As part of the deal, Dignity has committed to keeping charity care at the 31 hospitals it operates in California at current levels for six years following the deal's close, going one year beyond what is generally required by California law.
Dignity's spokesman wrote in an email that the system has a long-standing commitment to serving everyone in its communities regardless of their ability to pay.
“This alignment will strengthen our ability to care for all patients, including those most in need, and our new combined health system will remain deeply committed to meeting the health and social needs of all of our communities and maintaining charity care and community health programs that help care for the most vulnerable patients,” he said. “Our charity-care commitments in our application to the California attorney general regarding our California hospitals is one example of that commitment.”
In their 2017 financial reports, CHI and Dignity reported providing $252 million and $99 million in charity care, respectively. CHI's charity care represented 1.6% of the organization's total expenses that year, while Dignity's represented 0.76% of its total expenses.
To determine how much charity care its California hospitals will provide, Dignity compiled an average from the prior three years. In some cases, that means charity care will jump dramatically from fiscal 2017. For example, California Hospital Medical Center in Los Angeles provided $6.4 million in charity care in fiscal 2017, and its minimum required amount following the transaction will be $12.2 million. Northridge Hospital Medical Center provided $2.5 million in fiscal 2017 and its minimum required amount will be $5.2 million.
In other instances, charity care will decline under the requirement. For example, St. Joseph's Medical Center of Stockton provided about $3 million in fiscal 2017, but it will only have to provide $2.6 million after the deal closes.
It could also be a move to appease California's attorney general, who has shown a fierce commitment to ensuring not-for-profit health systems live up to their tax-exempt status. At deadline, Becerra's office was expected to release a health impact statement on the proposed deal Aug. 10, with public hearings to follow.
Most recently, Becerra denied requests from three hospitals to cut their charity care by more than half.
Those hospitals, with the help of the California Hospital Association, had argued that after the ACA's Medicaid expansion, there were no longer enough patients who met their financial eligibility criteria.
A number of consumer advocacy groups, including the National Health Law Program and the ACLU of Southern California, are asking California's attorney general's office to require Dignity hospitals to continue providing charity care, community benefits and essential healthcare services at the same levels for a minimum of 10 years. The groups also want the attorney general to use the average of the previous five years of charity care to calculate the amounts those hospitals will need to provide, rather than three.
Dignity's spokesman said the charity-care commitments apply only to its California hospitals, and declined to say what levels of charity care its eight hospitals outside of California will provide following the merger. A CHI spokesman wrote in an email that although Dignity's commitment is unique to California's approval process, CHI expects to maintain its level of charity care.
Susan Sherry, deputy director of the consumer advocacy group Community Catalyst, said California's charity-care requirement is unique, extensive and “incredibly good for people in California.” “I think it's really protecting things that the public really thinks are important,” she said, “and it's clearly consistent with the mission. It's kind of the concrete manifestation of a real commitment to the mission.”