September 16, 2024
by Rachana Pradhan, KFF Health News
Credit: Pixabay/CC0 Public Domain
When Jessica Staten’s kidney stones wouldn’t pass, she said, her doctor suggested a procedure to “blow ’em up.” She went to have it done last November at St. Joseph Medical Center in Bellingham, Washington, one of nine hospitals that the Catholic health system PeaceHealth operates in the Pacific Northwest and Alaska.
“I was probably there a total of 3½ hours, and everything went well,” said Staten, who works as an accountant and has health insurance. What came next shocked her: PeaceHealth sent a bill for $5,313.63 and, she said, told her she didn’t qualify for help to lower the cost. Staten said she asked about financial assistance but was told she earned slightly too much.
PeaceHealth aims to “carry on the healing mission of Jesus Christ by promoting personal and community health, relieving pain and suffering, and treating each person in a loving and caring way,” according to a 2022 tax filing.
For Staten, suffering lingered long after receiving care from the health system with the only hospital in town.
To pay off her medical bill, Staten ultimately took on more debt, using her condo as collateral to secure a line of credit of more than $5,000, according to records reviewed by KFF Health News. She said the line of credit had an 11.2% interest rate. That was cheaper than a payment plan the hospital offered through a third party, which Staten said she was told would have charged about 12.5% interest.
“It’s all about the money,” said Staten, who has lived in Bellingham for more than 30 years. “That’s the way they think now at the hospital.”
PeaceHealth spokesperson Victoria Wilson said the hospital offers patients interest-free 12-month payment plans. For some patients, the monthly obligation is unaffordable. PeaceHealth also now offers longer-term plans with a 9% interest rate “in alignment with current regulations,” she said, declining to elaborate further.
“Each patient who comes to us seeking care is experiencing a vulnerable moment in their life and needs healing,” Wilson said in an emailed statement. “We hold each healing opportunity sacred, so financial healing is closely aligned with our Mission.”
The “Ethical and Religious Directives for Catholic Health Care Services,” issued by the U.S. Conference of Catholic Bishops, outlines social responsibility principles for Catholic health facilities. One states that “a just health care system will be concerned both with promoting equity of care—to assure that the right of each person to basic health care is respected—and with promoting the good health of all in the community.”
As of 2023, there were just over 600 Catholic general hospitals nationally and roughly 100 more managed by Catholic chains that place some religious limits on care, a KFF Health News investigation revealed.
Catholic nuns established many hospitals in the name of service. But modern-day practices at such facilities demonstrate how they adhere to the directives and church teaching in one way—prohibiting or limiting procedures that the church deems immoral, such as abortion and what it calls “assisted suicide”—while neglecting social responsibility standards, patients and clinicians said.
“It does show the lack of control or influence that the faith organization has over the actual company,” said Shane Alderson, chair of the Baker County Board of Commissioners in Oregon. The local Catholic hospital owned by Trinity Health—Saint Alphonsus Medical Center-Baker City—last year shut down its obstetrics department. Its intensive care unit is also closed, Alderson said.
“You get the feeling when you go to a Catholic hospital that the care and the vision is a lot more defined by the faith,” he said, adding, “It’s not really. It’s corporate.”
Sister Mary Haddad, president of the Catholic Health Association, said in a written statement that Catholic health systems “remain true to our origins and the missions on which we were founded through our ongoing commitment to serving those most in need.” In addition to patient care, she said, this includes investing in programs to address societal problems such as homelessness and food insecurity.
Health systems like CommonSpirit Health, Ascension, PeaceHealth, Trinity Health, and Providence St. Joseph pay their chief executives millions of dollars a year—payouts that kept pace during the COVID-19 pandemic emergency, according to each company’s tax filings.
CommonSpirit Health’s then-CEO Lloyd Dean earned roughly $28 million in 2022; he was among nearly three dozen executives who pulled down more than $1 million that fiscal year, according to the health system’s tax filings.
Elsewhere, Rod Hochman, CEO of Providence St. Joseph Health, earned $12.1 million. Ascension CEO Joseph Impicciche was paid $9.1 million, according to corporate tax filings.
Spokespeople for Providence and Ascension said CEO compensation levels are market-competitive; CommonSpirit spokesperson Felicity Simmons said that Dean, who retired in July 2022, like other retiring executives “received standard deferred compensation benefits consistent with their many years of service.” (CommonSpirit’s 2021 tax filing showed Dean earned $35.5 million that year.)
To maintain their tax-exempt status, all nonprofit hospitals are required to spend on community benefits, but federal law doesn’t specify how much or which services qualify.
Several large nonprofit Catholic health systems spend far less on community benefits such as free or discounted care to eligible patients and community health improvement services than the estimated value of the millions they secure in tax breaks, according to research by the nonpartisan Lown Institute.
Based on 2021 data, the think tank found that five of the 10 health systems with the greatest “fair share deficits” are Catholic: Providence, CommonSpirit Health, Trinity Health, Ascension, and Bon Secours Mercy Health’s deficits were between $488 million and $1 billion.
Research by Community Catalyst, a consumer advocacy group, found that Catholic hospitals treat fewer Medicaid patients than other nonprofit hospitals, something at odds with their mission of prioritizing health care needs of the poor and underprivileged. And like other hospitals nationwide, many large Catholic health systems allow aggressive tactics against patients for unpaid medical bills, such as using third-party collections, filing lawsuits, placing liens, garnishing wages, reporting bad debt to credit bureaus, or restricting care to people who owe, a KFF Health News investigation found.
Catholic bishops are “quite zealous for making sure that the reproductive and end-of-life care components of the ERDs are followed,” said Patricia Gabow, a physician who led a Denver safety net health system for two decades and has written about the evolution of Catholic health care in the U.S. She said “they should be as zealous” on enforcing the directives outlining Catholic health care’s social responsibilities.
Among those directives is this: “Catholic health care should distinguish itself by service to and advocacy for those people whose social condition puts them at the margins of our society and makes them particularly vulnerable to discrimination,” including “the poor, the uninsured and the underinsured” and “children and the unborn.” The U.S. Conference of Catholic Bishops declined to comment for this article, referring questions to the Catholic Health Association.
PeaceHealth’s first hospital was founded in the 1890s by nuns from New Jersey who ventured to the West to care for loggers, millworkers, fishers, and their families in the country’s remote frontier. Seven nuns and a cook staffed St. Joseph Hospital in Whatcom County, Washington, where Bellingham is located. St. Joseph is the Catholic patron saint of families, workers, and the dying.
Now no nuns serve on St. Joseph Medical Center’s or PeaceHealth’s leadership teams; two are on the health system’s 11-person board of directors. PeaceHealth CEO Liz Dunne earned $3.6 million in the fiscal year that ended June 30, 2023, tax filings show, and the Lown Institute estimates the health system spent $108.7 million less on community investments than the value of its tax exemptions. PeaceHealth declined to comment on executive compensation or the Lown Institute’s findings.
In 2023, the health system was forced to refund up to $13.4 million to more than 15,000 low-income patients after the Washington attorney general’s office found it billed patients who should have received financial help.
Catholic health systems “set a standard for themselves which is higher” than other U.S. hospitals, Gabow said. “Do they reach what they set for themselves? And there’s a fair amount of data to say probably not.”
Shutting down maternity care
For more than a century, a Catholic hospital now named Saint Alphonsus Medical Center has provided care in Baker City, Oregon, a 10,000-person town less than 100 miles from the Idaho border.
The hospital was founded in 1897 by nuns from Philadelphia. They treated 115 patients in the first year, “many of whom were loggers, ranchers, and gold miners,” according to a document detailing its history. Patients “received complete health coverage” for $1 a month.
Like many of its peers across the nation, the small rural hospital would become part of larger Catholic health systems. In 2010 it settled in as part of Trinity Health, the nation’s fourth-largest hospital system by number of beds, according to federal data. Trinity Health operates 101 hospitals, plus other care sites, in 27 states.
CEO Michael Slubowski’s most recently reported salary was $5.3 million in the company’s 2023 fiscal year, when Trinity had an operating margin of -2%, according to financial statements and tax filings. Operating margins are a measure of a hospital’s financial health.
Trinity Health spokesperson Melissa Lander said Slubowski’s compensation is based on factors including experience and performance, and pay “must be market competitive to attract and sustain talented people.”
Baker City was given a jolt in 2023. Blaming staffing shortages and a decline in births, hospital executives announced that Saint Alphonsus would close its obstetrics unit, the only one in the county. The move caused an uproar locally and pushback by Oregon’s two Democratic senators.
“What they were doing is essentially getting rid of the unit that made no money and cost a lot,” said Cathie Roach, a nurse who worked in Saint Alphonsus Medical Center’s obstetrics unit for roughly a decade before retiring last year.
Roach said the staffing shortages were “pretty much of their making.” Hospital management rotated nurses among departments in ways that made some feel “really uncomfortable,” and the hospital didn’t consider alternative ways of staffing the OB unit, she said.
For months, she said, nurses were getting hints that executives might close the birth center and began looking for jobs elsewhere. “Out here if you want to be an OB nurse and this is the only hospital, and they start talking about closing,” she said, “then, time to get out.”
Hospital leaders said its obstetric deliveries had “declined at a record rate.” However, birth data from the Oregon Health Authority tells a different story.
Births at the Baker City hospital declined to 103 in 2015, a nearly 30% drop from 2013, before rebounding. Annual births were in the 120s or 130s until the COVID-19 pandemic took hold, when they fell 25% from 2019 to 2020. Still, from 2020 to 2022, between 100 and 112 babies were delivered each year.
Saint Alphonsus Health System and Trinity Health declined to comment.
Now the closest hospital where a person can give birth is over 40 miles away. In the winter in eastern Oregon, roads to get there are often closed.
In 2023, 54% of Baker County resident births were paid for by Medicaid, the health coverage program for people with low incomes, according to Oregon Health Authority statistics. That’s a higher share than Medicaid-covered births statewide.
“They really lost their charity,” Roach said, “when the old nuns disappeared.”
The reach of market power
The actions of Catholic health systems can have an outsize impact because of their reach, fueled by mergers in recent years: Four of the 10 largest U.S. hospital chains by number of beds are Catholic, according to federal data from the Agency for Healthcare Research and Quality.
Haddad noted that that power has worked for the good of vulnerable populations.
The association and most of the Catholic health systems criticized the Lown Institute report on community benefit spending as flawed for excluding several categories reported to the IRS, including uncompensated care costs and spending on health professional education. Haddad called the research an effort “to disparage the work of Catholic health care by publishing misleading and biased reports that cherry-pick data.”
The Lown Institute considers five categories of community investments, including financial assistance for patients, community health services, and health services such as free clinics and addiction treatment.
Ascension spokesperson Sean Fitzpatrick called the report an “exercise in misinformation”; Trinity Health’s Lander said it “gives inaccurate and, unfortunately, misleading conclusions.”
Bon Secours Mercy Health spokesperson Maureen Richmond said that the report “utilizes flawed high-level assumptions and incomplete data” and that the health system’s community benefit spending in 2021 exceeded the value of its tax exemptions by more than $274 million—while Lown calculated that its benefit fell short of tax exemptions by $488 million. Providence spokesperson Melissa Tizon said Lown’s methodology “falls short.”
The CHA and multiple health systems declined to answer questions about whether certain business practices raised by this story were consistent with the mission of Catholic health care.
Years ago, Catholic hospital mergers were motivated primarily by ministry, said Lawrence Singer, a retired associate professor who was affiliated with Loyola University Chicago School of Law. But things have changed.
“It really isn’t ‘save the ministry’ any longer,” he said. “It’s really business that’s driving a lot of this now.”
Consolidation raises market power, and several studies have found that it leads to higher prices for patients while the quality of care remains steady or declines.
The Federal Trade Commission has blocked certain deals it predicts could reduce competition. Historically, the agency has targeted transactions in which hospitals operate in the same market, according to antitrust law experts. State regulators have broader authority than the federal government, but most states can’t reject proposed mergers without going to court, according to researchers at the University of California Law-San Francisco.
Some of the largest Catholic health systems, including CommonSpirit Health, Providence St. Joseph Health, and Trinity Health, achieved their size due to a different strategy: combining companies with little to no geographic overlap. Such “cross-market mergers” are traditionally harder for the FTC to block, according to health care antitrust experts.
When hospitals in the same market try to merge, “in some ways it’s a lot easier to quantify what’s going on” and the potential harm to competition, said Kevin Hahm, an antitrust attorney at Hunton Andrews Kurth and a former FTC official who investigated health care transactions.
But deals involving hospitals in different regions are increasingly drawing scrutiny. Researchers at the University of California-Berkeley, UC Law-San Francisco, and the University of Auckland found that health systems that acquired hospitals more than 50 miles away increased prices by 12.9% after six years compared with hospitals not involved in mergers or acquisitions.
“The new frontier,” said Thomas Greaney, one of that merger study’s authors, “is whether we’ll go after what we’ve called system power.”
Bellingham is one of the nation’s least competitive hospital markets: In 2021, it was the fifth most concentrated in the U.S. and had the highest health care prices of metro areas in Washington, according to the nonprofit Health Care Cost Institute.
The nuns who established PeaceHealth’s first hospital would open or operate others throughout the 20th century. PeaceHealth also acquired hospitals through mergers, including Southwest Medical Center in Vancouver and United General Hospital in Sedro-Woolley.
“PeaceHealth is the leader in all three of its markets, with decided market share leads in its Northwest and Oregon markets,” credit ratings firm Fitch Ratings reported in March. PeaceHealth declined to answer questions about whether a desire to charge higher prices drives market decisions.
Its hospitals stand out for what they’re paid. Rand Corp. researchers told KFF Health News that commercial health plans in 2022 paid PeaceHealth’s Washington hospitals 314% of what Medicare would have paid for the same services. Those are the highest-priced rates among health systems in the state, according to Rand’s analysis. PeaceHealth declined to comment.
Staten’s medical bill from PeaceHealth is gone. She used the home equity line of credit to pay it off. Now she’s paying more on her mortgage every month.
She said she can’t afford to have another experience like her kidney stone surgery, which she was told involved a laser to break the stones into smaller pieces.
“It’s not like you’ve got three hospitals to choose from,” Staten said. “We’re a captive audience.”
2024 KFF Health News. Distributed by Tribune Content Agency, LLC.
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