Benefits Report Makes Hospitals Fume

A new report on the community benefits spending of some of California's largest healthcare systems has raised questions as to the transparency of their efforts in this arena, and has prompted a surprisingly strong backlash from the state's powerful hospital lobby.

The report, issued by the Berkeley-based Greenlining Institute, questioned the community benefits provided by the state's most prominent hospital systems, including Kaiser Permanente, Sutter Health, Dignity Health, Adventist Health, and Scripps Health. It used data the systems furnish to the Office of Statewide Health Planning and Development.

The report accused most of the providers of not providing enough “upstream” benefits to members of its community – proactive efforts to prevent members of the communities from getting ill in the first place. 

Altogether, the Greenlining Institute estimated that California's biggest hospital operators were devoting 7.2 percent of their operating budgets on community benefits. Of that amount, it was estimated 1.1 percent is being devoted to upstream benefits, although the organization said voids in information made it uncertain of that specific amount.

“When we delved into the data, we found that the publicly reported information for the largest companies is so opaque and incomplete it’s almost like a black box,” said Carla Saporta, the Greenlining Institute's director of health policy and a co-author of the 38-page report, “Non-Profit Hospitals And Community Benefits – What We Don't Know Can Hurt Us.”

The Greenlining Institute also accused Roseville-based Adventist, which operates hospitals in California and two other states, of not complying with changes in community benefits provisions and reporting mandated by the Affordable Care Act.

The role hospitals play in providing community benefits has been a particularly touchy issue in recent years. Both the implementation of the Affordable Care Act and recent rulings by the IRS have placed more pressure on hospitals to both report the benefits they provide and to receive input from community members about how to proceed. At the same time, hospitals and hospital systems have disagreed about reporting standards. For example, the American Hospital Association in its reporting has included operating losses on Medicare beneficiaries and unpaid bills by patients who would have qualified for free or discounted care but didn’t apply for it. Neither are permitted by the IRS for reporting purposes.

Among the assertions made by the Greenlining Institute:

• The reporting of community benefits varies dramatically from providers, making it often challenging to obtain any specific information about how specific community benefits programs work

• California's hospitals devote a fraction of their community benefits spending on “upstream” projects – in some instances, it is well below 10%.

• Kaiser Permanente exploited a 2009 IRS ruling that allowed hospitals to count external grants they receive as community benefit dollars, allowing it to spend three times more on research and health profession education than on upstream benefits

• One Sutter Health hospital, Sutter Coast Hospital in the isolated Northern California coastal town of Crescent City, reported what Greenlining officials called a “negative community benefit” in that it provided no tangible net benefits other than charity care, even though the town's per capita income is well below the statewide average

Although Saporta acknowledged that California's hospitals may be providing ample community benefits and may be broadly supporting upstream efforts, she said finding out is all but impossible. “It is not transparent, and we really do believe that the hospitals are not making it transparent,” she said.

Although Sutter Health did not expressly refute the allegation regarding the Sutter Coast facility, spokesperson Bill Gleeson observed that “our not-for-profit network gives millions every year to provide care to people who can't afford to pay and to support health-related programs for communities in need. From helping the homeless better their lives to supporting victims of domestic violence and sexual assault, our community partnerships make a difference for people—regardless of their financial status, race, ethnicity or culture.”

Kaiser and Adventist Health spokespersons did not immediately respond to a request for comment.

The California Hospital Association was highly critical of the report, claiming in both a statement and interview that it was little more than a jargon-filled irrelevance. It issued a statement the day before the report's release on Wednesday that expressed doubts about its accuracy.

“The report relies on inaccuracies and faulty assumptions to criticize a program that is, in fact, a robust, effective, transparent partnership between the state’s not-for-profit hospitals and the communities they serve,” the CHA said in its statement.

According to CHA spokesperson Jan Emerson-Shea, CHA and Greenlining officials met in August. Emerson-Shea said Greenlining wanted five years of public benefits records.

“It was outdated, irrelevant data from five years ago that was before the ACA was even a discussion,” Emerson-Shea said. Saporta said her organization wanted a snapshot of public benefits programs before the changes wrought by the ACA, which included assessing community health needs and articulating specific benefit plans. In California, hospitals also have to make regular measures as to how their community benefits plans are proceeding and whether they are meeting goals.

As a result of the report, the Greenlining Institute suggested that California's lawmakers pass legislation to provide more clarity and parity to the state's community benefits reporting laws. It also suggested that Gov. Jerry Brown and Health and Human Services Secretary Diana Dooley provide more financial support to OSHPD in order to provide more transparency and accountability in reporting, and that members of the community have more say in how providers conduct community needs health assessments.

In its statement, CHA cited a variety of instances where its members provide what could be termed upstream benefits. They included a mobile health screening clinic operated by Providence Health in the San Fernando Valley, a dental clinic operated by St. Joseph Health in Orange County, and Sacramento Covered, an insurance program for low-income households operated by Dignity Health, Sutter Health and Kaiser.

“The Greenlining proposal that non-profit hospitals should allocate money to ‘upstream activities’ fails to recognize the financial pressures, unfunded governmental mandates (e.g. seismic compliance, etc.) and delivery system changes that are challenging hospitals like never before,” CHA President C. Duane Dauner said in the statement. “Local residents, stakeholders and hospitals all will be better served if they determine their local healthcare and communities’ priorities. together, rather than facing another mandate from Sacramento.”