Front Street Hospital Case Study
Professor Ed Schaffer
August 09, 2014
Serving the Uninsured
According to Kaiser Family Foundation (2013), more than 47 million Americans were uninsured in 2012. These gaps in health insurance undoubtedly increase healthcare costs, discourage the use of preventative care, and negatively impact the lives and health of the American people. One way to combat this issue is for hospitals and providers to offer charity care to those who qualify and are in need. Non-profit hospitals are organized to serve a charitable purpose to meet the needs of the community and serve indigent patients that would otherwise go without care due to lack of insurance. In return, these organizations receive tax exempt status on all of their earnings. However, some hospitals have fallen short in terms of fulfilling their obligations to the community and the patients in need.
The revenue function of healthcare organizations is extremely complex. Part of this issue can be attributed to the different sources of revenue payers: self-pay, Medicare, Medicaid, commercial insurance, and managed care contract payers. Health economist Gerard Anderson notes that “uninsured patients and those who pay with their own funds are charged 2.5 times more for hospital care than those covered by health insurance and more than 3 times the allowable amount paid by Medicare” (Anderson, 2007).
Front Street Hospital has most certainly contributed to those staggering figures researched by Anderson. For example, Jane Adams, a young uninsured patient spent two days at Front Street for an appendectomy procedure. An insured patient undergoing the same procedure would have been expected to pay close to $2500 after Medicare and Medicaid reimbursements to the hospital. Instead, Adams was left with a $19,000 bill for the appendectomy. Like all other uninsured patients, Adams didn’t benefit from discounted rates. To add insult to injury, Front Street is known for its intimidating collection tactics against patients who are unable to finance their care. Similarly there is Lori Duff, an uninsured Ohio resident who was barely able to make ends meet. After seeking treatment and not being able to pay her hospital bill, she was threatened with a 25% wage garnishment and continuously harassed by Mount Carmel Health System.
Being a part of the uninsured population I empathize with self-pay and uninsured patients. Many people delay treatment to avoid outrageous bills and the financial burdens associated with them. So, I completely disagree with the billing and collection policies of non-profit hospitals related to the uninsured. The uninsured patients are the ones who need discounted services most. It creates a catch 22 situation when choosing to seek care. Avoiding care will only deteriorate an individual’s health, while seeking care creates financial problems.
I don’t believe that hospitals should not try to collect on past due bills; however they should go about it in a different way than Front Street has. The Fair Debt Collection Practices Act grants creditors the ability to seek to collect on outstanding debt in a number of ways (FTC, 2014). Hospitals are known for providing a substantial amount of uncompensated care and it is their job to reduce these types of liabilities. Therefore, Front Street was not unethical in their efforts to collect debt through communications with the patients. I disagree with how far they have chosen to go to collect on bad debt and believe that there are different methods that could have been used.
If I could act as the ultimate authority in this situation I would create a stringent law that requires hospitals to fairly set prices for uninsured patients, monitor compliance, and add penalties for those who disregard the law. Thankfully the new healthcare reform has addressed the issue related to hospitals and their obligation to provide charity care. Under the new rules...
References: Anderson , G. (2007). Hospitals charge uninsured and “self-pay” patients more than double what insured patients pay. Retrieved from http://www.jhsph.edu/news/news-releases/2007/anderson-hospital-charges.html
Federal Trade Commission (FTC) (n.d.)
Gapenski, L. (2010). Cases in healthcare finance. (4 ed., pp. 239-241). Health Administration Press.
Gold, J. (2012, April). Nonprofit hospitals faulted for stinginess with charity care. Retrieved from http://www.npr.org/blogs/health/2012/04/27/151537743/nonprofit-hospitals-faulted-for-stinginess-with-charity-care
Kaiser Family Foundation
Please join StudyMode to read the full document