Printed from the Charlotte Observer -
Posted: Sunday, Apr. 22, 2012

Carolinas HealthCare's charitable spending is above average, but so are its profits

By Ames Alexander and Karen Garloch
Published in: Prognosis: Profits
  • Prognosis: Profits

    A five-part series examining how N.C. hospitals profit at the expense of patients.

    Sunday: Nonprofits very profitable

    Monday: Charity care lacking

    Tuesday: Suing the needy

    Wednesday: Staying strong in Raleigh

    Thursday: Policies that could help

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    Hospitals owned by Carolinas HealthCare System are among the state’s most generous when it comes to providing free care for the needy.

    The system’s hospitals in Mecklenburg, Cabarrus and Lincoln counties, which form the heart of its operation, spent about $131 million on charity care in 2010.

    But critics contend the system could afford to do more. In 2010, the system’s core operation turned a profit of more than $300 million.

    Carolinas HealthCare hospitals in its three core counties get tax exemptions worth more than $100 million a year, the Observer estimated. The system owns more than $1 billion in tax-exempt property, pays no corporate income taxes and got sales tax rebates of about $40 million in 2011.

    Carolinas Medical Center, the system’s flagship hospital, spent about $74 million on charity care in 2010, more than any other North Carolina hospital. It spent about 5.5 percent of its budget on charity care – among the highest percentages in the state.

    CMC operates four clinics that give uninsured patients free or discounted primary care so they don’t have to get treatment through the more expensive emergency rooms.

    After outside groups – including the Observer – began to focus on hospital charity care in 2010, Carolinas HealthCare expanded its guidelines to cover more patients. Now, uninsured patients earning less than 200 percent of the federal poverty guideline – or about $22,000 a year for an individual – are eligible for free care. Previously, the threshold was 150 percent.

    Russ Guerin, an executive vice president, said Carolinas HealthCare has a responsibility to try to collect from those who are able to pay. “If everybody was simply allowed to be written off as charity care, then guess who has to make up the difference?”

    Guerin added that hospitals can have generous financial assistance policies in writing but still discourage needy patients from seeking care. Through its community clinics, he said, Carolinas Medical Center offers patients an affordable entry point, while most other hospitals see uninsured patients only after they’ve come to the emergency room.

    “If I don’t see them, I don’t have a lot to write off,” he said.

    Carolinas HealthCare officials note that the charity care figures don’t include other community benefits. In a report to the N.C. Hospital Association, the system said it lost more than $66 million treating Medicaid patients in 2010. Like other N.C. hospitals, the system also reported losing millions treating Medicare patients.

    But some agencies – including the IRS and the Catholic Hospital Association – say Medicare losses shouldn’t be counted as community benefit. One reason: Federal studies have concluded that efficient hospitals should be able to make a small profit treating Medicare patients.

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