Charity care costs Valley hospitals millions

By Don Shilling

When Sharon Kovach learned St. Joseph Health Center was going to write off the huge bill generated by her husband’s six-day hospital stay, she breathed a sigh of relief and cried.

Accountants for Humility of Mary Health Partners just sighed and added to the system’s ever-growing amount of charity care.

Charity care charges totaled $70.4 million last year for the parent organization of St. Joseph in Warren and St. Elizabeth Health Center in Youngstown and Boardman. Actual hospital expenses on those cases amounted to $19.9 million.

Those amounts are almost double the numbers from five years ago, with much of the increase coming recently as the recession took hold. In 2007, charity care charges amounted to $55.2 million, with actual expenses totaling $15.7 million.

“We are the largest safety net for Mahoning and Trumbull counties,” said Don Kline, HMHP chief financial officer.

The area’s other hospital system, Forum Health, last year provided charity care that was charged at $16.6 million, which included $4.5 million in actual hospital expenses.

Sharon Kovach was shocked to learn last week that her husband’s medical insurance had been canceled without her knowledge. The next day, she met with St. Joseph officials, who told her that she and her husband qualified for free care.

HMHP’s guidelines provide free care for anyone with income up to twice the federal poverty guidelines, or reduced prices for those with income up to four times the federal poverty guidelines. That means a family of four can receive free care with an income up to $40,000 and reduced prices with an income up to $80,000.

Non-profit hospitals are required by Medicare regulations to provide care to everyone, regardless of ability to pay. Those hospitals set their own guidelines, however.

Kline said some hospitals set their standards as low as poverty level.

Paul Olivier, HMHP senior vice president of business development, said that organization sets a higher standard because of its mission set by the Sisters of the Humility of Mary.

“We think we have to be there for everyone,” he said.

Higher amounts of charity care, however, make it difficult for the system have positive earnings, Kline said.

“It’s extremely challenging,” he said.

In 2008, the system met its goal of having a 3 percent profit margin on its operations, he said. That money, which amounted to $18 million, is critical because it provides investments for new technology and equipment, he said.

When its investment losses are considered, however, the hospital lost $23 million overall last year.

As charity care has risen, HMHP does what it can to increase its revenues through negotiations with insurance companies, he said.

Most of the increase in charity care, however, has to be made up for in cost controls, he said. In addition to cutting expenses, the system looks to use technology to become more efficient, he said. Better medical procedures can reduce costs and improve patient care, he said.

Olivier said hospital executives hope the level of charity care will subside eventually when the economy improves, but they are prepared to do whatever is necessary to meet people’s needs.

“We’re here for the community. Whether someone is insured or not insured, we’ll be here,” he said.

shilling@vindy.com