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Anatomy of a Crusade

by Emily Friedman

First published in Hospitals & Health Networks OnLine, June 1, 2004

The controversy over hospital charges for uninsured patients offers valuable lessons about public perception, politics, fairness, accounting--and the strangest of bedfellows.

It is a rare event--an unheard-of event, actually--when the rather arcane subject of hospital billing and accounting practices becomes the center of a raging national debate. It isn't a new topic; the notorious $10 aspirin has become standard fodder for everyone from comedians to consumer advocates.

But this is different. A variety of forces have coalesced into what appears to be a consumer revolt over hospitals' practice of charging low-income uninsured patients retail prices, which are almost always far higher than what insurers or governments pay. Furthermore, some hospitals have been found to be engaging in highly aggressive and even thuggish behavior to extract money from patients without coverage, sometimes with devastating results.

A Sudden Scandal

The whole thing exploded into the news last year, when Yale - New Haven Hospital was accused by Connecticut Attorney General Richard Blumenthal of misusing millions of dollars in funds that were donated to the hospital for charity care purposes. Shortly thereafter, the Wall Street Journal ran a long piece about a severely ill 77-year-old African-American retiree who was still trying to pay off his long-dead wife's Yale - New Haven Hospital bills from 20 years before. A massive controversy ensued, and by October the Connecticut legislature had passed tough legislation limiting hospital collection practices, interest rates and charges.

Meanwhile, things were heating up in a number of other locales, including California, Colorado, Florida and Illinois. At the center of the heat was a self-described consumer advocate named K.B. Forbes, who runs an East Los Angeles Latino organization. He accused the California-based hospital chain Tenet of profiteering on the uninsured and won major concessions from them (given that Tenet is mired in a swamp of scandals including Medicare fraud, bribing physicians, unnecessary surgery and patient deaths, the firm probably didn't feel it needed another one). Forbes then went after Catholic Healthcare West, accusing it of profiteering while complimenting Tenet on its new policy.

Forbes has gone on to accuse hospitals in Colorado and most recently in Florida of overcharging the uninsured, and he has been effective: A bill requiring hospital discounts of 30 percent is being considered by the Florida legislature. His argument is not only that hospitals are gouging helpless uninsured people, but also that the practice is racist because African-Americans and Latinos are most often the victims.

Forbes is not alone in his crusade. The Yale - New Haven situation continues to be pursued by the Connecticut Center for a New Economy, a nonprofit group that has consistently criticized the hospital's practices. And in Illinois, the Hospital Accountability Project, based in Chicago, has gone after one of that state's largest hospital systems, Advocate Health Care, alleging price gouging and overcharging of the uninsured; the advocacy group has even organized community opposition to a proposed new Advocate hospital in the Chicago suburbs.

A "Consumer" Revolt?

So is this a classic consumer revolt against an egregious practice? It's much more complicated than that.

First, that it is unfair for the poorest and most vulnerable patients to be charged the highest prices goes without saying for anyone with half a heart and even a quarter of a brain. Indeed, when this brushfire turned into a firestorm, the American Hospital Association (AHA) offered the defense that Medicare rules might be violated if hospitals gave discounts to the uninsured. In a highly publicized letter, U.S. Health and Human Services Secretary Tommy Thompson replied that this is not the case, and hospitals can offer discounts to uninsured poor people without fear of getting busted. The AHA Board of Trustees then issued a thoughtful set of guidelines for billing and collection practices involving low-income people who lack coverage.

There have been other positive developments, including proposals from the Illinois Hospital Association and the Hospital Association of New York State to implement discounts and kinder, gentler collection practices for uninsured patients. The Florida Hospital Association was the source of the legislation being considered by that state's legislature. The Illinois Senate has passed, and its House is considering, a bill that requires discounted or free care for the uninsured, along with an end to brutal collection practices and a requirement that patients be informed of the possibility of free charity care. Illinois is a particularly sensitive battleground, because earlier this year, Provena Covenant Medical Center, a Catholic facility in Urbana, was stripped of its nonprofit tax status by the state because of its allegedly unfair treatment of uninsured poor patients.

A Few Complications

As I have been raising the issue of the uninsured for longer than I care to remember, I am not sorry to see some of what has transpired. To charge inflated prices to helpless people and then threaten to take their homes or even to put them in jail for debt--a practice the founders of this country hated and fled from--is unforgivable, especially if funds have been entrusted to you precisely to care for such patients. And to charge such prices when your CEO (or former CEO) is worth hundreds of millions of dollars in cash and stock options raises very basic questions about fairness and humanity.

On the other hand, some hospitals are legitimately between a rock and a hard place. If your facility has the privilege of being located in a wealthy neighborhood and has lots of patients with good insurance, you can float the uninsured, and you should--especially if you are a so-called nonprofit hospital. But if you are located in a depressed urban or rural area, with few or any other hospitals nearby (or if those that are nearby don't like the uninsured poor), a high Medicare and Medicaid patient load, and an increasing percentage of uninsured patients at a time when every payer is cutting back, at some point you hit the wall. Hospitals may be the last refuge for those who have been victimized by our insurance, tax, employment and social policy failures as a society, but they are not miracle workers. They have pulled a lot of bunnies out of a lot of hats, but they at least need a hat.

So that's the first complication: There are hospitals that can easily afford to provide free care, and choose not to, and there are hospitals that cannot afford it easily, and choose to do so, anyway. Yet they all get lumped together and tarred with the same brush.

Then there's the second complication: As Linda Quick, president of the South Florida Hospital and Health Care Association, points out, the difference between hospital costs and hospital charges is arbitrary. Hospital accounting is, at its best, a rather flexible game; the $10 aspirin is a metaphor for a very difficult challenge. These institutions are the most complex of places, and trying to allocate costs, comply with tons of regulations and contracts, account for amorphous expenses (What does nursing really cost? What does the library really cost? What does medical education really cost? What does compliance really cost?), and keep the place afloat, is daunting for even the most sophisticated financial manager. Does that excuse gouging the uninsured? Of course not. Does it make actually computing true costs harder? No, it makes it impossible. And, absent new requirements from the Healthcare Financial Management Association and/or the Financial Accounting Standards Board, hospitals will continue to muddle along with accounting practices that confound accountants and critics alike.

Who Are They, Really?

As for the third complication: Are the folks who are pushing these confrontations really consumer advocates? Well, it depends on what you consume, I guess.

Take Forbes. He is a Chilean-American whose organization is based in East L.A. but who lives in Las Vegas. More interestingly, he used to work for conservative pundit and former presidential candidate Pat Buchanan. I find it fascinating that someone who claims to be an advocate for Latinos was employed by someone who made a cornerstone of his campaign a promise to build a wall across the U.S.-Mexican border to prevent immigration from Mexico. I guess Pat likes Chileans better.

It gets weirder. According to its tax filing for 2002 (which is incomplete because "third party" financing information is supposedly not yet available), Forbes' organization Consejo de Latinos Unidos (CLU) had total revenue in that year of something over $76,000, and Forbes claims he did not earn a nickel from it. One might then ask where the money came from for CLU's lavishly produced television, radio and print ads; Forbes' ubiquitous air travel; the slick Web site; the press releases; and so forth. For an outfit with a five-figure income, these guys spend big --and Forbes has been consistently evasive as to the sources of his funding.

Well, as it turns out, Forbes got $100,000 in startup funding from one J. Patrick Rooney--money Forbes claimed he never spent. Who is Rooney? An insurance executive, former head of Golden Rule Insurance and current chairman of Medical Savings Insurance. Both firms sell health savings accounts (HSAs). Indeed, Rooney proudly describes his role in lobbying Congress to enact legislation to promote medical savings accounts (which they did, with HIPAA). These plans were renamed HSAs and expanded in the recent omnibus Medicare legislation. HSAs allow a person to put pretax dollars in a savings account that can accrue interest tax free and will not be taxed as long as the money is spent for health care purposes. Of course, there's a little catch, and that is that the HSA must be accompanied by a high-deductible ($1,000 and up) health insurance policy. You can use the HSA money to cover the deductible, then the insurance kicks in.

Yes, you're right; this is hardly something for the uninsured poor. A colleague of mine calls it the "Warren Buffet PPO."

So why would Rooney, the "father of medical savings accounts" and a big conservative donor, be funding a Latino activist who is advocating for lower hospital costs for the uninsured? At least three explanations have been offered. The first is that Rooney is also chairman of an organization that wants to bring more Latinos into the Republican Party. As Harry Anderson, vice president of corporate communications for Tenet, said last year, "If what you're trying to do is attract Latinos to Republican candidates, wouldn't the problems of the uninsured be in that community's interest? It becomes a political issue." Good point; more than a third of U.S. Latinos are uninsured, as are nearly half of Latinos with incomes at or below poverty.

Second, it has been suggested that Rooney, who is trying to sell HSAs, would benefit from hospitals being forced to lower their charges because he could then decrease the price of his offerings. Unlike HMOs, HSAs cannot (yet) negotiate with providers for lower rates. But if a state forced providers to lower rates for the uninsured, then HSA insurers could demand the same rates.

Third, because persons with HSAs are, for all intents and purposes, uninsured for their deductibles, if hospital charges for the uninsured are lower, then patients would have to spend a great deal more to fulfill their deductibles before an HSA insurer, such as Rooney's firm, would have to start paying claims.

Gee, does anybody else think that maybe this doesn't have to do with helping the uninsured?

Meanwhile, on the other side of the spectrum, we find that the Connecticut Center for a New Economy and the Hospital Accountability Project, which have been the core instigators of press attention and legislative action in Connecticut and Illinois, are branches of the Service Employees' International Union (SEIU), which is--surprise!--trying to organize employees of the Yale - New Haven Hospital and Advocate Health Care facilities in highly contentious campaigns.

Although the SEIU has a long history of social activism, which could account for the union's advocating for a better deal for the uninsured, one must wonder at the Illinois organization's Web site, which lists the following priorities for "fixing health care in Chicago":

Seems to me to be three apples and an orange, regardless of whether one is in favor of all four or not.

So we can suppose, if not assume, that the right is using the uninsured poor to sell insurance and build up a political base, and the left is using the uninsured poor to increase health care unionization. And in both cases, the vehicle is the hospital.

How lovely.

Maybe someone can explain to me how any of this helps the 44 million uninsured Americans, most of them working or in families of working people, many of them poor, most of them with no insurance alternatives. Does using hospital misbehavior to enhance insurance sales to the wealthy improve things any? Does using the uninsured as a smokescreen for other agendas amount to anything more than exploitation?

Troubling Lessons

The lessons of this crusade are unsettling. Among them are that:

People who want to accomplish something look for a publicly appealing hook on which to hang their efforts. When a great, big, luscious hook appears, no matter its relevance, they are likely to grab it. Hospital excesses in charges and collection practices provided such a hook.

Advocates for many causes have hidden agendas, including some that may run completely counter to the cause they say they are supporting. For example, Mr. Rooney's company, Golden Rule, was notorious throughout the industry for aggressive risk rating and dropping of policyholders who filed serious claims. As of November 2003, United Healthcare owns Golden Rule. Earlier this year, United dropped 18,000 individual HMO subscribers and offered them risk-rated Golden Rule policies instead. So much for helping the uninsured.

The issue is the message, not the messenger. Hospitals under attack have pointed out the problematic motives of Forbes and the unions. But the pot calling the kettle black does not obviate the underlying problem: Socking it to low-income uninsured people is unacceptable. As Connecticut State Senator Patricia Dillon observed, "I don't really care who the messenger is if the facts are right."

Politicians know an issue when they see it. As of this writing, we have legislation passed in Connecticut and under consideration in Illinois and Florida--with more to come. It may not do all that much for the uninsured, but it looks good, and hey, it's an election year.

Don't assume that every issue cuts along ideological lines. I find it hard to believe that there could be stranger bedfellows than K.B. Forbes and the SEIU, but that doesn't mean this crusade isn't fulfilling both of their purposes, no matter how disparate they are. And there are wonderful ironies: While Forbes was running print ads decrying Catholic Healthcare West's heartlessness, the SEIU was praising CHW's fair union practices. Well, maybe bedfellows, but not lovers.

Once a crusade like this gets started, its original reason can get lost in a hurry. As George Santayana said, "Fanaticism is what happens when you redouble your efforts after you have forgotten your cause." The sad thing in this case is that the cause may not ever have been in the equation.

Money can't buy me love. Hospitals can launch public relations campaigns and raise questions about their persecutors and bring up issues such as the growing burden of the uninsured, declining third-party payer financing and increasing fiscal pressures from all sectors. And they--well, some of them--have a valid point. But the public expects hospitals to do good and to behave well and to be nice, and perhaps the thing that is at greatest risk here is public trust of hospitals. No amount of money in the world will buy that back if it is lost.

Quick fixes generally do not make for good policy. The legislation being rushed through in states is not likely the best solution. In Florida, for example, the bill that is being considered requires 30 percent discounts on charges for the uninsured--but only for legal U.S. residents, and only for those who come to the emergency department or are giving birth. That excludes a large proportion of the uninsured patients in the southern part of that state--in addition to sending even more of them into the emergency department, which is not exactly what Florida hospitals need just now. And, needless to say, it is hardly a boon for preventive care.

And by the way, the uninsured are still uninsured. It has become a big issue in the presidential campaign. It has obviously been the hook for these various and sundry adventures in accounting and insurance and organizing. Yet nothing that is being promised or threatened, and none of the money that is being thrown around, and none of these crusades is doing one blessed thing to make health insurance more affordable for people who don't make a lot of money. Linda Quick of the South Florida Hospital Association, in response to Forbes' attacks, suggested that he join her organization in trying to find an answer to skyrocketing costs and declining levels of insurance. I'll go further than that: Why doesn't everybody involved in this "consumer crusade" drop their pretenses and, instead, start really doing something for the people who are suffering and dying?

First published in Hospitals & Health Networks OnLine, June 1, 2004

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