Saint Agnes bid to modify minimum charity-care level draws ire

Saint Agnes Medical Center is coming under fire from community members for its request to reduce the amount it is required to allocate to charity care under an agreement with the state attorney general.

The nonprofit Catholic-based hospital in Fresno wants a $7 million annual charity-care minimum, established three years ago, to be lowered because it provided less than $5 million in care to patients who had no insurance or means to pay for their care in 2015.

The attorney general is responsible for determining whether to reduce the charity-care minimum for Saint Agnes.

At a public hearing July 1 at the hospital, several members of community organizations spoke against the hospital’s request.

“It would be a huge loss to our community for you to reduce your charity care,” said Socorro Santillan of Fresno Barrios Unidos, an organization that helps provide education, wellness and advocacy for families.

Saint Agnes said it is not abandoning charity patients, but fewer are without insurance and need free care since implementation of the Affordable Care Act in 2014. “Our charity-care policies are not changing,” said President and CEO Nancy Hollingsworth. “We will still be available to serve those who are eligible for charity care.”

Under normal circumstances, Saint Agnes’ request to change its charity-care minimum would not require state approval. Other hospitals may lower their charity-care allocations without a nod from the state and away from the public scrutiny that Saint Agnes has come under. But this hospital’s case is special, and the attorney general’s involvement has given community members a rare chance to have a voice in setting a hospital’s level of charity care.

California and the federal government normally do not tell nonprofit hospitals how much they must devote to charity care and other public-minded services that are called “community benefits.” The hospitals only need to show the IRS that they have plowed profits back into their communities to remain tax-exempt.

But Saint Agnes needs state approval to modify its charity-care threshold because governance of the hospital changed three years ago when Trinity Health Corp. and Catholic Health East merged.

Saint Agnes is one of 92 hospitals in the newly formed Trinity Health. California attorney general Kamala Harris consented to the merger on conditions – one of them being that Saint Agnes agree to a minimum charity-care threshold.

Since that 2013 agreement, Saint Agnes said “unforeseen circumstances” have occurred, and the hospital should be granted a reduction in its charity-care minimum.

The hospital position: The Affordable Care Act has shrunk the uninsured population that Saint Agnes and other nonprofit hospitals in the central San Joaquin Valley serve. Hospitals are seeing fewer people in need of charity care since full implementation of the health law began in 2014, it said. Patients who in the past did not qualify for Medi-Cal, the state-federal insurance for the poor, now are eligible for coverage.

Hospital executives cite a report for the attorney general by Vizient Inc. that analyzed Saint Agnes’ charity care. The report showed a 32 percent to 69 percent decline in the care provided by central San Joaquin Valley hospitals in 2015 compared to the amount spent in 2013.

Saint Agnes’ charity care dropped 49 percent, from $9.6 million in 2013 to $4.9 million in 2015; Community Regional Medical Center in downtown Fresno had a 32 percent decrease, from $5.4 million to $3.7 million; Clovis Community Medical Center had a drop of 69 percent, from $1.6 million to $488,172; and Madera Community Hospital had a 53 percent decline, from $2.3 million to $1 million.

“We’re looking for a modification of the threshold that reflects a new reality,” said Rick P. Wolf, secretary and general counsel for Saint Agnes.

But those opposed to a reduction said the hospital’s request is premature.

The Affordable Care Act could be repealed next year, they said, depending on the outcome of elections in November. “It would be good policy to hold off a year or longer,” said Noe Paramo of California Rural Legal Assistance Foundation. “Keep the charity care in place and see what is going to happen in a year or two.”

They also said patients with high-deductible insurance plans complain of not being able to pay medical bills and need help.

But the attorney general study found bad debt had decreased 75 percent at Saint Agnes, from $30 million in 2013 to $7.4 million in 2015, which the report said is an indication that the decrease in charity care costs could not be explained by an increase in people struggling with co-pays and high deductibles.

Some health policy advocates said the hospital’s reduction in charity care could be an opportunity for Saint Agnes to redirect funds to other community benefits, such as programs to prevent disease.

Typically, hospitals budget 9 percent to 11 percent of total expenditures as community benefits, said Sara Rosenbaum, a law professor at Georgetown University in Washington, D.C.

The hospitals have an incentive for doing so, she said. Tax-exempt status is worth keeping. According to a 2015 study she authored and that was published in Health Affairs, the value of federal, state and local tax exemptions, tax-exempt bonds and tax-deductible contributions to hospitals nationwide was $24.6 billion in 2011.

Under the Affordable Care Act, hospitals are supposed to identify needs in their communities, Rosenbaum said. “What they’re supposed to be doing is community health planning.”

In California, the value of tax exemptions for not-for-profit hospitals was $3.3 billion in 2010, said Kerry Sakimoto, a health policy fellow at The Greenlining Institute, a Berkeley-based public policy and research institution.

But it’s hard to know where hospitals put their community benefit money, Sakimoto said.

In March, Sakimoto led a study of community benefits in 11 not-for-profit hospitals from Merced to Bakersfield – including Saint Agnes. The report found hospitals had “unclear and inconsistent community benefit reporting.” Said Sakimoto: “We need to know not only where that money is going but how that money is being invested and who is really benefiting from those investments,” he said.

Anthony Galace, health policy director for Greenlining, was at Friday’s hearing in Fresno. He criticized Saint Agnes for failing to file annual community benefit reports for the years 2011-13 with the Office of Statewide Health Planning and Development.

Saint Agnes has posted its annual reports for 2014 and 2015 on its website, and Wolf said older reports could be made available.

Besides, Wolf said, Saint Agnes is not asking to reduce the amount it expends for community benefits, such as the Holy Cross Clinic at Poverello House and the Holy Cross Center for Women. “Those programs are not going to go away,” he said. “We are not shirking away from those responsibilities.”

Ivonne Der Torosian, regional vice president of the Hospital Council of Northern & Central California, said Saint Agnes has been at the forefront of meeting the community’s health needs. “They are fully aware of the needs of their patients.”

But Santillan of Fresno Barrios Unidos said Fresno County has high rates of obesity and asthma. “We have so many chronic diseases,” she said. “I really urge you to look at how otherwise you can impact the community.”

People in Fresno County need the level of charity care to remain the same, said Brisa Cruz of Centro Binacional para el Desarrollo Indigena Oaxaqueno or Binational Center for the Development of Oaxacan Indigenous Communities. “The funds are really, really needed for the population that I work with.”

The public has until Wednesday to submit written comments about the Saint Agnes charity-care minimum to the attorney general at wendi.horwitz@doj.ca.gov or by fax at 213-897-7605.

This story was originally published July 2, 2016 at 2:00 PM with the headline "Saint Agnes bid to modify minimum charity-care level draws ire."