Hospital charity care demands increase

Northeast Mississippi’s two biggest hospital systems handed out more charity care in 2009 than they did a year earlier.
Despite the increase in people who couldn’t pay, both Tupelo-based North Mississippi Health Services and Memphis-based Baptist Memorial Health Care – which are nonprofit institutions – bucked the national trend, finishing the fiscal years with more revenues than expenses.
“Only 40 percent of hospitals are in the black,” said Joe Reppert, chief financial officer for North Mississippi Health Services, citing reports from Moody’s Investors Service.
NMHS saw its charity care jump from $56.6 million for fiscal year 2008 to $70.8 million for fiscal year 2009, which ended in September.
The charity care numbers cover the system’s six North Mississippi Medical Center hospitals and affiliated North Mississippi Medical Clinics.
“The jump primarily correlates to unemployment,” Reppert said.
Charity care represents about 5 percent of the NMMC system’s $1.4 billion in gross revenues – the full sticker price for the services the system provided.
The net revenues – the money that the system receives – is much lower when reimbursement from Medicare and Medicaid, private insurance discounts and bad debt are taken into account.
The hospital system writes off an average of $400,000 a day in uncompensated care – charity care and bad debt combined, Reppert said.
“Those rates are double the national average,” Reppert said.
As a group, the Baptist Memorial Hospitals in New Albany, Oxford and Booneville were just under 17 percent for uncompensated care, which included charity care, bad debt and expenses not covered by Medicaid reimbursement.
“We’ve seen a small increase overall,” said David Barham, vice president for financial operations for the 15-hospital Baptist Memorial system, noting that all three of those communities were hit by significant layoffs in the past year.
Those three hospitals had gross charges of $510 million in 2009, placing their uncompensated care around $86 million.
Officials for both hospital systems said reining in expenses was key to keeping their hospitals in healthy financial shape.
Many hospitals around the state are not so lucky.
“It’s been a tough year,” said Eddie Foster, chief operating officer for the Mississippi Hospital Association.
The state hospital association just finished an economic crisis survey, querying Mississippi hospitals about the impact of the economy on their operations over the past three months.
Almost a third reported a 5-7 percent increase in requests for charity care over what they had projected.
“The majority had some impact,” Foster said.
A quarter of hospitals reported the charity care and bad debt had a significant impact on the day-to-day operating expenses of the hospital.
Controlling expenses is the key tool that area hospitals use to combat the decrease in revenue.
“We have to be good stewards of our resources,” Barham said.
For 2009, North Mississippi Health Services was able to generate a 3 percent margin of revenues over expenses, which covered the annual costs of repairs, refurbishing and replacing equipment and buildings, Reppert said.
But the system is anticipating a greater demand for charity care in the 2010 fiscal year.
“We’re budgeted for an increase,” Reppert said. “We’ve planned for other operational improvements to compensate for that.”

How charity care works
All hospitals – regardless of who owns them – generally provide some level of uncompensated care, Foster said.
Hospitals with emergency rooms are required by federal law to treat and stabilize patients before transferring them to another hospital.
Nonprofit hospitals, like Baptist Memorial and NMMC hospitals, generally have a broader mandate to provide charity care than for-profit hospitals, which have to answer to shareholders.
Nonprofit hospitals have to show community benefit to the Internal Revenue Service in order to retain their tax-exempt status.
Some government-owned hospitals like University of Mississippi Medical Center in Jackson receive allocations for operations.
However, government-owned hospitals in Northeast Mississippi – Oktibbeha County Hospital in Starkville and Magnolia Regional Medical Center in Corinth – are expected to cover operating expenses and repayment of construction bonds out of their operating revenues.
Magnolia Regional was the only major referral hospital in Northeast Mississippi that declined to provide charity care information to the Daily Journal.
Most hospitals use percentages above the federal poverty guidelines to set charity care levels. The federal poverty guidelines take into account both family size and income.
“We do want to help people who can’t afford their health care,” said Melissa Chenney, director of social services director at Oktibbeha County Hospital, which provided $2 million in charity care over the past fiscal year.
Every self-pay patient at Baptist Memorial Hospitals receives a charity care application. The hospital uses federal poverty guidelines to set a sliding scale for charity care, Barham said.
All self-pay patients receive a 36 percent discount, which mirrors the discounts private insurers negotiate with the hospital.
“We’re not cost-shifting back to self-pay,” Barham said.
The mission of North Mississippi Health Services is to provide the best quality care to all patients regardless of their ability to pay.
“It’s the commitment of the board,” Reppert said. “That drives everything.”
Through the Health Care Foundation of North Mississippi, NMMC hospitals have an extra layer of aid they offer through patient assistance funds.
Those funds don’t pay hospital bills, but help patients with the things they need to go home from the hospital or stay out of the hospital.
Different patient assistance funds have different guidelines, but they pay for such items as nutritional supplements for people in cancer treatment, transportation and diabetic testing supplies.
The foundation had a 21 percent increase in giving to patient assistance funds, bringing the total for 2009 to $490,000. The vast majority of those funds come from employees and medical staff members, said Dean Hancock, executive director of the Health Care Foundation.
“They’re the ones who see where the needs are,” Hancock said. “They’ve been extremely generous with their support.”

Contact Michaela Gibson Morris at (662) 678-1599 or michaela.morris@djournal.com.

Michael Gibson Morris/NEMS Daily Journal