Sanders' Senate committee report puts nonprofit hospitals on notice while bi-partisan appetite for reforms intensifies.

In “American Hospitals: Healing a Broken System,” a documentary I helped produce, journalist Elisabeth Rosenthal succinctly summed up a big reason why so many of us are mired in medical debt: While the pharmaceutical industry and other parts of the U.S. health-care system have faced scrutiny by lawmakers and the media, hospitals have gotten off relatively “scot-free.” This despite the fact that almost a third of the $4.3 trillion we spend on health care goes to hospitals.

American Hospitals: Healing a Broken System (Trailer):

Rosenthal would know. She has been covering health care for The New York Times and KFF Health News (formerly known as Kaiser Health News), and is the author of the bestseller An American Sickness: How Healthcare Became Big Business and How You Can Take It Back. 

At long last, hospitals’ business practices – especially those that have made the lives of an untold number of low-income Americans a living hell – are beginning to get the attention of members of Congress and a handful of investigative reporters. “American Hospitals,” which premiered in Washington in late March and will be available on Amazon, Apple TV/iTunes and Google Play on Nov. 10, along with those reporters, can claim at least some of the credit. 

A few days ago, Bernie Sanders, chair of the U.S. Senate Health, Education, Labor and Pensions (HELP) Committee, released a report titled, “Major Non-Profit Hospitals Take Advantage of Tax Breaks and Prioritize CEO Pay Over Helping Patients Afford Medical Care.” It came on the heels of a letter by a bipartisan group of senators – Elizabeth Warren (D-Mass.), Chuck Grassley (R-Iowa), Raphael Warnock (D-Ga.), and Bill Cassidy (R-La.) – sent to IRS and Treasury officials asking for an evaluation of nonprofit hospitals’ compliance with their tax-exempt requirements. They said they sent the letter “following reports that some nonprofit hospitals are taking advantage of their tax-exempt status in ways that restrict care or drive up costs for patients.”

Sanders’ HELP Committee report leads off with the experience of Carrie Barrett, a grocery-store employee who was experiencing chest pain and shortness of breath and was taken to the emergency room of a Methodist Le Bonheur hospital in Memphis. She was admitted, underwent a heart catheterization and spent two nights in the hospital.

Despite the fact that she made less than $12 an hour – and the fact that Methodist is a tax-exempt, nonprofit hospital that is required by law to provide charity care to poor patients – she was billed $12,019. That was in 2007. Three years later, the hospital sued her and hounded her for years. 

As Sanders’ wrote, Barrett “had no hope of paying back that bill. But the hospital not only refused to help Barett afford her bill, it instead piled on interest and sent the bill to collections. By June 2019, she owed over $33,000, nearly three times the original cost of the procedure and more than twice what she earned in a year.” The hospital also garnished her meager paycheck 15 times.

Barrett’s story was first told by prize-winning Memphis journalist Wendi C. Thomas, a former columnist for the daily newspaper The Commercial Appeal who went on to found MLK50: Justice Through Journalism to commemorate the 50th anniversary of the assassination of Dr. Martin Luther King Jr. in Memphis. In 2020, Thomas won the Selden Ring Award and the Gerald Loeb Award for her reporting on predatory health-care practices in the city.

Thomas’s investigative work attracted national attention in June 2019 when she collaborated with ProPublica to shed light on how many tax-exempt hospitals have ignored the legal mandate to use a portion of their revenues for charity care and “community benefit.”

The headline was riveting: Profiting from the Poor: The Nonprofit Hospital That Makes Millions, Owns a Collection Agency and Relentlessly Sues the Poor. It noted that Methodist Le Bonheur had brought 8,300 lawsuits for unpaid medical bills in just five years.

It was such a PR black eye for Methodist that the hospital later announced it would erase debt for unpaid hospital bills owed by more than 6,500 patients. The New York Times and other media outlets have published similar stories about hospitals that behaved as badly if not worse than Methodist. The Times carried a story earlier this year about how a wealthy nonprofit hospital in Minnesota – Allina Health System – reportedly prohibited its doctors from seeing poor patients or children with too many unpaid medical bills. 

As Sanders noted in his report, the federal government requires nonprofit hospitals with tax-exempt status to “operate for the public benefit by providing a set of community benefits, which includes ensuring low-income individuals receive medical care for free or at significantly reduced rates.” 

In addition, the Affordable Care Act of 2010 added additional community benefit requirements, including stipulating that hospitals must maintain a publicly available financial assistance program. It also prohibited hospitals from taking “extraordinary collection actions” against patients who are eligible for charity care. 

The Sanders report cited a recent study that found that in 2017, nonprofit hospitals billed $2.7 billion to patients who were likely eligible for charity care. “At a time when a record number of Americans report delaying medical care due to high costs, those choices from well-resourced hospitals ensure that future patients, including those who qualify for charity care, will hesitate before they seek the necessary care out of fear of accruing medical debt. That is unacceptable.”

Sanders said Congress should take steps to ensure that nonprofit hospitals are offering charity care “at levels consistent with the enormous tax breaks they receive” and also “define the community engagement necessary to justify a hospital’s non-profit status.”

Echoing language from the letter Sens. Warren, Grassley, Warnock and Cassidy sent to regulators, Sanders said the IRS could address the administrative gaps “that allow non-profit hospitals to benefit off the people they are failing to help.”

When I checked in with Sen. Warren’s staff a few days ago, they told me they haven’t heard back yet from the IRS and Treasury. I’ll let you know what they say – if and when they reply.