Hospitals give away millions in charity care

The four hospitals that do business in Northern Colorado delivered a combined $216.1 million in charity care in 2012, about $20 million more than in the previous year.

University of Colorado Health’s Northern Region, formerly Poudre Valley Health System, provided $118 million in charity care in 2012, while Banner Health’s two hospitals did $98.1 million combined.

UCHealth and Banner are both nonprofit health care organizations. Nonprofit hospitals pay no taxes, giving them an edge over for-profit rivals. In return, they are expected to offer a community benefit, including free and discounted care for low-income patients.

But as government budgets continue to tighten, federal officials increasingly have questioned hospital tax exemptions based on charity care levels.

There is no minimum dollar amount of charity care that hospitals must provide, and “community benefit activities” are vaguely defined. Still, the IRS in 2009 began to require hospitals to prove that they do, indeed, provide charity care, via a “Schedule H” with their annual Form 990 tax disclosures.

A 2011 study of 20 Form 990s from large health systems by ModernHealthcare.com showed that on average, each hospital company devoted about 2.5 percent of its total expenses to charity care.

In the same year, Sen. Chuck Grassley of Iowa proposed requiring nonprofit hospitals to devote 5 percent of their total expenses to charity care, though he ultimately backed away from that proposal.

A look at the charity care provided by Northern Colorado hospitals shows that the institutions give away a great deal more in charity care than the hospitals analyzed by ModernHealthcare, at least as a percentage of overall expenses.

Banner-owned North Colorado Medical Center in Greeley provided the most charity care in the region, about $76.6 million, or 22 percent of the hospital’s expenses in 2012, about the same as the previous year.

With 381 beds, NCMC is the largest hospital in Larimer and Weld counties, and is located closest to the greatest concentrations of poor and underserved populations than the other hospitals.

The area’s demographics are the biggest reason for the large amount of charity care, according to Sara Quale, a spokeswoman for Banner Health.

The percentages of uninsured in Greeley and Loveland, the two cities where Banner’s hospitals are located, are some of the highest in the state, at 17.5 percent and 19 percent, respectively as of 2011.

Only Longmont and Aurora have higher rates of uninsured, according to the Colorado Health Institute. The rate is considerably lower in Fort Collins, at about 9.7 percent in 2011.

Banner’s McKee Medical Center in Loveland did about $21.5 million worth of charity care in 2012, equal to 17 percent of its annual expenses.

The majority of the charity care at Banner’s hospitals is emergency care and inpatient services, according to Paul Matthews, a company spokesman. The same can be said for UCHealth Northern, according to Grace Taylor, senior director of physician relations and outreach.

UCHealth Northern’s hospitals recorded the biggest year-to-year increases in charity care, a figure that jumped by a combined $21 million.

Poudre Valley Hospital in Fort Collins provided $69 million in charity care last year, about 18 percent of its 2012 expenses, while Medical Center of the Rockies in Loveland did about $49 million, about 19.2 percent of its expenses.

PVH is the second-largest hospital with 241 beds and is the only hospital in Fort Collins, at least for now. Banner is planning on building a 192-bed hospital in southeast Fort Collins beginning in late 2013 or early 2014.

In both systems, the only patients who receive charity care are those who are not covered by either private insurance or Medicaid, the government health care safety net that in Colorado covers women, children and the elderly. An expansion of Medicaid will mean more residents will qualify for coverage, including for the first time men.

Mitzi Moran, CEO of Sunrise Community Health, whose clinics offer health care regardless of a patient’s ability to pay, lauded the hospitals for their role in caring for those least able to afford it.

“I don’t want to sound dramatic, but this can be a life-or-death issue in some situations,” Moran said. “If patients can’t access the appropriate care at the appropriate time because of a lack of money, that could potentially result in the worst possible outcome.”

Sunrise has clinics in both the Greeley-Evans area and in Loveland, and its patients receive care at both Loveland hospitals and NCMC, Moran said.

Sunrise tries to handle as many outpatient cases as possible, Moran said, but when an emergency situation arises or a patient needs surgery, the clinics must turn to local hospitals.

“Affordable care is needed by so many, and we count on our hospital partners,” she said.

With the expansion of Medicaid and increased access to health care provided under the federal Affordable Care Act, it’s expected that charity care will fall off in coming years.

Gov. John Hickenlooper has said that up to 160,000 Coloradans could be covered under the Medicaid expansion, which begins next year.

New laws have already helped reduce the amount of charity care delivered by Colorado hospitals. Statewide charity care levels have dropped since 2009, when the Colorado Health Care Affordability Act was passed.

The act included a Hospital Provider Fee, which has helped generate additional federal Medicaid matching funds to expand health care access. In 2009, Colorado hospitals performed $667.7 million in charity care services, compared with 2011’s $591.3 million.

Molly Armbrister covers real estate, banking and health care for the Northern Colorado Business Report. She can be reached at 970-232-3139, marmbrister@ncbr.com or twitter.com/MArmbristerNCBR
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