05/04/12 — Charity care big expense at Wayne Memorial Hospital

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Charity care big expense at Wayne Memorial Hospital

By Phyllis Moore
Published in News on May 4, 2012 1:46 PM

More than 11 percent of the Wayne Memorial Hospital budget goes for uncompensated care -- a combination of charity and services rendered to patients who don't pay.

According to the Community Benefit Report, released by N.C. Hospital Association, the estimated cost of treating charity care patients at Wayne Memorial was $7.5 million for fiscal year 2010 and spiked to $11.2 million for 2011.

"The increase in charity care -- we like to call it medical assistance because no one likes to be a 'charity case' -- is partly due to better classification and also partly (due) to the increase in unemployment in Wayne County," said Rebecca Craig, vice president of finance and chief financial officer for the hospital.

There will probably always be a need for that option, especially in cases where the patient is homeless or living on the streets, rendering them unlikely to fill out an application for financial assistance, she said.

The bad debt category, though, is another matter.

"If you can afford to pay and you just choose not to pay, then we call that a 'bad debt,'" she explained. "We try very hard to get people into the right classification."

An estimated 6.9 percent, or $14.7 million of the hospital's annual budget, is written off to charity, she said. Bad debts, an estimated $9.7 million, account for another 4.6 percent.

"Some of that (bad debt) potentially is charity," she said. "As far as we're concerned, they'll be just ignoring (the bills) or putting some things ahead of it.

"If you add the 6.9 percent charity, then our total is 11.5 percent for uncompensated care."

That is much higher than what has recently been reported about hospitals around the state, which indicated that most spend less than 3 percent of their budget on charity care, while about one-third spend less than 2 percent forgiving patient debt.

Wayne Memorial's policy for charity care is "among the most generous in the state," she said.

Part of the reason the hospital is compelled to write off a percentage of services dates back to action taken more than 25 years ago by local government.

"We used to be a county-owned hospital," Mrs. Craig said. "The county actually gave the hospital not-for-profit (status) back in 1985. There was a provision that the hospital would always have to provide quality care. That's part of our mission.

"The IRS allows us not to pay taxes. We do not pay real estate taxes. We have 100 acres here. We treat everybody. (In exchange) the city and county do not make us pay property taxes. It's part of the social contract."

Despite that, among the biggest concerns, and causes for frustration, for patients are usually related to the staggering cost of health care.

Officials at Wayne Memorial realize this, Mrs. Craig said, which is why its financial aid policies are posted on its website, www.waynehealth.org.

"We have financial counselors that walk through a series of questions with patients to determine if we can get them any help on their bills (Medicaid, crime victims funds, workers compensation, veterans benefits)," Mrs. Craig said. "If none of these are appropriate, there is Wayne Medical Assistance Program for those that qualify.

"There are some people who choose, despite their income, not to purchase health insurance. They may not quality for WMAP. There are payment options for them as well. We give uninsured (with assets) the same discount for payment within 30 days, that we give to managed care companies, which receive a discount, partly because they pay within 30 days."

Applications for financial aid can be downloaded or will be mailed upon request. Certain criteria apply, including permission to run a credit check.

"If a patient is determined to meet charity care criteria, all bills are stopped," Mrs. Craig pointed out. "Using the 'soft credit check' has permitted the hospital to classify balances due to charity -- no ability to pay -- instead of bad debt (appears to be able to pay but is unwilling)."

The new emergency department is also incorporating discussions about payments, she said.

"At checkout, the patient/family will have a detailed estimate of the expected bill and, because the hospital is linked electronically to their insurance company, they will know what their expected balance due is," she said. "Patients will be able to discuss payment options with a financial counselor, who is knowledgeable about all the options available."

Almost all outstanding bills, nearly 99.5 percent, are handled by a local collection agency, which Mrs. Craig said does not report them to the national credit reporting companies.

"WMH attempts to work with patients to find a plan that works, including full and partial adjustment of accounts, recognizing that health care is not something you walk in to purchase, like a new car," she said. "Reporting to credit agencies is not an issue for patients who use WMH. It would be great if we could simply accept what insurance companies pay, and write off all co-payments and deductibles. Unfortunately, employers and insurance companies have been increasing the patients' portion of each bill -- sometimes to $5,000 before insurance will pay the first dollar -- and the viability of the hospital would be in jeopardy if none of these balances were collected."