Tampa Bay Times Claim: “Profits Rise, Charity Falls” 5/1/16 Front Page headline regarding Bayfront Medical Center since rescue of hospital from economic danger.
Sunbeam Times Truth Check: False and rated “Under a Rock”. In fact, Bayfront outperforms other Downtown St. Petersburg Hospitals in Free care compared to Profit.
The Sunbeam Times continues its Truth Check evaluation of the claim of the Tampa Bay Times relating to Bayfront Medical Center financial activity since the acquisition of the failing hospital by HMA in 2012 and then CHS in 2013. Part I of story showed that the Times claim that indigent care was 3.2% was false since it was actually 25.3% in 2014.
Charity measurement used by Times and State are invalid
The Times inaccurately reported on a number reported by the state as “charity” as “indigent care”, however that charity measurement itself does not accurately portray the free care provided by any hospital. The “charity” figure is used by the Florida Hospital Uniform Reporting System (FHURS). FHURS defines charity in an odd way. Charity refers to the percent of gross charges made by the hospital that are never subject to collection. In other words, it refers to the free care provided for which there is no charge whatsoever to the patient. Furthermore, using the amount charged as the basis of amount of “charity” is not valid since it assumes that the amount charged is related to cost, the amount the hospital will be paid or its profit (amount left over after expenses). Hospitals generally charge over three times more than they ever collect (as do most doctors). It would be like going to the grocery store that had marked the price up to three times the market rate, filling up the cart and expecting the store to help you to walk out the door as they smile, wave and say “no charge”.
A more accurate reflection of “charity” would be the amounts provided for those who are receiving care below cost or for free. The “below cost” population is part of the “indigent care” number discussed and includes Medicaid, Medicaid HMO’s and charity and poorly analyzed by the TB Times as discussed in part one of this series. The free costs would include the amount that is not being paid by patients because they declined to pay or no charge was made at all. The more accurate measure of “charitable care” or “free care” would be the amount assigned as “bad debt” and “charity” combined. The “bad debt” number is reported under the FHURS and was available to the Tampa Bay Times. However, the Times did not evaluate this number or the indigent care numbers in their piece attacking Bayfront Medical Center. (See part I on their false claim on Indigent care rated “Under a Rock” by the Sunbeam Times Truth Check).
The sunbeam Times did analyze the amount of absolutely free care provided by Bayfront Medical Center, St. Anthony’s Hospital and All Children’s Hospital. We were assisted by staff of the FHURS who provided the latest hospital data as reported to the state for 2014. The Sunbeam Times has labelled as “free care” the amount of “bad debt” in addition to the “charity” number reported to FHURS, since this provides a more accurate reflection of how much the hospital is “giving away” to people in the community. The adult hospitals are located in downtown St. Petersburg and serve a similar demographic. All Children’s frequently trades on the “charity care” they provide, hosting telethons and fundraisers. When Bayfront Medical Center was taken over, it was bleeding money and in danger of laying off workers, cutting services, not keeping up with hospital upgrades and modern technology and of closing down if not rescued. When HMA and then CHS took over, rather than simply “write off” and cease any attempt to collect from patients, these businesses did what all other hospitals in the area have been doing for years: they started to try to collect on their bills. It was this standard business practice, in part, that has helped turn Bayfront around and made it able to continue to provide the highest amount of indigent care in the area. When Bayfront began collecting, the amounts that were defined as “charity” was reclassified as “bad debt”. According to the FHURS even the intent to collect anything from a patient takes it out of the charity category.
Bayfront Outperforms St. Anthony’s and All Children’s in Free Care Provided
BMC has adopted standard business practices to prevent it from having a $12 million loss as experienced under prior CEO Sue Brody and past “VP for Strategic planning” and now Vice Mayor of St. Petersburg Kanika Tomalin. That means they are no longer just letting people walk out the door of the store with a full grocery cart for free. They have instead worked to collect on the money owed by people who have a means to pay. As such the number that used to be reflected as “charity” has been transferred to “bad debt”, like other hospitals have done for years.In determining how much “charitable” care the hospital is providing, tt is critical to look at the amount it is giving away as “Free care”, which would mean the amount of annual bad debt combined with charity.
Since taking over in 2012, the amount of free care provided by Bayfront Medical Center has increased. In 2013, the amount of free care provided by Bayfront was $62,764,010 and in 2014 t was $92,269,706. This is in stark contrast to the false headline in the Tampa Bay Times of “profits rise, charity falls”. This compares very favorably to the amount of free care provided by St. Anthony’s in those years which was $90,860,854 in 2013 and $99,317,501 in 2014. What is most surprising is that the amount of free care provided by All Children’s Hospital was very low at $18,213,316 (2013) and $14,476,701 (2014). However, ACH does provide substantial indigent care through Medicaid and receives additional government subsidies for that through the Low Income Pool (LIP).
Another interesting observation is that for years St. Anthony’s and other regional hospitals received a very lopsided benefit through the amount of free care provided by Bayfront. Prior to 2013, St. Anthony’s provided less than half the free care of Bayfront (less than $60 million compared to Bayfront’s over $120 million). In 2013, St. Anthony’s finally began shouldering some of the load for free care when Bayfront was bought and began operating with similar business principles as the “not-for Profit” Baycare affiliate. The amount of free care has merely been more fairly redistributed to other hospitals, hospitals that make an even larger profit.
So with Bayfront providing a somewhat smaller amount in free care in 2014 than St. Anthony’s ($92 million vs $99 million), how can the Sunbeam Times assert that Bayfront outperforms them in free care provided? The answer is in the profit. When compared to its actual profits, the amount of charity provided by Bayfront outstrips that of St. Anthony’s Hospital and All Children’s Hospital. The actual profit that the Tampa Bay Times complains is rising was paltry compared to that of the “not-for-profit” St. Anthony’s, part of the massive Baycare corporate structure that includes many other hospitals. In 2014, the “not for profit” (tax-exempt) St. Anthony’s hospital achieved a profit of $34,445,162 and All Children’s earned $52,974,086 both dwarfing the Bayfront 2014 profit of $28,758,719. The year 2013 was an even better for the superior profit of SAH and ACH vs BMC with each profiting $45,059,924, $25,378,195 and $6,347,648 respectively. In fact, since Johns Hopkins took over at All Children’s Hospital profits have skyrocketed (compared to prior years).
When compared to profits, Bayfront Medical Center gave away as free care far more than it collected in profit and did so at rates greater than nearby “not for profit” hospitals. St. Anthony’s or All Children’s Hospitals are really Tax-exempt and pay no taxes while embracing the “not for profit” label. In 2014, Bayfront gave away 3.2 times its profit in the form of free care, compared to St. Anthony’s free care at 2.88 times its profit and less than 0.3 times by All Children’s. In 2013, Bayfront gave away over 9.18 times its profit in the form of free care with St. Anthony’s providing over 3.58 times and only 0.4 times the profit for All Children’s. To be clear, Bayfront profited far less than St. Anthony’s and All Children’s in both 2013 and 2014, but gave away a larger amount compared to the profits of “non-profit” hospitals. One is reminded of the “Widow’s Mite” story in which Jesus points out to his disciples that the widow who donated two coins was providing far more than the rich who donated a smaller portion of their wealth. It was a far greater sacrifice for her as is the smaller portion of free care provided by Catholic St. Anthony’s Hospital.
What is most ironic is that the amount of state reported “charity” care performed by All Children’s was 0.69% in 2013 and 2014. Thus while the Times complained that Bayfront provided “3.2%” of its charges in “charity” care (mislabeling it “indigent”) All Children’s provided less than 0.7% in the same time period!
Bayfront Medical Center continues to provide substantial free care to the community and when compared to its actual profit, tt provides more than St. Anthony’s Hospital and All Children’s Hospital. In addition, St. Anthony’s Hospital is finally starting to shoulder more of its responsibility to provide free care to the community since Bayfront began using modern business practices to turn around its operations. Rather than failing on charity care, Bayfront Medical System, under the management of Community Health Systems, is excelling. In 2014, they provided $92.26 million in free care ($51 million at no charge) and received only $28 million in profit. There are no other businesses in America that give away more than three times their profit margin every year as part of their routine model of business. This is only done by doctors and hospitals. It is not done by the profit generating Tampa Bay Times, which could set a good example by providing pages of free advertising and space for stories like this if they truly believed in “charity”.
The Tampa Bay Times has been running the narrative of the “for profit” hospital that is harming “charity care” since the sale of the foundering BMC in 2012 (see here, here, here, here, & here). Rather than look at the facts of how a private corporation is providing an immense public service to St. Petersburg, they are attacking them for daring to contradict their false narrative. What’s more, the Tampa Bay Times is completely ignoring how St. Anthony’s Hospital and All Children’s Hospitals are making massive profits while paying absolutely nothing in federal income taxes (unlike Bayfront), and providing proportionally less charity care. The Tampa Bay Times false narrative on charity at Bayfront Medical Center should be dropped and until it is, it can only be rated as “under a rock” by the Sunbeam Times Truth Check.
Dr. David McKalip, author of this piece and editor/founder of the Sunbeam Times, is a private practice neurological surgeon on the medical staff of Bayfront Medical Center since 2000. He previously served on its Medical Executive Committee. He has performed this analysis independently with publicly available data and receives no compensation from Bayfront Medical Center.