Thousands Could be Shut Out of Health Care if Charity Mandate is Approved

Sacramento Business Journal by Kathy Robertson –

January 17, 2014:

The California Hospital Association unveiled a study Thursday that concludes thousands of Californians could be shut out of the health care they need — even if they have insurance — if new regulations and mandates are on charity care are approved.

The study by former Congressman and state finance director Tom Campbell, working in partnership with the Berkeley Research Group and the California Hospital Association, examined the amount of charity care provided by nonprofit hospitals in California.

The study concludes that:

• Rules restricting the amount of excess money nonprofit hospitals can hold on their balance sheet will reduce the amount of care that nonprofit hospitals provide and cut health care jobs.
• The state will lose millions in revenue due to the loss of income tax on employees.
• New mandates will increase the cost of financing nonprofit hospital expansion, retrofit or repair — or result in delayed or cancelled investments.

The study comes in anticipation of a rerun of the debate over Assembly Bill 975, which was one of the most heated bills in the Legislature last year. It died last May. AB 975 would have required nonprofit hospitals and nonprofit multi-specialty clinics to conduct a community-needs assessment and file the results with the Office of Statewide Health Planning and Development.

AB 975 tried to establish specifications for the community-benefits plan and a definition for what qualifies for charity care. It also would have required OSHPD to calculate and make public the value of community benefits provided and assess penalties against providers that fail to comply with the rules.

Consider the unintended consequences, Campbell said in a call Thursday with reporters.

“The concept of a nonprofit hospital is a legal concept; it is not an economic concept,” Campbell said. “They retain earnings to increase capacity rather than pay shareholders.”

AB 975 looks dead for this year, too. One co-author, Democratic Assemblyman Bob Wieckowski from Fremont, expects to introduce a new bill.

“The idea is to create a standard for measuring the level of charity care provided by nonprofit hospitals and holding them accountable.

“Reports by the California State Auditor, Time magazine, the Greenlining Institute and others have shined the light on the lack of accountability surrounding the amount of charity care provided by nonprofit hospital,”
Wieckowski said in a statement. “These important medical facilities receive millions of dollars in favorable tax treatment by Californians and in return are expected to provide lower-income residents in their communities free or reduced-cost medical care.”

Currently, hospitals calculate their charity care differently. And audits show some hospitals don’t submit their community benefit plans as required, Wieckowski added.

To address this issue, Wieckowski expects to work with co-author Democratic Assemblyman Bob Bonta from Alameda to push new legislation to bring about more accountability and transparency to charity care provided by nonprofit hospitals.