Providence rated worst nonprofit hospital in country regarding consumer practices

Jan 27, 2023, 3:30 PM | Updated: 6:00 pm
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A driver prepares to leave after transporting a patient into an ambulance at Life Care Center. (Photo by David Ryder/Getty Images)
(Photo by David Ryder/Getty Images)

Providence, a nonprofit hospital with a branch located in Renton, has failed to spend more than $700 million that was intended for the community, according to The Lown Institute.

“Washington has a total fair share deficit of $737 million,” Consumer for Quality Care Board Member Donna Christensen told MyNorthwest. “This is money that should be spent on individuals who require their medical bills to be waived.”

A fair share deficit is the financial difference between a nonprofit hospital’s tax exemption and the amount spent toward the hospital’s community. A hospital system has a fair share deficit if its spending on charity care and the community is less than the value of its tax exemption.

Its why Consumer for Quality Care, a coalition of advocates and former policymakers in health care, gave Washington state nonprofit hospitals a flat ‘F’ grade over the organizations’ troubling practices. The scorecard graded four factors: Transparency, charging charity care eligible patients, medical debt consumer protection policies, and charity care spending.

Nonprofit hospitals make up more than half of all hospitals in the United States, providing free or reduced-price care to those who are uninsured or unable to pay while also working with other community-based organizations to connect patients with affordable housing, food, and resources.

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Out of 275 nonprofit hospital systems evaluated, 227 spent less on charity care and community investment than the estimated value of their tax breaks.

But Providence was the nonprofit hospital most referenced for negligence by The Lown Institute, a nonpartisan think tank that examines health care systems.

“According to the New York Times investigation, Providence hospital system systematically saddled low-income patients with bills they should never have received due to Washington’s requirement that hospitals require free care for anyone making under 300% of the federal poverty level,” the scorecard read.

Under the Affordable Care Act, nonprofit hospitals must demonstrate that they operate for a charitable purpose by providing “benefits to a class of persons that is broad enough to benefit the community” and serving the public interest, according to the IRS.

Washington state also has legislation in place for those needing medical assistance who can’t afford it.

“I would argue it is getting better,” Christensen said when analyzing the long-term outlook of nonprofit hospitals. “I think there is a lot more oversight than there was 20 years ago, but there’s so much more we can do to limit hospitals from hounding patients.”

Attorney General Bob Ferguson filed a consumer protection lawsuit last year, claiming Providence began the Rev-Up effort to substantially increase the amount of payments collected directly from patients.

In 2018, before Providence’s “Rev-Up program” kicked in, Providence spent 1.2% of its expenses on charity care — a standard way of measuring how much nonprofit hospitals provide, according to The New York Times (NYT), which is below the national average of 2% for nonprofit hospitals nationwide.

Last year, Providence’s charity spending fell under 1% of the hospital’s expenses.

Since Rev-Up, according to Ferguson’s suit, staff in charge of interacting with patients were directed by mandated training materials to attempt collecting payments on hospital bills with a new motto: “Ask Every Patient Every Time.” Providence allegedly trained staff to collect payment with tactics that did not make the availability of charity care known, including specific phrasing to patients such as, “How would you like to pay today?”

Providence has called the charges “inaccurate and unfair.”

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“Nonprofit hospitals have an obligation to inform the community at large of their rights at these hospitals,” Christensen said. “If these patients are under 300% of the federal poverty level, they should not be hounded by collection agencies.”

Christensen even cited an incident where a patient’s house was foreclosed to secure payment for medical services.

Christensen previously served in the House of Representatives and previously worked alongside Governor Jay Inslee. She was the first woman to represent the U.S. Virgin Islands and the first female medical doctor to serve in Congress.

“My field has always been healthcare,” Christensen said.

MyNorthwest reached out to Providence in Renton for comment, but has yet to hear back.

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Providence rated worst nonprofit hospital in country regarding consumer practices