bills. And it’s not
reasonable for FHS to garnish my wages after just one missed payment.
I made and continue to make a good faith effort to meet my obligations;
there’s no reason they can’t forgive just one mistakenly missed payment.
Suzette Powell, Certified Nursing Assistant, Oncology/Medical Surgery,
FHS-St. Joseph’s Medical Center
16
Merciless Charity: Franciscan Health System leaves patients in crippling debt
Over a five year period, FHS provided financial
assistance to patients totaling an average of 1.7
percent of each hospital’s net patient service
revenue.55 In comparison, over the same period,
charity care at Seattle’s Harborview Medical
Center was equivalent to 12 percent of its net
patient service revenue.56
10%
4%
12%
2%
11%
2%
10%
3.5%
10.9%
11%
3.1%
Nonprofit institutions are expected to reinvest in
healthcare and the community with only a small
cushion held over to prepare for the unexpected.
The industry considers a “rainy day fund” of 3
percent to 4 percent54 reasonable; its earnings
beyond that provide FHS with an extraordinary
opportunity to provide additional healthcare and
serve the community.
FHS revenue up to six times
the state average
2.7%
FHS has the financial resources to provide
significantly more financial assistance to patients
in need. Pierce County hospital systems have
priced their care above market norms and thus
produce unusually large operating margins and
total margins compared to peer hospitals through
the state.52 Profits for the combined hospitals
in FHS remain more than double the statewide
median of comparable hospital and systems.53
9.6%
Last year I needed an emergency
hysterectomy and had it done where I
work, at FHS-St. Joseph’s Medical
Center. After the surgery, FHS sent
me a flood of bills from different
providers, all of whom were affiliated
with FHS. I tried to pay them as they
came in but the bills were confusing
and overwhelming. I applied for
financial assistance and had the
hospital bill written off but not the
rest of my FHS bill of physicians’ fees
and other charges, which was
substantial.
FHS can afford to do better
2.7%
One mistake leads to thousands in fees
and wage garnishment
Franciscan
Washington
hospital
median
2006 2007 2008 2009 2010 2011 2012
FHS profits grow
Total profit of all Franciscan
hospitals 2009 and 2013.
Source: SEIU Healthcare 1199NW
analysis of Washington Dept of
Health financial reports. Total profit is
operating profit plus investment gains.
The public, however, cannot measure patient
assistance needed versus patient assistance given.
While hospitals are proud to show the community
the dollar amounts for their charity care spending, they don’t show how many
eligible patients should have received financial assistance but never applied. While
hospitals show they’re meeting part of the need, we do not know the true extent of the need.
52 Caring for Pierce County: are our local healthcare providers adequately serving our community? (2012). Retrieved from Washington
CAN website: http://washingtoncan.org/wordpress/3922/pierce-county-hospitals-make-1000-more-profit-per-patient-visit-thanthe-washington-state-average/
53 SEIU Healthcare 1199NW analysis of Washington Dept. of Health financial reports. Excess margins over revenue represent money
that is left over after the system pays the staff, maintains needed systems, and purchases the machines, drugs, and supplies—
basically, after it has performed all needed healthcare and corporate functions. Washington Dept. of Health financial reports accessed
at http://www.doh.wa.gov/DataandStatisticalReports/HealthCareinWashington/HospitalandPatientData/HospitalFinancialData/
YearEndReports.aspx
54 Harrison, M. G., & Montalvo, C. C. (2002). The Financial Health Of California Hospitals: A Looming Crisis. Health Affairs, 21(1),
120.
55 Charity care/financial assistance expenditure expressed as the cost of service, not charges.
56 SEIU Healthcare 1199NW analysis of hospital annual financial reports to the Washington State Department of Health. Raw data
downloaded February 15, 2014, from http://www.doh.wa.gov/EHSPHL/hospdata/Financial.htm. An average ratio of charity care
(cost-to-charge adjusted) to net patient service revenue was computed based on five year aggregates from 2008-2012 for each of 88
general acute care hospitals. St. Joseph Medical Center’s five year average is 65%. This analysis was done specifically for this report
and this is the first appearance in publication.
SEIU Healthcare 1199NW • September 2014
17
Conclusion
Recommendations
FHS appears to be failing the very patients it was established to protect: the poor
and vulnerable. Because of its status as a hospital, as a nonprofit institution, and
as a religious institution with a charitable mission, FHS must prioritize supporting
patient care before amassing profits. It is further obliged by its nonprofit status
that lowers its tax obligations to provide Tacoma with a benefit that justifies the
tax expense.
Review of FHS’s charity care policies and practices points to clear changes FHS
must make:
FHS must refocus its energies from maximizing revenue streams to uplifting the
health and wellbeing of the community that has given so much to it. It must return
to its mission of consistently providing quality, compassionate care to all who seek
it, with reasonable financial assistance for those unable to pay.
Applied for charity care, never heard back
I was scared, I was uninsured, and I needed an
emergency hysterectomy. I left the hospital trying to
wrap my head around the reality that I would never be
able to have kids again, and the hospital sent me home
with a charity care application and $8,000 in bills. I
remember laying on the couch, in pain, trying to fill out
the paperwork, wondering how I was going to gather
up all the supporting documents they were asking me
for when I couldn’t even stand up. I filled out the
paperwork, I did everything they asked, but I never
heard back from the hospital about whether or not I
was approved. My bills ended up in collections before
the hospital ever responded to my request for
assistance.
Before I had any hope of paying off my bills, I had
another medical emergency. For 17.5 hours, I waited in the ER at St. Clare’s as my appendix
ruptured. This time the hospital sent me a bill for $24,000. I knew this time to ask for charity
care, and they told me that they would mail an application to my address that I could fill out. I
never received that application, only bills eventually notifying me that this debt was sold into
collections too.
1. Follow the law. Comply with existing federal and state laws and standards
including industry standards and FHS’s own policies. State and local officials
should take note of areas where it fails to meet requirements.
2. Educate patients on financial aid. Widely, prominently, and proactively
promote the availability of financial assistance. Instruct admissions staff
and financial services staff to tell all patients directly about the availability
of financial aid and to ask about income eligibility several times during the
billing cycle. Prominently display the current sliding scale chart throughout
the hospital.
3. Make the application process accessible to all. Simplify the application and
only require patients to apply once annually. Extend deadlines to complete
the application, especially if requiring supporting documentation. Make
interpreters available or on-call for non-English speakers. Train hospital
administrative staff to help patients of all educational levels navigate
the forms and procedures. Remove the “medical indigence” barrier for
underinsured patients.
4. Take responsibility for collections. Avoid the use of collection agencies
whenever possible. Treat collection agencies as direct agents representing
the hospital and monitor their activities. Immediately sever any relationship
with any collection agency that has engaged in questionable practices.
5. Apply financial aid retroactively when needed. Forgive debt for anyone
who can demonstrate income eligibility or overwhelming financial distress
regardless of timing of application. Refund in full any payments made in
excess of eligible discounts.
6. Show Tacoma the true picture of our charity care needs. Increase
transparency in debt collection and charity care. Release information on
the disposition of accounts throughout the revenue cycle, demographic
characteristics of charity care patients and patients with overdue accounts,
the number of applicants for assistance, the number of patients approved
and receiving assistance, and the actual number and amount of overdue
accounts (as opposed to accounting provisions for “bad debt.”)
Six years later, Franciscan has me in collections for over $32,000 that I have no hope of
ever being able to pay off. As a single mom, I struggle to afford the basic necessities for my
daughter and me.
Holly Whaley
18
Merciless Charity: Franciscan Health System leaves patients in crippling debt
SEIU Healthcare 1199NW • September 2014
19
Methodology
Data for this report came from three sources: court records, neighborhood
canvassing, and employee surveys.
In July 2012, researchers searched electronic court records to identify collection
agencies that had Pierce County hospitals or hospital systems as a client. The
researchers used PACER for federal bankruptcy records, Pierce County LINX
for superior court records, and JIS-LINK for district court records. Once they
identified collection agencies, they conducted name searches for those collection
agencies on JIS-LINK for district court cases beginning in August 2012. Since
electronic docket records for district court did not include information regarding
business clients, researchers used the electronic records to request paper case
files from the district court to identify cases where a local hospital was the client.
Between August 2012 and April 2013, this process retrieved 281 hospital debt
cases deemed worthy of further review based on the amount in controversy and the
circumstances of the case. From this list, staff made 67 house visits between April
2013 and August 2013, completing 23 interviews. Twelve cases warranted followup interviews and the resulting interview data contributed to this report.
Between April 2014 and July 2014, Washington CAN! canvassed the
neighborhood surrounding FHS-St. Joseph Medical Center in Tacoma. Canvassers
knocked on 5000 doors and made 1507 contacts resulting in 550 completed
surveys. Canvassers identified 206 patients with medical debt, who were
interviewed at length. Of these, 64 cases were selected for follow-up interviews
and the resulting interview data contributed to this report.
Between March 11 and March 14, 2014, workers at St. Joseph Medical Center
completed surveys regarding their experience with medical debt and their
awareness of charity care. 64 hospital workers indicated that they or a family
member had medical debt. Of these, SEIU Healthcare 1199NW staff interviewed
22 workers. The resulting interview data contributed to this report.
20
Merciless Charity: Franciscan Health System leaves patients in crippling debt

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