Two Georgia not-for-profit hospitals raked in so much money last year that one of them is voluntarily returning $1.8 million to taxpayers and the other saw its public funds severely cut.
The hospital returning the money is 418-bed Phoebe Putney Memorial Hospital in Albany, while 234-bed Floyd Medical Center in Rome now has to contend with almost a 93% reduction in indigent-care payments from the county.
In the case of Phoebe Putney, the hospital's largess came after it posted a $43 million profit last year on gross revenues of $317 million. In 1996, the hospital had a net income of almost $24 million on gross revenues of $283 million.
Flush with money, the hospital took the unusual step of refunding to Dougherty County the $1.8 million the facility had been paid for indigent care under a contract with the county.
"We said, `What's the right thing to do?' " recalled Ed Ollie, senior vice president and chief financial officer of Phoebe Putney Health Systems, the parent company that oversees the hospital and other healthcare services, including a for-profit arm. The company leases the hospital from the local hospital authority.
The return of taxpayer money by community hospitals could become more common "as hospitals begin to look for creative ways to demonstrate community benefit," said Richard Wade, senior vice president for communications at the American Hospital Association.
But not all Georgia hospitals are so profitable.
Of 165 hospitals in the state, 51 are losing money, said Holly Snow, a spokeswoman for GHA: An Association of Hospitals and Health Systems. Four of those 51 hospitals are for-profit. Snow said counties in Georgia aren't obligated to pay for indigent care.
Phoebe Putney had a good year because more people-both inpatients and outpatients- used the hospital, and the facility was able to hold the line on expenses. In 1997 inpatient visits increased about 2% and outpatient visits by more than 8%, according to the hospital.
"Somehow, we have to try to share that with the community," Ollie said.
Besides returning the money, the hospital cut its bed charge $40 per day, he said.
Ollie said this is the first time he recalls that money was returned to the county.
Gil Barrett, chairman of the Dougherty County Commission in southwest Georgia, said commissioners want the refund kept in a separate fund to pay for future health services.
Future refunds will be made to the county by the hospital as long as those refunds don't drive the hospital's net income below budgeted levels.
It's a plan that Barrett likes.
"If they are making a profit, I don't think we should have to continue to participate in indigent care," he said.
According to Phoebe Putney, the hospital last year provided $13.7 million in indigent care, excluding bad debt. The county's $1.8 million share was about 13% of that. Bad debt added another $5.8 million, a hospital spokeswoman said.
In Rome, which is in the northwest part of the state, county commissioners dealt a blow to Floyd County Medical Center.
Because the hospital enjoyed nearly $5 million in profits last year, Floyd County commissioners budgeted only $100,000 for indigent care this year, "a token amount," said Tom Tully, assistant to the county manager.
In fact, the county suspended its indigent-care payments midway through last year when it had budgeted to pay the hospital $1.3 million.
"The commissioners didn't think it was wise for us to dip into our fund balance to increase theirs," Tully said of the hospital.
Tully said the county's decision to reduce payments to the hospital doesn't reflect a less caring attitude about the poor. He pointed out that the county funds a local indigent-care clinic, which will share in a $600,000 budget allocation. The county also pays $120,000 annually to Floyd Medical Center for ambulance service, he said.
Kurt Stuenkel, president and chief executive officer of the hospital, called the county's decision "unfortunate." The hospital is leased from the local hospital authority by a private not-for-profit group.
Stuenkel said the hospital's net income was based on total net revenues of $131 million. The hospital had a good year because it controlled expenses and tried to be more efficient.
On charity care alone, Stuenkel said the hospital provided $6.5 million worth of free care last year to Floyd County residents. Extend that to the hospital's five-county service area, and the total grows to $24 million, including charity care and bad debt, he said.
Other neighboring counties don't contribute indigent-care funds to the hospital, Stuenkel said.
"We don't know (in the) long term what the outcome of all this will be," he said.
Stuenkel said Floyd Medical Center has a margin of less than 5%.
"The Phoebe action, as I understand it, is laudable," Stuenkel said. "Were we in that kind of position, I wouldn't be asking for the support of the county."