No Easy Way Out on Tampa Bay Medical News

No Easy Way Out

By: DAVID GULLIVER

Sarasota County Indigent Care Controversy Continues

SARASOTA—Three Sarasota County hospitals have taken the unprecedented step of billing the county government for more than $37 million, their costs of caring for poor and uninsured patients over the past year.

The hospitals say they can do so under a heretofore unnoticed clause in the state law that governs the Sarasota Memorial Hospital district. The clause says the Sarasota County Commission shall reimburse any other hospital for indigent care the same way it reimburses Sarasota Memorial.

County officials say they do not intend to pay, claiming the provision has been superseded by new laws. Paying the bills would be “an unlawful expenditure of taxpayer funds” and be an improper subsidy of a for-profit business.

They also say that paying the bills would require raising property taxes another 1 mill, or $1 for every $1,000 of a house’s assessed value.

The county responded to the billing by asking the county’s state legislative delegation to introduce a bill that would strike the language from state law when the legislature convenes next month in Tallahassee.

But the three facilities—Doctors Hospital of Sarasota, Venice Regional Medical Center and Englewood Community Hospital—say getting some level of compensation is crucial for them to continue to provide their current level of service.

“For many years, physicians and hospitals nationwide have faced rapidly escalating labor and operating costs in an environment of shrinking reimbursement,” said Doctors Hospital CEO Robert Meade, in a letter to the county. “With the recent economic downturn, however, these challenges are reaching historic levels as many families have lost or greatly reduced their insurance coverage. This has resulted in a tremendous increase in indigent care provided by Doctors Hospital. This year, we’ll provide over $20 million of care for the uninsured and underinsured.

“Continuation of this trend will negatively impact the services we can provide and threaten our ability to achieve our core mission... again, providing quality healthcare for the Sarasota community.”

Attached to the Dec. 2008 letter was a five-page spreadsheet of line-by-line listings of 205 unpaid patient accounts, totaling $1.18 million, and a copy of the key section of the Sarasota Memorial law.

Englewood Community Hospital, like Doctors Hospital owned by Nashville-based HCA, submitted a similarly worded letter and a line-by-line bill. Venice Regional, owned by Naples-based chain HMA, began submitting bills in February 2009.

In subsequent letters, all three hospitals certified that their bills properly cited costs, that the patients were uninsured county residents ineligible for Medicaid, and that the hospitals would not pursue collections of the accounts.

By mid-November, the three hospitals had submitted bills totaling $37.1 million. That represented a full year’s worth of indigent care expenses at Doctors Hospital ($16.9 million), and at Englewood Community Hospital ($7.5 million). Venice Regional, which submitted bills for only eight months, totaled $12.7 million.

Those amounts could be the difference between red ink and black. According to their most recent financial statements filed with Florida regulators, all three hospitals lost money in 2008. Venice Regional Medical Center lost $7 million on operations and $4.7 million overall. Englewood Community Hospital lost $5.3 million on operations and $2.7 million overall. Doctors Hospital lost $2.5 million on its operations and $152,097 overall.

At Doctors Hospital, indigent care and bad debt costs increased 30 percent from 2006 to 2008. “Obviously, we’re in a position that’s not sustainable,” Meade said in a recent interview.

As the economy has collapsed, with about 14.5 million people unemployed, millions have lost their health insurance. Census estimates show about 65,000 Sarasota County residents under age 65—25 percent of the total—had no healthcare coverage in 2008. That’s nearly 50 percent more than in 2004, when a state study found 44,000 county residents lacked insurance.

People without health insurance often turn to emergency rooms for care, because federal law mandates hospitals treat and stabilize anyone who enters an emergency room. That means hospitals must provide care—often expensive care—and get little or nothing in return.

The average monthly cost for indigent care at both Doctors Hospital and Venice Regional was about $1.4 million. Englewood averaged about $625,000. But indigent care can be like Russian roulette: Records show a single uninsured patient in June cost Venice Regional almost $2.2 million—double its typical monthly cost for all indigent care.

Publicly owned Sarasota Memorial provides the bulk of the area’s indigent care. At the request of county officials, it submitted a bill using the same criteria as the three for-profit hospitals. It reported providing $8.1 million in indigent care costs for November 2008 alone. The hospital lost about $15 million on operations in its 2008 fiscal year, according to its audited financial statements.

But Sarasota Memorial also has authority to collect property taxes to offset its charity care. In 2009, it received about $47 million from its levy, helping turn its operational loss into a $59.7 million profit.

That makes the tax levy a bone of contention with the county’s for-profit hospitals.

“The only hospital in the county that’s making money is the hospital that gets a subsidy,” Meade said. “All the hospitals should be able to share in that reimbursement.”

Sarasota County officials see it differently. Sarasota Memorial offers obstetrics and psychiatric care, services no other hospital provides, said County Administrator Jim Ley.

There also is a principle at hand, he said: “It causes us to ask a question: why should this county be required to subsidize the profit margins of private hospitals?”

In a Dec. 1 letter to the three hospitals, Ley said the legal teams for both the county and Sarasota Memorial believe the clause on which the hospitals pin their billing claim is unconstitutional.

They also cite a 1987 ruling from the Florida Supreme Court that found the state constitution did not oblige counties to pay hospitals for the cost of indigent care.

But in that case, there was no language in state law obligating Dade County to pay the hospitals, where Sarasota County’s obligation is specifically spelled out in the hospital enabling legislation. And that legislation—including the indigent care provisions—was reviewed, overhauled and approved by state lawmakers in 2003.

In an Oct. 5 letter to state Sen. Nancy Detert (R-Venice), Sarasota County Commission Chairman Jon Thaxton asked that the county delegation strike the clause from state law.

Detert did not return calls and emails seeking comment. But Thaxton said that after speaking with state legislators, he believes the solution might require a wholesale rewrite of the law establishing Sarasota Memorial.

Thaxton said he thought all sides had valid claims, and that he had not taken a side in the dispute. “It puts the county in a fairness position where there is no simple answer,” he said.

Paying the bills would trigger budget cuts or a tax increase. The county spent $35 million in reserves to avoid cuts this year. “We don’t have the money lying around to write a check to the for-profit hospitals,” Thaxton said.

In his letter to Detert, he suggests the hospitals create a special taxing district to pay hospitals for indigent care, akin to Hillsboro County’s system. Thaxton suggested Sarasota Memorial also could use some of its untapped millage—it can levy up to 2 mills of value, about twice its current levy—to assist the other hospitals. But none of those options are likely, he said.

“I’ve looked this issue over every which way from Sunday, and every option had ardent opposition from one leg of the three-legged stool,” he said. “There’s no easy way out.”