With Tenet Healthcare Corp.'s unraveling as a heaven-sent backdrop, the Catholic Health Association is scheduled to release a report this week that argues Roman Catholic hospitals play such a special and distinct role in America's healthcare system that they deserve special and distinct financial concessions from the federal government.
The CHA was expected to release the report, which Modern Healthcare obtained in advance last week, on Nov. 18 in Washington.
The CHA's move threatens to fracture the already shaken hospital lobby at a time when hospitals are battling with other sectors of the healthcare industry for Medicare and Medicaid payment relief and when one of the lobby's largest for-profit systems, Tenet, stands accused of improperly gaming the Medicare payment system. While Tenet's problems may be a blow to the hospital lobby, its current controversy may bolster the argument that Catholic hospitals are different.
Not just a Catholic issue
Yet using its religious affiliation for special treatment might not be the best move for the CHA, said Larry Margolis, executive vice president of Storandt Pann Margolis & Partners, a healthcare marketing communications firm in Chicago. "This certainly isn't just a Catholic issue," Margolis said. "To think they should be reimbursed because of a religious affiliation is not a smart move. It is a stronger effort if they are all working together."
In fact, public hospitals argue that they should not be overlooked when it comes to who is treating the poor and uninsured. According to the National Association of Public Hospitals and Health Systems, the nation's public hospitals account for 2% of hospital beds but provide about 20% of uncompensated care, said Larry Gage, president of the NAPH. Lawmakers should not just consider the private, not-for-profit hospitals, including Catholic systems, he said.
"We are the core of the safety net," Gage said. "The large urban hospitals are the linchpins of the safety net. They are the largest providers of care."
For Chip Kahn, president of the Federation of American Hospitals, which represents for-profit hospitals that make up about 15% of total hospitals in the U.S., the solution lies in reducing the number of uninsured, which is approximately 41 million. "As the uninsured numbers go up, it is a problem that we need public policy to solve," Kahn said. "It affects all hospitals. There is a lot of sensitivity to the uninsured in Congress and the Bush administration."
The efforts by the CHA will help public-policy efforts for all hospitals, said Richard Wade, a spokesman for the American Hospital Association.
"They are making a case that will resonate," Wade said. "The combined strategies of all hospital groups are to tell their stories and make sure policymakers hear it from all sides. Every voice helps because this will be a tough battle."
At a news conference scheduled for this week on Capitol Hill, the Rev. Michael Place, the CHA's president and chief executive officer, was expected to give a sales pitch to legislators and say that private not-for-profit hospitals are providing care for the poor and uninsured at the risk of their own financial stability. In an interview with Modern Healthcare, Place said he planned to call for stronger public-policy efforts to identify new funding for all not-for-profit hospitals-both public and private-that provide safety-net care.
Yet the CHA did not ask other hospital groups, such as for-profit facilities or nonreligious not-for-profits, to be part of its report and lobbying effort. In the report, titled A Commitment to Caring: The Role of Catholic Hospitals in the Health Care Safety Net, the CHA, in fact, makes the point that Catholic hospitals are different.
"Many Catholic hospitals not only play a significant role in their local safety net, but also are maintaining their commitment to the poor and uninsured at the risk of their own financial stability," the 89-page report states.
Commitment to the poor
"These findings reaffirm the mission of Catholic hospitals to promote wellness for all persons and communities, with special attention to their neighbors who are poor, uninsured and vulnerable," Place said.
The report is based on a study by Georgetown University's Institute for Health Care Research and Policy, which surveyed seven Catholic hospitals, including rural and urban centers. It did not look at trends at any non-Catholic hospitals for comparison purposes. Georgetown researchers studied safety-net trends at 520-bed Christus Santa Rosa Health Care, San Antonio; 39-bed Our Lady of the Way Hospital, Martin, Ky.; 333-bed Providence Hospital, Washington; 414-bed St. Francis Medical Center, Lynwood, Calif.; 1,164-bed St. John Health System, Detroit; 328-bed St. Mary Hospital, Hoboken, N.J.; and 449-bed St. Vincent's Catholic Medical Center in New York.
"I take strength from the fact the president's budget last year had money allocated for the uninsured," Place said. "This study will give us a basis for conversation."
The study concluded that Catholic providers' commitment to the poor has resulted in the systems taking great financial hits. Yet some of the largest Catholic hospital systems have reported significant profits (See chart). Private not-for-profit hospitals, including Catholic hospitals, account for nearly 75% of the hospital market and provide about 56% of total uncompensated care, according to the study. The not-for-profit hospitals deliver more uncompensated care, medical education and research, and healthcare services than their for-profit counterparts, the study argues.
The most effective way to strengthen the safety net is to reduce the number of people without health insurance, Place said.
Expanding Medicaid and the State Children's Health Insurance Program is another step that can expand the safety net, the CHA recommends in the report.
Place said he wants lawmakers to strengthen funding sources, including increasing the federal matching assistance percentage for Medicaid, increasing Medicaid and Medicare disproportionate-share payments and appropriating increased funding for the Community Access Program. The program provides grants to assist safety-net providers in developing infrastructure, including improving information and telecommunications systems.
The fiscal 2003 federal budget called for eliminating funding for the program, which received $105 million in 2002. Lawmakers permanently authorized the program this fall, but have not agreed on an appropriation for 2003. In its recommendation the CHA called for Congress to allocate $150 million in funding for fiscal 2003.
The CHA supports a three-year 1.5% increase in federal matching payments to all state Medicaid programs and an additional 1.5% for states whose unemployment rates exceed the national average. The CHA also proposes eliminating 2003 cuts to the Medicaid disproportionate-share hospital program. Safety-net hospitals in 45 states face cuts in funding as a result of Medicaid policy changes. In fiscal 2003, the program will see a $1.3 billion, or 13%, cut in funding.
"That will dramatically affect safety-net hospitals-both public and private," Gage said. "Hopefully we can look beyond the short-term crisis and look at long-term reforms."
Recommendations also include a review of all safety-net programs and policies to assess their effectiveness and a federal initiative that would support core safety-net providers.
The proposals and recommendations will "fortify the fiscal strength of all safety-net providers," Place said. Although the study illustrates the challenges for Catholic providers, Place said Congress must look at the big picture and draft policies that will help public not-for-profit hospitals as well. He said the study was not meant to aid only Catholic systems.
"We are using Catholic providers as an example," he said. "Everybody who provides for the safety net should get adequate reimbursement."
The study's lead author, Alexandra Shields, also contributed to the Institute of Medicine's 2000 report that focused on the role of public hospitals and community health centers that provide care for the uninsured. "Many Catholic hospitals do indeed fit the IOM definition of safety-net hospitals because of their explicit mission to care for all," Shields said.
Place said he intends to use the $80,000 study, which took several months to complete, to lobby congressional leaders and educate local legislators. The study should provide "credibility when we get into a public discussion," he said.
"We are all on one message," he said. "There must be a just and adequate reimbursement for healthcare in this country. This isn't meant to be in competition with anyone."
Place said it was "premature to characterize" what impact this month's elections and the new face of Congress will have on reforming safety-net reimbursement.
But once lawmakers consider the prospects of war, the economy and possible tax cuts, Place said the safety-net issue would see consideration from lawmakers.
"Those three will intersect to determine what money will be left for healthcare," Place said. "We will be at the table."
The release of the study comes just weeks after Tenet's business strategy came under scrutiny because a large proportion of its Medicare revenue was generated by outlier payments-the extra money Medicare pays on cases in which the cost of treatment far exceeds the DRG reimbursement (See story, p. 10).
Earlier this month, Tenet revealed HHS' inspector general's office is conducting a nationwide audit of the company's outlier payments and also announced a major management shake-up (Nov. 11, p. 6).
Waiting for CHA lobbying results will be hospitals such as Our Lady of the Way, operated by Catholic Health Initiatives. The eastern Kentucky hospital provides more than $1.7 million in uncompensated care each year, as more than 16% of the local residents are uninsured. The hospital provides from 25% to 30% of the area's uncompensated care and reported a net loss of $563,000 in fiscal 2002 on revenue of $14.5 million.
Trying to survive
Hospitals in rural areas are depending on better reimbursement to survive, said Patricia Cahill, CEO of Denver-based Catholic Health Initiatives, which operates 64 hospitals and 38 long-term-care assisted-living facilities in 19 states.
At the parent system, charity care accounted for $192 million in 2002, Cahill said.
"The system has to step up to see if it can help with the process and protect the smaller places' ability to stay in the community and serve," she said.
At Ascension Health, which was represented in the safety-net study with Providence Hospital and St. John Health System, the goal is to work for more federal funding for the safety net, said Susan Nestor Levy, senior vice president of advocacy and external relations.
She said the private, not-for-profit hospitals have a tough time receiving funding. "The safety net is mostly invisible in the eyes of federal lawmakers," Levy said. "They tend to think of public hospitals as comprising the safety net. Catholic hospitals are so integral to the safety net."
St. Louis-based Ascension, which has 57 hospitals, provided $440 million in charity care and community-benefit spending. The system is spending $6.8 million on five new clinics for the poor. Ascension reported a profit of $111.1 million on net revenue of $7.7 billion in the fiscal year ended June 30.
In Detroit, the system operates three hospitals, which provided more than $75 million in uncompensated care in 2000. About 25% of Detroit residents are uninsured, Levy said.
"This is a tough time to look for funding in a federal budget, but it should be a priority," Levy said.
At Providence, the demand for safety-net services has increased after the closing of 250-bed D.C. General Hospital in 2001. More than 70% of discharges at Providence were either Medicaid or Medicare patients. The hospital provides more than $8 million in uncompensated care annually.
"We are going to be there tomorrow and the next day treating the uninsured," Levy said. "We just hope there will be a solution to the uninsured so everybody has a stable and consistent source of funding."