501(c)(3) religiously affiliated Advocate profits on the uninsured

From: "KD Weber"
501(c)(3) religiously affiliated Advocate profits on the uninsured

Why Hospitals Overcharge The Uninsured
By Kari Lydersen
AlterNet
http://www.rense.com/general39/over.htm
7-24-3

Rose Shaffer is a homecare nurse and grandmother of seven who lives on
Chicago's south side. Though she spends all day caring for the health of others,
her job doesn't provide her with health insurance.

Advocate is one of the largest chains of hospitals in Illinois, with 10
hospitals in the Cook County area and profits of $108 million in 2001.

But Shaffer - and millions like her around the country - are actually
subsidizing Advocate and other major hospitals, according to a report recently
released by the Service Employees International Union (SEIU). That's because the
approximately 41.2 million Americans who don't have health insurance today not
only have to pay astronomically high healthcare bills out of their own pockets,
but they actually pay around 50 to 70 percent more than insurance companies do
for health coverage.

When an insurance carrier foots a hospital bill, the company
"negotiates" a price with the hospital that is usually about half the original
billing price. Yet when an individual without insurance is forced to pay for
healthcare, they don't have this bargaining power. So they end up paying the
"full" rates, making up the slack for the deals the insurance companies have
gotten (as well as the uninsured individuals who never pay their bills).
"If you look at it from the insurance company's perspective, they are a
big group who can make a deal with the hospital," said Marianne McMullen,
communications director of the Service Employees International Union (SEIU)
Hospital Accountability Project, a relatively new initiative aimed at linking
workers' and patients' rights. "But from the perspective of the uninsured, it's
really gross. The hospitals are making their biggest profit off them."

The full rates uninsured people end up paying are usually vastly
inflated from the actual cost of providing service. For the past 20 years
healthcare bills have risen at twice the inflation rate. In 1993 the U.S.
General Accounting Office reported that 99 percent of hospital bills have
overcharges, which can include "phantom charges" for services that weren't
actually given, markups, duplicate billings and charges for unnecessarily long
hospital stays or unneeded services.

Hospital administrators argue that many uninsured individuals never pay
their bills, so hospitals have to keep costs high to avoid losing money. But
that doesn't make it any easier for those who do pay. And most hospitals don't
just write off the unpaid bills. It is common practice for hospitals to sue
patients for tens of thousands of dollars, money they often just don't have.
After Shaffer had a major heart attack in October 2000, she couldn't pay the
bills. She noted that even though she told her doctors she didn't have
insurance, she was never given available financial aid forms to fill out for her
treatment.

So Advocate South Suburban Hospital where she was treated sued her for
the amount of her bill - $17,760. Never mind that if Shaffer had had health
insurance, the company would only have been billed about $8,500. Shaffer said
she could have handled the $8,500. But coming up with over $17,000 was
impossible. So she put her house in foreclosure and declared bankruptcy.
Meanwhile the stress this has caused isn't helping her health any.
"I'm grateful to the hospital for the care I received - they saved my
life," Shaffer said. "But now they are trying to take it away from me again."

A study by the SEIU project found that at Advocate hospitals in Cook
County, Illinois, uninsured residents like Shaffer were charged an average 139
percent more than the charge insurance companies ended up paying for the same
services. That equals out to $13,854 compared to $5,805 on average for inpatient
services - funds an average uninsured person can hardly spare. This amounted to
a total gap of $58 million between charges for the insured and uninsured at
Advocate hospitals in 2001, the SEIU said.

McMullen said that while virtually all hospitals overcharge the
uninsured, Advocate is the current target of the overpricing campaign because
they have the area's highest average charges for uninsured people and also
because they are a non-profit, religiously affiliated chain which is supposed to
have the mission of helping the needy. Advocate is affiliated with the Illinois
Conference of the United Church of Christ and the Evangelical Lutheran Church of
America. In 2001, the SEIU report says, Advocate made an $8,460 profit on the
uninsured patients who paid their full bills.
"This just incredibly wrong," said Toure Muhammad, communications
director for the SEIU. "Advocate is a religiously sponsored non-profit
institution that is getting tax breaks that the community pays for."

Advocate spokesman Ed Domansky said that Advocate's billing practices
are mandated by federal law, as are the billing structures of all hospitals. He
thinks the SEIU is singling out Advocate since they are trying to unionize the
hospitals, in what has turned into an extremely contentious campaign.
"They're exploiting the uninsured with this study and they're singling
out Advocate because they want to unionize," he said. "It's pretty clear what
this is about. It's just another tactic they're using to mislead the public." He
added that Advocate has "one of the most generous charity care programs in the
country."

The SEIU alleges that overcharging also allows non-profit hospitals like
Advocate to inflate the amount of charity care they provide - Advocate claimed
to provide $32.7 million in charity care in 2001, but the SEIU pegged the true
cost of the care at only $12.7 million.

Members of the SEIU project hope that by drawing attention to Advocate's
practices, hospitals around the country will be forced to change their ways.
Already, McMullen noted, two national for-profit hospital chains - Columbia HCA
and Tenet - have promised to stop charging more to uninsured patients. In
response, Domansky said, "Whatever the SEIU has pressured Columbia HCA and Tenet
into doing, they will find that the federal government doesn't allow them to use
that pricing structure."

Meanwhile between the tough job market and the rising costs of coverage
for employers, the number of uninsured in the country is likely to keep rising.
While the ranks of the uninsured include the unemployed and homeless, the
majority of uninsured people are employed, working everything from service
industry and blue collar jobs to professional jobs with temporary agencies,
small businesses or non-profit organizations. Minorities are also more likely to
lack health insurance, as are immigrants. For example in Illinois 28.9 percent
of Latinos and 22.8 percent of African-Americans are uninsured, compared to 11
percent of whites.

In June the Hospital Accountability Project held a widely attended Town
Hall meeting in Chicago on the topic of overcharging, and they have staged
numerous protests outside Advocate hospitals as well as advocating on the behalf
of individual patients.

They hope a victory in ending or reducing the overcharging of uninsured
people will aid both low income people in general and health care workers
themselves Ð workers who ironically are themselves often uninsured or
underinsured. The Hospital Accountability Project also plans to undertake other
campaigns linking the rights of workers and patients, noting that healthcare
workers' rights are inextricably linked to patient safety and vice versa.

Already the SEIU is on the verge of winning passage of Illinois state
legislation that requires hospitals to make public their staffing levels,
infection rates and other crucial data, which can both help people choose what
hospital to go to based on these indicators of quality of care, and help unions
fight against understaffing and other workplace issues. Legislation that is
similar, though not as comprehensive, already exists in Wisconsin and California
and is in the works in other states.
"We're working on behalf of the patients, workers and the community in
which [the hospitals] operate," said McMullen. "Unions usually just work on the
behalf of employees, but here we're working on behalf of the whole community.
It's part of the new direction unions have to go in."

http://www.alternet.org/story.html?StoryID=16466