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SUNDAY • APRIL 22, 2012 • $2.00 charlotteobserver.com CDEF ■ +

$6.7 NONPROFIT HOSPITALS billion THRIVE ON PROFITS 6 CHS

First of five parts 5 By Ames Alexander, Karen Garloch Hospitals in the Charlotte and Joseph Neff [email protected] [email protected] region are among the most [email protected] onprofit hospitals in the Char- profitable in the U.S. They have 4 lotte region are respected com- munity institutions. They save $3.4 lives, heal the sick and provide billions in investments and real billion N good jobs. At the same time, most of them are stock- estate. Experts say they should piling a fortune. Their profits have risen along with their 3 prices. Top executives are paid millions as do more to lower patients’ their hospitals expand, buy expensive tech- nology and build aggressively. rising costs. And they benefit each year from a perk Novant worth millions: They pay no income, prop- erty or sales taxes. Total revenue These institutions were created with 2 charitable missions. But many don’t act like $1.4 nonprofits anymore. In their quest for billion growth and financial strength, they have contributed to the rising cost of health care, leaving thousands of patients with bills they struggle to pay. 1 An investigation by The Charlotte Ob- server and The News & Observer of Ra- $1.04 Soaring revenue PHOTOS BY ROBERT LAHSER - [email protected] leigh found that many Charlotte-area hos- billion Carolinas HealthCare System has watched its total pitals: annual revenue grow nearly five-fold since 2000; at • Generate some of the nation’s largest Novant Health, the number has more than tripled. profit margins. Despite the Great Reces- sion, they have amassed billions of dollars in reserves. 2000 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 • Inflate prices on drugs and procedures, Note: Figures for Carolinas HealthCare are for the total enterprise, including facilities managed and leased by the system. sometimes as much as 10 times over costs. Hospital prices in the region are about 5 percent higher than the national average INSIDE and comparable to those of larger cities, CHS evolution: public such as Chicago, Dallas and New York City, MONEY FLOWS TO according to Aetna insurance company. EXECUTIVE SALARIES • Hike prices almost every year. Blue Cross At Carolinas HealthCare and hospital, private attitude and Blue Shield of North Carolina, the Novant Health, top officials state’s largest health insurer, says its total are paid millions. 8A By Karen Garloch even hospital leaders who de- cost per hospital admission went up nearly and Ames Alexander cided that, to survive, they need- 40 percent from 2007 through 2010. [email protected] ed to attract paying patients as • Pay their top executives millions. Nine- THE MYSTERIOUS [email protected] well as the uninsured. teen officials at Carolinas HealthCare Sys- HOSPITAL BILL Carolinas HealthCare System “We have so far overachieved tem and Novant Health got total compensa- Trying to decipher hospital wasn’t always the sprawling, our vision of 30 years ago, it’s tion exceeding $1 million in 2010 or 2011. charges isn’t easy. 10A profitable giant it is today. hard for me to comprehend,” All of this is entirely legal. No laws limit Only 30 years ago, it was a said board chairman Jim Hynes. profits, charges or executive pay for non- HOSPITAL COSTS charity hospital called Charlotte Mecklenburg County officials profit hospitals. CRUSH SOME PATIENTS Memorial – a crowded, dreary watched in amazement, too. Hospital officials say they’re simply act- Vietnam War vet Cleveland place that lost money every year They wondered why they ing as they must to survive. They point to a Davis got a $200,000 tab, because most of its patients should continue to subsidize in- U.S. health care system that rewards hospi- and then he got sued. 9A couldn’t pay their bills. digent care for a hospital system tals for providing more sophisticated serv- DIEDRA LAIRD – [email protected] Today, the nonprofit system that was making plenty of mon- ices to meet consumer demands. owns or manages about 30 hos- ey on its own. “The trajectory that we are on in health THE SERIES MORE ONLINE pitals, has nearly $7 billion in Finally, last June, county com- care spending is not sustainable,” said Mi- revenue and pays top executives missioners voted to stop paying TODAY TUESDAY See our audio chael Tarwater, CEO of Carolinas Health- millions of dollars. It’s the larg- Carolinas HealthCare $16 million Profitable nonprofits Suing the needy slideshow and Care. WEDNESDAY interactive map for est employer in Mecklenburg a year to care for the uninsured. He said patient expectations are: “I want MONDAY Staying strong in Raleigh information about your County and the nation’s second- With a profit of $428 million in the best. I want it now. I want it close. And I largest public hospital system. 2010 and nearly $2 billion in re- Charity care lacking THURSDAY hospital. SEE HOSPITALS, 8A The transformation amazes SEE CHS, 10A Policies that could help charlotteobserver.com

64o 42o COMPARE THE CANDIDATES Black churchgoers break with leading Forecast: Cloudy, showers. 12B Learn the views of those seeking three © 2012 The Charlotte Observer at-large Mecklenburg Vol. 143, No. 113 Democrats on marriage amendment County commissioner By Michael Gordon Thirty-one states – in 31 tries – have seats May 8. 3B and Tim Funk approved amendments to block gay [email protected] unions. Based on the polls, North Caro- Bishop Phillip Davis had not planned lina is a good bet to extend the streak to talk about marriage and politics, but May 8, due in part to African-American Ask Amy ...... 4E Famed author: five minutes into his sermon at Nations congregations like Nations Ford. Books ...... 5E Doris Betts, a cele- Business ...... 1D Ford Community Church in Charlotte A March 23 survey by Public Policy brated Southern Classified ...... 6B he changed his mind. Polling of Raleigh showed that black writer and UNC Editorial ...... 24A Not only should the 6,000 mem- voters statewide support the measure Horoscope ...... 4E Chapel Hill profes- bers of the overwhelmingly African- 61 percent to 30 percent. Whites: 58-38 Lottery...... 1B sor, has died. 1B Obituaries ...... 5B American congregation pray with ROBERT LAHSER - [email protected] percent in favor. Sports...... 1C one voice, he said, come May 8 they Bishop Phillip Davis told Nations More than 80 percent of the state’s Auto mall: Rick TV...... 6E should vote with one, too. Ford Community Church to vote yes African-American voters are Demo- Delivery assistance Hendrick is opening “You know, we got this amendment on Amendment One. crats. Their support for the amend- or to subscribe a $55 million luxury on the ballot,” Davis said, walking to ment represents a rare break with the ...... 800-532-5350 auto mall in north To subscribe to the back of the church stage, then “If I was your pastor, and I was mar- party’s leaders and civil rights groups. Mecklenburg. It’s a OnTV magazine throwing his arm around a member of ried to him, how many of y’all would President Barack Obama, who in ...... 877-800-1335 bet on growth. 1D the men’s choir as laughter grew. be here today?” SEE BLACK CHURCH, 4A

+ 8A Sunday, April 22, 2012 ■ PROGNOSIS: PROFITS charlotteobserver.com • The Charlotte Observer +

Charlotte area: Home to the state’s most profitable hospitals First on the state’s profit list: Presbyterian Hospital Matthews. The chart shows total margins MILLION-DOLLAR EXECS and operating margins for hospitals in the Charlotte area. Experts interviewed say that the Twenty-five N.C. nonprofit hospital executives made total compensation exceeding best measure is total margin, which includes investment income. But some hospital officials prefer looking at operating margin, which excludes investment income and reflects profits $1 million in 2010 or 2011. Executive raises have been generous. So have retirement from hospital operations. The figures are for 2010. packages. In 2009, Pitt County Memorial Hospital in Greenville, N.C., reported total Operating compensation of $8.7 million to former CEO David McRae, including a $7.7 million Carolinas HealthCare System Total margin margin payout to a retirement trust. When former Gaston Memorial CEO Wayne Shovelin Hospital CMC-Mercy/Pineville 28.6% 19.8% retired in 2009, he received a retirement payment of $5.9 million - a combination CMC-University 25.6 20.2 of deferred compensation and contributions from the hospital's parent company. Carolinas Medical Center 15.2 -9.8 CMC-NorthEast, Concord 11.3 -0.9 CAROLINAS HEALTHCARE SYSTEM CMC-Union, Monroe 9.6 6.5 Grace Hospital, Morganton 7.8 -7.0 -1.3 Valdese Hospital, Burke County -5.5 -1.9 Kings Mountain Hospital -2.0 -4.1 CMC-Lincoln -4.8

Total system8.4% Operating Margin 3% Michael Tarwater Joseph Piemont Greg Gombar Novant Health Total margin CEO President/COO CFO Hospital Presbyterian Matthews 34.7% 34.6% Carolinas Healthcare System Carolinas Healthcare System Carolinas Healthcare System Presbyterian Huntersville 33.5 33.4 +14.1 +19.7 +8.9 $4,236,305 % $2,536,792 % $1,751,798 % Presbyterian Orthopaedic 30.7 29.8 Presbyterian Hospital 22.0 20.4 Rowan Regional, Salisbury 1.6 0.2

Total system 4.5% Operating Margin 2.0% Other Hospital Davis Regional, Statesville 14.6% 14.1% Lake Norman Regional 14.2 13.1 Laurence Hinsdale Paul Franz Dennis Phillips Piedmont Medical Center, Rock Hill 11.6 10.8 Executive VP Executive VP Executive VP Catawba Valley Medical Center 1.1 Carolinas HealthCare System Carolinas HealthCare System Carolinas HealthCare System 4.7 Gaston Memorial 2.6 5.5 44.1 -1.3 +12.2 $1,693,314 % $1,575,927 % $1,351,138 % Iredell Memorial, Statesville 2.2 -0.3 Caldwell Memorial, Lenoir 1.6 -3.5 -6.8 Frye Regional, Hickory -7.7

NOTE: The profit figures for individual hospitals are based on data that hospitals report to the federal government in their Medicare cost reports. Officials for Carolinas HealthCare contend that in large systems like theirs, Medicare cost reports often yield misleading profit numbers. Federal officials say that if hospitals report accurately, those figures should be reliable. Figures for Carolinas HealthCare are based on its obligated group, which includes hospitals in Mecklenburg, Cabarrus and Lincoln counties, plus the Carolinas HealthCare Foundation. SOURCE: American Hospital DirectoryAMES ALEXANDER – RESEARCH DAVID PUCKETT – STAFF CHART John Knox Roger Ray Russ Guerin Chief Administrative Officer Chief Medical Officer Executive VP Carolinas HealthCare System Carolinas HealthCare System Carolinas HealthCare System HOSPITALS Hospital profit center Hospitals in the Charlotte region are more prof- +11.8 NA +3% • from 1A $1,197,528 % $1,080,159 $1,060,931 itable than all but one of the nation’s largest metropolitan areas, according to one report. Source: Carolinas HealthCare System; Note: Compensation figures are for calendar year 2011. don’t care what it costs. Those are the demands Here are the five most profitable metropolitan in which this system grew up.” areas for hospitals. Hospital leaders say profits support their mis- sion of caring for all patients, wealthy or poor. Region/ Median total OTHER HOSPITALS AND SYSTEMS They say they need to pay competitive salaries City profit margin to attract talented leaders. And they say they 1) Salt Lake City 13.7% need to operate like businesses to survive in tur- bulent times. 2) Charlotte-Gastonia-Rock Hill 12.4% But in many important ways, nonprofit hospi- 3) Indianapolis 7.5% tals differ from private businesses. They don’t 4) Houston-Galveston-Brazoria 7.0% answer to stockholders. They don’t compete on 5) Orlando, Fla. 7.0% price. They don’t even tell customers what they — SOURCE: 2011 “STATE OF THE HOSPITAL INDUSTRY” REPORT BY charge. Victor Dzau Paul Wiles Carl Armato CLEVERLEY AND ASSOCIATES President/CEO President/CEO (now retired) Sr. Executive VP (now CEO) Critics say many hospitals aren’t just surviv- Duke University Health System Novant Health Novant Health ing, they’re thriving – and could afford to make medical care less expensive for everyone. on price. They compete by offering more high- +1.3 +18.2 +10.3 $2,229,145 % $2,215,773 % $2,133,626 % Nonprofit hospitals have become part of the tech and costly services. problem, critics say. By consolidating into large “John Q. Citizen is who winds up paying for systems, hospitals gain leverage to negotiate ev- this. Not big bad insurance companies ...,” said er higher payments from insurance companies. Martin Gaynor, professor of health policy at That means patients and employers pay more Carnegie Mellon University. “It’s actually taking for treatment and insurance – to the point where money out of everybody’s paycheck.” a single medical catastrophe can be financially Inflated prices devastating. As hospitals grow, critics contend they are Across North Carolina, hospital prices have straying from their charitable missions. surged. Gregory Beier Wayne Shovelin Charles Frock “There’s no accountability anymore,” said They are more than 10 percent higher than the President Novant Operations CEO (retired) President/CEO Adam Searing, project director for the N.C. national average for Aetna, said Jarvis Leigh, a Novant Health Gaston Memorial Hospital First Health of the Carolinas Health Access Coalition. “They started as these network vice president in the Carolinas. +11.4 +41.7 -0.4 social welfare experiments, with all this com- According to the 2011 “State of the Hospital $2,108,839 % $1,762,418 % $1,731,327 % mitment. ... What they should work for is that no Industry” report published by Cleverley and As- person has to go bankrupt or lose their house to sociates, an Ohio-based consulting firm, Char- pay their hospital bills. … That’s not a very high lotte-area hospitals receive more money for standard.” treating each patient, on average, than those in Birth of a giant most other large urban areas. This despite the fact that their average cost of treating those pa- To understand what’s happening nationally, tients is lower. one need look no farther than Charlotte’s Dil- Like others around the U.S., hospitals here worth neighborhood, where North Carolina’s boost their revenue with substantially marked- largest hospital system got its start. up prices on drugs and procedures. John McConnell Sallye Liner Jacqueline Daniels Carolinas HealthCare System began in 1943 Carl King, head of national contracting for CEO Chief Clinical Officer Chief Administrative Officer Wake Forest Baptist Medical Center Novant Health Novant Health with a 325-bed hospital called Charlotte Memo- Aetna, said insurance companies usually pay 40 rial, which struggled financially for decades. percent over a hospital’s cost as hospitals seek to NA +33.7 +11.7 Its leaders decided they needed to grow to make up for losses on government insurance $1,681,680 $1,641,893 % $1,580,012 % survive. They built a system that could attract programs. paying patients while continuing to care for the While it’s unclear how markups in the Char- uninsured. It worked. lotte area compare with those elsewhere, the Over the past 30 years, they have transformed Observer found inflated prices on more than a it into a juggernaut. It’s now the country’s sec- dozen local hospital bills, including: ond-largest public hospital system, behind only • Lake Norman Regional Medical Center, a for- the nationwide system of Veterans Affairs hospi- profit hospital in Mooresville, billed one patient tals. about $3,000 for two CT scans in 2010. That was One of the benefits of that growth is access to more than four times the hospital’s average cost, quality medical care. Carolinas HealthCare of- according to American Hospital Directory, a Stephen Wallenhaupt David McRae Fred Hargett fers one of five organ transplant programs in the service that uses federal Medicare cost reports Chief Medical Officer CEO CFO state and operates the region’s most compre- to examine hospital finances. Novant Health Pitt County Memorial Hospital Novant Health hensive trauma center, where accident victims • Presbyterian Hospital billed the state $15,840 +20.9 NA +54.8 frequently arrive via medical helicopter. Five- in 2010 for use of its cardiac catheterization lab $1,577,360 % $1,534,183 $1,405,451 % year-old Levine Children’s Hospital has brought after treating a prison inmate. The average cost new pediatric specialties to Charlotte, and Le- for using its cath lab: about $1,064. The bill was vine Cancer Institute has recruited specialists covered in full by taxpayers. from such respected institutions as the Cleve- One patient, Robert Talford, was so outraged land Clinic. by his 2007 bill from Carolinas Medical Center With nearly $7 billion in annual revenue, Car- that he has taken the issue to the N.C. Supreme olinas HealthCare runs about 30 hospitals. It Court. owns more than $1 billion worth of property in Talford refused to pay the bill after discovering Mecklenburg County alone, and it has more the hospital charges on some drugs were up to 24 than $2 billion in investments. times higher than what those medications cost him Arthur Patefield Lawrence McGee Tony Johnson In the five-year period ending in 2011, it spent at the pharmacy. He has asked the court to deter- Chief Medical Information Officer General Counsel Senior VP $1.8 billion on capital projects. mine whether those charges are reasonable. Novant Health Novant Health Novant Health Growth at Novant Health, the region’s other Such markups trouble Jason Beans, the CEO +0.7 +0.1 +69.6 major hospital system, has been almost as dra- of Rising Medical Solutions, which examines $1,225,106 % $1,189,576 % $1,105,271 % matic. medical bills for payers. Novant owns 13 hospitals, including the three At the newspapers’ request, Beans’ firm ex- Presbyterian hospitals, and has total annual rev- amined bills from various North Carolina hospi- enue of more than $3 billion. The system had tals and found possible markups as high as 500 Source: IRS returns filed by the hospitals. The returns are for calendar and about $1.6 billion in cash and investments in percent. 2010 – a three-fold increase over the decade. “Everyone blames the (insurance) carriers, fiscal year 2010, the latest available. The two chains own all eight hospitals in but what the hospitals are doing in these situa- Note: Total compensation includes base pay, bonuses, benefits and deferred Mecklenburg. tions is egregious,” Beans said. “No other indus- compensation. But it does not include compensation reported in previous As hospital systems have grown, experts say, try can justify charging markups of 500 percent. years’ IRS returns. (IRS rules require nonprofit organizations to report some they’ve been able to use their market power to Health care is often a need, not a want. The sys- William Fulkerson forms of compensation, such as deferred compensation, in two separate demand higher payments from insurance com- tem is so broken.” Executive VP years – the year the company puts aside deferred compensation for the panies. And that has allowed them to grow even Hospital officials defend their prices, saying Duke University Health System executive, and the year the executive actually collects that compensation.) more. their charges for drugs and tests must cover +10.1 While volume business at Wal-Mart and Tar- overhead. They say they must mark up prices $1,020,658 % get has led to lower prices, the opposite is true in for those with private insurance or they’d be ru- the hospital industry. Hospitals don’t compete SEE MARKUPS, 9A + The Charlotte Observer • charlotteobserver.com PROGNOSIS: PROFITS ■■■ Sunday, April 22, 2012 + 9A Hospital sues veteran Insured, but deep in debt By Karen Garloch [email protected] August May’s job as a parale- for almost $200,000 gal provides health insurance, so she had little reason to think having a baby would turn into a By Ames Alexander financial ordeal. But like thou- [email protected] sands of other North Carolin- The trouble began on a Christmas Day. ians, May discovered hospital That afternoon in 2005, Cleveland Davis’ bills can be crushing, even for head began hurting, and his speech became those with insurance. slurred. His family thought he might be suffer- When May gave birth to her ing a stroke. first child on March 17, 2010, They rushed him from his Charlotte home to the bill from Presbyterian nearby Carolinas Medical Center. Doctors found Hospital Matthews totaled al- problems, including a blood clot next to his brain most $15,000. and severe circulation problems in his legs. The hospital’s contract with Doctors amputated Davis’ left leg, drained Blue Cross and Blue Shield of blood from the clot and kept him for more than a North Carolina called for a dis- count to $7,788. Of that, insur- month for an array of tests and procedures. DIEDRA LAIRD - [email protected] ance paid $5,400. Because they In early 2006, the bills started arriving. The August May is still paying off hospital bills for the birth of had a high deductible, May hospital said Davis was responsible for paying her daughter, Ella, in 2010 and for her ear surgery last year. and her husband owed about nearly $200,000. Carolinas HealthCare System $2,300. later sued to collect on the bill. When they didn’t pay quick- owed Presbyterian Hospital very sad that even with the health insurance, we owe so A combat veteran who received the Purple ly, the couple was contacted by $3,200, not counting anesthesi- much money. Heart for injuries suffered in Vietnam, Davis a collections agency, and they ology. contends that if the hospital had done its job After making payments for “We’re trying to do the best arranged to make payments of we can and be responsible,” properly, the U.S. Department of Veterans Af- $50 a month. two years, the Matthews cou- ple still owes about $4,400. she said. “We all know that fairs probably would have covered his medical More than a year later, when money from our hospital bills bills. In court papers, he argued that the hospital baby Ella needed surgery for ear “It almost discourages you is helping to cover the cost of didn’t properly process the documents needed infections, May and her hus- from going to the hospital or everyone who does not pay to submit the bills to the VA. band again got stuck with a big the emergency room,” said their bill.” Hospital officials say they tried to work with bill because they hadn’t met May, 32, whose family income both Davis and the VA. But when the VA refused to their $1,750 deductible. They is about $65,000 a year. “It is Garloch: 704-358-5078 pay, they say, the bill became Davis’ responsibility. DIEDRA LAIRD – [email protected] Davis is one of thousands of patients sued by Cleveland Davis says, “I’ll spend the rest of my Carolinas HealthCare. It’s a bill-collection prac- life” paying Carolinas Medical Center. tice that most North Carolina hospitals have chosen to avoid. But officials say they are obli- Charlotte bankruptcy lawyer David Badger Surgery bills ruin her credit gated to try to collect whatever they can from says medical debt has been the driving force in patients who can afford to pay. about a quarter of the cases he has handled over For Concord resident Tra- In Davis’ case, the resolution of the dispute in the past decade. cie Potee, a hernia diagnosis 2008 proved costly. Davis said he agreed to pay Nationally, such cases have soared as medical was the beginning of a phys- $700 a month for three years to the hospital and prices rise. A 2009 study in the American Jour- ical and financial nightmare. clinics that provided his care. After that, he said, he nal of Medicine found that 62 percent of U.S. Following a 2006 operation agreed to pay $200 a month to the hospital. Those bankruptcies are linked to medical bills. at Carolinas Medical Center- payments have been his single biggest monthly ex- ‘Straight to the funeral home’ University and a second sur- pense, he says, and he still can’t understand how gery at a Winston-Salem hos- the total bill climbed so high. Davis has been able to avoid bankruptcy – but pital for subsequent compli- Davis receives about $4,400 a month from the not the stress associated with fighting the hospi- cations, Potee was facing VA. After exhausting most of his savings, his tal. more than $200,000 in hospi- modest three-bedroom house in northeast Officials with Carolinas HealthCare say the tal bills. Her insurance com- Charlotte – valued at $134,000 – had been paid in VA initially agreed that Davis was covered. But pany wouldn’t cover the treat- full before his hospitalization. later, after Davis was discharged, the VA notified ments, claiming the hernia Otherwise, he says, there’s no way he could CMC it wouldn’t pay for his care. was a pre-existing condition. make his monthly medical payments. For now, Under federal rules, the VA will pay for emer- Potee said she couldn’t af- he closely watches expenses and cringes each gency care in non-VA hospitals, but only until a pa- ford to pay the bills. They a- time he sends his check to the hospital. tient is stabilized. After that, the policy says, the pa- mounted to more than three “If I didn’t have to pay this, I could pay my (oth- tient, a responsible party or the hospital should ar- times what she made each er) bills without a struggle,” said Davis, now 64. He range for the patient’s transfer to a VA facility. year as a self-employed train- has paid only a small portion of his bill so far. “I Carolinas HealthCare officials say they re- er in the mental health profes- know I’ll spend the rest of my life paying this.” peatedly contacted the VA regarding Davis’ sion. Bankruptcies linked to medical bills transfer, but the patient was never offered a bed. Carolinas HealthCare Sys- Carolinas HealthCare said in a statement that tem sued to collect its share – Like Davis, many North Carolinians have it tried to work with Davis and the VA but could more than $17,000 – and won a found themselves owing more money to hospi- never get the federal government to pay. judgment. tals than they imagined possible. “The patient legally remains responsible for Her credit was destroyed, Among those hurt the worst are the unin- payment of the care provided,” the hospital said. she said. “Because of one in- sured, who number nearly 1.6 million in North Usually even-tempered, Davis doesn’t try to cident, you can be financially Carolina. conceal his feelings about CMC. ruined,” says Potee, now 47. In a 2010 survey by Care Ring, a Charlotte “I don’t ever want to go back there,” he tells It has taken her years to re- nonprofit that helps low-income residents, 63 his wife and children. “If I get sick and the VA is cover from the toll. “I’m just percent of clients polled reported they had med- full, take me straight to the funeral home.” now getting my financial DIEDRA LAIRD - [email protected] ical debt. Among those with debt, more than half house in order,” she said. “Because of one incident, you can be financially ruined,” reported their credit had been harmed as a re- Alexander: 704-358-5060 — AMES ALEXANDER says Tracie Potee, who couldn’t afford her surgery bills. sult.

Carolinas HealthCare, had a Hospital markups: The inflated cost of drugs lowed Carolinas HealthCare MARKUPS total margin of 26 percent in and Novant to amass large cash The Observer reviewed bills from area hospitals and found markups of more than 500 percent on • from 8A 2010. reserves – more than $2 billion some drugs and procedures. Hospital officials say they must mark up prices on drugs to cover Gerard Anderson, director and $1.6 billion, respectively. costs such as shipping, packaging and quality control. Here are examples from a bill that August ined by losses from treating pa- of the Johns Hopkins Center Officials say this allows the May received after having a baby at Presbyterian Hospital Matthews in 2010. tients who are covered by for Hospital Finance and Man- systems to maintain good cred- Medicare and Medicaid or agement, said margins in Zolpidem (a sedative) it ratings and borrow money at who are uninsured. Mecklenburg suggest hospi- Under its contract with the insurer, the hospital expected to be paid 52 percent of its full charges favorable rates. It lets them Jim Tobalski, a spokesman tals here “are charging a whole by the patient and her insurance company. At that rate, the hospital expected to be paid about build new facilities, add tech- for Novant, said Presbyterian lot for health care services.” $8 for the tablet of zolpidem. Some online merchants sell the tablets for less than $1 apiece. nology and maintain existing does not typically collect such “Anyone with insurance is buildings and equipment. large amounts for services paying prices substantially What’s more, they say, it may such as the cardiac catheteriza- higher than they should be help them weather the coming tion lab. That’s because insur- paying,” Anderson said. financial storm. ers and government agencies “That’s outrageous.” The coming ‘horse race’ usually pay hospitals much less Officials at Carolinas than full charges. HealthCare argue that the fig- Under health-care reform, Tarwater, the Carolinas ures for their individual hospi- scheduled to become fully ef- HealthCare CEO, said it’s un- tals are mislead- fective in 2014, the federal gov- fair to compare what retailers ing. They con- ernment plans to cut Medicare and hospitals charge for a pill tend that it’s in- reimbursement to hospitals because hospitals pay to have accurate to use and transfer more responsibili- the drug shipped, repackaged, Medicare cost re- Docusate (a stool softener) ty for Medicaid to the states. In checked and administered. ports to calculate turn, states will likely push Under its contract with the insurer, the hospital expected to collect about $4 for each tablet of Hospital officials say they’ve profit figures for costs to counties and hospitals. docusate, a stool softener. The tablets can be purchased for less than 10 cents apiece from worked to reduce costs for pa- Anderson hospitals within pharmacies and online merchants. “We have looked at the im- tients. a large, multi- pending future and tried to be Carolinas HealthCare has hospital system. Instead, they SOURCE: August May provided a copy of her bill. prepared for it,” said Jim saved $120 million in the last 10 say, it’s more accurate to look at AMES ALEXANDER – RESEARCH DAVID PUCKETT – STAFF GRAPHIC Hynes, chairman of the board years by consolidating, reduc- the margin of the entire sys- at Carolinas HealthCare. ing duplication, rebidding con- tem. was a decade earlier, when the without regard for profit. Duke University’s Center for “We’re going to have to have tracts and “finding better ways Federal officials say the fig- economy was stronger. Carolinas HealthCare, for the Study of Health Manage- strong finances … to sustain to do things,” Tarwater said. ures for individual hospitals Officials at Carolinas example, has proposed build- ment, says large systems with ourselves through the on- A profitable time should be reliable if hospitals HealthCare and Presbyterian ing a psychiatric hospital in high profits are spending ex- slaught that is coming.” report accurately. say they’re profitable because Huntersville, which is expect- cessively on new buildings, While hospital growth and It has been a good decade for Carolinas HealthCare’s core the Charlotte region is the ed to lose money. But they say new services and consolidation have been oc- Mecklenburg’s hospitals. operation in Mecklenburg, Ca- most populous in the state and they’re doing it because the high salaries. curring for years, the federal Despite the recession, all barrus and Lincoln counties – because their hospitals operate area needs more services. “They have Affordable Care Act is spur- were more profitable in 2010 which also includes doctors’ efficiently. Also, the system’s four pri- more margin ring more of it, experts say. than a decade earlier. offices, clinics and other facil- Presbyterian Matthews, for mary-care clinics in Charlotte than meets the The law calls for creation of Hospitals in the Charlotte ities – had an average total mar- instance, operates at near ca- serve more than 70,000 low-in- mission,” Schul- networks of hospitals, doctors region are more profitable gin of about 7 percent over the pacity, says Paul Wiles, the re- come patients a year who man said. “What and other medical providers. than those in all but one of the past three years. Novant had an cently retired CEO of Novant. might otherwise have relied on Schulman are they going to But that sort of consolidation nation’s 40 largest urban areas, average total margin of about But Wiles acknowledged more expensive emergency do with all the almost always leads to higher according to the Cleverley re- 3.5 percent over that period. that North Carolina is a good rooms for basic care. money they made? They can’t prices, studies have shown. port. Across North Carolina, place to run hospitals, largely “Because we run our health give it to shareholders. They “It’s a horse race right now,” Data from the N.C. Hospital healthy profits aren’t universal. because of low labor costs and care system like a business, be- put it all into infrastructure. … said Dr. Donald Berwick, for- Association show that hospi- About a third of hospitals – insurers that are “pretty good cause we try to do things to It leads the managers of the mer administrator of the Cen- tals in the multi-county Char- most of them small and rural – to work with.” make sure we’re fiscally sound, hospitals to build an ever more ters for Medicare and Medic- lotte area had an average total reported losing money in 2010. Margin and mission we’re able to do those things,” expensive delivery system.” aid Services. “(Hospitals) are margin of 12 percent in 2010 – CMC-Lincoln, which is run by said CEO Tarwater. “If your Schulman said that hospitals trying to gain more and more far higher than those in other Carolinas HealthCare, posted a Just because a hospital is a mission was solely to take care make choices about how they market power (to prepare for) parts of the state. $3.3 million loss that year. nonprofit doesn’t mean it of the indigent, you wouldn’t “deploy their capital against the changes that are coming.” Novant-owned Presbyterian But on the whole, North Car- makes no profit. Unlike for- stay in business very long. … their mission” and that they With those changes, many Matthews was the state’s most olina hospitals are more profit- profit companies, which use Without margin, you can’t could choose to make health experts predict hospitals will profitable general hospital in able than most, according to their profits to pay dividends have mission.” care more affordable. continue to raise prices. 2010, with a 35 percent total data from the American Hospi- to stockholders, nonprofit hos- Even after spending more “Do we want to tax every Asked why, Johns Hopkins’ profit margin, according to the tal Association. In 2010, the to- pitals must plow extra revenue than $260 million on financial employer by having them pay professor Anderson said the American Hospital Directory, tal profit margin for North Car- back into their organizations. assistance and discounts to un- higher health care costs? Or answer is simple: “Because a service that examines hospi- olina hospitals was 9.3 percent. Hospital officials say they in- insured patients, Carolinas should we make the employers they can.” tal finances using Medicare That’s about 2 percentage vest in facilities, staff and HealthCare made a profit of more profitable and the hospi- cost reports. points more than the national equipment that the communi- $428 million in 2010. tals less profitable?” Alexander: 704-358-5060 + CMC-University, part of average – and higher than it ty needs – and demands – often Kevin Schulman, director of Consistent profits have al- Garloch: 704-358-5078 SUN SHINES No one behind the wheel ON HAMLIN Race to put driverless TRUEX CAN’T HANG cars on the road ON TO LEAD. SPORTS SciTech 8-9A

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MONDAY • APRIL 23, 2012 • 75¢ charlotteobserver.com CDEF ■ + U.S. pledges PROGNOSIS: PROFITS SECOND OF FIVE PARTS 10 years of aid Most N.C. hospitals to Afghanistan Hard-won agreement stan and the United States. “The document finalized slim on charity care meant to show America today provides a strong foun- won’t abandon its ally dation for the security of Af- ghanistan, the region and the By Alissa J. Rubin world, and is a document for New York Times the development of the re- KABUL, Afghanistan — After gion,” Rangin Dadfar Spanta, months of negotiations, the the Afghan national security United States and Afghani- adviser, said in a statement re- stan on Sunday finalized an leased by President Hamid agreement that pledges U.S. Karzai’s office. support for Afghanistan for The U.S. ambassador, Ryan 10 years after the withdrawal Crocker, speaking on Sunday of troops at the end of 2014. to Afghanistan’s national se- The agreement, whose text curity council, said the agree- was not released, builds on ment meant that America hard-won new understand- was committed to helping Af- ings the two countries ghanistan as “a unified, dem- reached in recent weeks on ocratic, stable and secure the thorny issues of detainees state,” the statement said. and special operations raids The talks to reach the deal to broadly redefine the rela- were intense, and at times tionship between Afghani- SEE AFGHANISTAN, 13A

STARTING OVER LAYOFF NIGHTMARE IS A DREAM COME TRUE

JEFF WILLHELM - [email protected] Rachael Shehan, with 5-year-old nephew Dallen, has no health insurance and no job but has been unable to get financial help from Caldwell Memorial Hospital in Lenoir. Her bills total $15,000, and she feels hounded by collections agencies, she said. In some of poorest counties, it’s hard to get forgiveness on bills

INSIDE By Ames Alexander, Joseph Neff and Karen Garloch DAVIE HINSHAW - [email protected] [email protected], [email protected], [email protected] Greg Thomas in his home studio in Charlotte. A sudden DO YOU QUALIFY FOR layoff in 2008 sent him following a long-forgotten dream. FINANCIAL HELP? achael Shehan has no health insurance and virtually no income. But when serious respi- Proving eligibility at hospitals ratory problems strike, her hospital has never provided financial help, she said. isn’t always simple. 5A Career do-over sparks R Instead, the 39-year-old Lenoir resident says, Caldwell Memorial Hospital has sent bill collectors who have hounded her for payment and ruined her credit. CAROLINAS HEALTHCARE Issues statement in response to new life in voice-over hospital series. 5A Now, she sometimes bursts into tears when dictate how much charity care a nonprofit medical problems arise. “I know the hospital hospital must provide. Not even the IRS takes By Greg Thomas atre of Charlotte, where I be- isn’t going to help me with my bills,” says She- action. The result: A nonprofit hospital can Special to the Observer gan the discovery of theater MORE ONLINE han, who relies on food stamps and the help of spend virtually nothing on charity care and Being laid off was the best and art. Throughout my teen Find more photos and an friends. receive the same tax breaks as a hospital that thing that ever happened to years, these remained my interactive map for information Nonprofit hospitals such as Caldwell Me- sets aside as much as 10 percent of its budget me. passions. about your hospital. morial are exempt from property, sales and in- to help the poor. In 2008, my position as as- But somewhere in my 20s I charlotteobserver.com come taxes. In return, they are expected to The newspapers’ findings raise questions sistant regional manager for a put aside those dreams and give back to their communities, largely by pro- about whether some hospitals are earning national realty company was focused on something that viding care to those who can’t afford it. their nonprofit status, experts say. downsized. In one day, 13 of us would pay the bills. I found a Like Caldwell, most North Carolina hospi- The investigation found: were let go via a phone call paycheck in apartment man- THE SERIES tals are devoting a fraction of their expenses to • About a third of North Carolina hospitals – from the corporate office. Not agement and leasing, work- help the poor and uninsured, an investigation including Caldwell Memorial – spent less than even a handshake goodbye. ing my way up for 13 years. SUNDAY by the Charlotte Observer and The News & 2 percent of their budgets on charity care in I was 33, and my wife, Eliza- Being laid off hurt. I had Nonprofits very profitable Observer of Raleigh found. 2010. Most of these are small hospitals in rural beth, and I were responsible worked hard for that company TODAY In 2010, most of the state’s hospitals spent areas, and many report they are losing money. for three kids. And a mort- and was then tossed out like Charity care lacking less than 3 percent of their budgets on charity • Some of the hospitals with the lowest per- gage on our home in Char- yesterday’s doughnuts. But like care – the practice of forgiving all or part of a centages serve counties where the needs are lotte. The real estate market so many others, I had to move TUESDAY patient’s bill. high. Vidant Duplin Hospital, for instance, ca- had crashed, and nobody was on. Suing the needy Mecklenburg County’s hospitals perform ters to a high-poverty county where one in hiring in my field. Daddy had I finally decided to pursue Also: Consumers guide better than average, with all spending more four people lack health insurance. It spent less to do something, and quick. SEE STARTING OVER, 13A WEDNESDAY than 4 percent of their budgets on charity than 1 percent of its budget on charity care. As a kid, I’d been obsessed Staying strong in Raleigh care. They are among the state’s most profit- • Hospital practices vary widely. While the with movies, radio, and act- VIDEO ONLINE THURSDAY able hospitals. least generous hospitals are giving less than ing. My parents allowed me See Thomas in action at New policies that could help In North Carolina, no government rules to join The Children’s The- charlotteobserver.com. SEE CHARITY CARE, 4A

HIGH COURT TO HEAR Looking Ahead IMMIGRATION CASE Immigration politics will hit the 5-DAY FORECAST MORE ON PAGE 14A Tuesday Wednesday Thursday Friday Supreme Court this week as justices 63/44 76/57 76/54 73/48 consider how much border-control Today 61/34 Partly clou- Sunny and Chance of Sunny and clout the states can deploy. 2A Partly cloudy and cool dy and cool warmer thunder- pleasant Ads blur focus of dental bill Chance of rain: 0% Chance of Chance of storms Chance of A measure to enforce tougher Ozone: rain: 0% rain: 0% Chance of rain: 0% regulations on dental care in N.C. is Little/no health risk rain: 30% attracting lots of TV ads. 1B

Ask Amy...... 5B Horoscope ...... 4B Delivery assistance TODAY’S MUST-READ Classified...... 10C Lottery ...... 1B or to subscribe Francois Hollande, the Socialist challenger, © 2012 The Charlotte Observer LAURENT CIPRIANI - AP Comics...... 4-5B Obituaries ...... 3B ...... 800-532-5350 eked out a victory in the first round of the Vol. 143, No. 114 Editorial...... 12A Sports...... 1C To subscribe to French presidential elections Sunday, but A supporter of Socialist Francois Hollande TV ...... 2B OnTV magazine his lead over incumbent Nicolas Sarkozy reacts to results showing that he will ...... 877-800-1335 delivered no clear answer. 2A advance to a runoff against Nicolas Sarkozy.

+ 4A Monday, April 23, 2012 ■■■ PROGNOSIS: PROFITS charlotteobserver.com • The Charlotte Observer + 13 percent is highest in N.C. charity care By Ames Alexander How charitable is your hospital? [email protected] N.C. hospitals vary wildly in how much charity care they provide In the heart of North Carolina furniture country, to patients who are poor and uninsured. The following charts in a county struggling with above-average unem- show the percentage of operating expenses that Charlotte-area ployment, sits a hospital with a little-known distinc- hospitals spend on charity care - as well as the state’s least and AMES ALEXANDER - [email protected] most generous hospitals. tion. Thomasville Medical Center is, by one impor- In 2010, nonprofit Caldwell Memorial Hospital reported spending about Charity care tant measure, the state’s most generous hospital. $1.5 million of its $99 million budget on charity care. What hospitals spending as a In 2010, the hospital devoted 13 percent of its Charlotte-area hospitals spent on charity percentage of budget to charity care – the highest percentage in to get financial help for uninsured care in fiscal total operating the state. CHARITY CARE people with large hospital bills. Hospital 2010 expenses Located about 70 miles northeast of Charlotte, • from 1A Sonia Royes, a social worker for Catawba Valley Medical Center $3,689,748 1.65% the 146-bed hospital is owned by Novant Health, a Catholic Charities, said she has tried Hickory nonprofit hospital chain with the state’s most 1 percent to free care, the most chari- about six times to get financial assis- Caldwell Memorial Hospital 1,522,757 1.77% generous charity care policy. At hospitals owned table hospital – Thomasville Medical tance for uninsured clients who had Lenoir by Novant, uninsured patients with family in- Center – spent about 13 percent. bills from Vidant Duplin – and has comes less than 300 percent of federal poverty CMC-Lincoln 2,791,408 3.55% • Many uninsured patients are never never succeeded. Lincolnton guidelines can qualify for free care. offered financial assistance. More She called the hospital in January That means a family of four with an income of than a third of hospitals in the state 2011, asking if there was help available Gaston Memorial Hospital 13,481,041 4.24% less than $69,000 would qualify. At Gastonia provide no details about their charity for one uninsured client. The official that level, many Thomasville resi- care policies on their websites. And told her the hospital had no charity Grace Hospital, Morganton 4,874,829 4.52% dents would be eligible. The town’s more than 20 uninsured patients in- care policy, she said. Morganton median family income is about terviewed say they were never in- Duplin spent about $245,000 on Presbyterian Hospital 26,876,532 4.94% $36,000. formed about charity care policies charity care in 2010 – less than 1 per- Charlotte Some North Carolina hospitals when they sought treatment. cent of its budget. Iredell Memorial 6,763,698 5.12% require patients to supply extensive Statesville • Most hospitals appear to be getting Curtis, of Community Catalyst, said documentation before they can be Johnson more in tax exemptions than they’re it’s “unacceptable” that any nonprofit Carolinas Medical Center 73,581,234 5.45% approved for charity care. Supply- giving back in the form of charity care. hospital spend less than 1 percent of Charlotte ing such information can be hard for patients fac- No agency or group calculates the its budget on charity care. “A hospital CMC-Northeast 27,190,854 5.51% ing medical emergencies. value of hospital tax exemptions, so spending that little on charity care in a Concord But Thomasville, like other Novant hospitals, the newspapers derived estimates community with high needs raises CMC-Union 9,014,320 5.51% uses “soft credit checks,” making it easier for pa- from publicly available data. questions about that hospital’s com- Monroe tients to qualify. That system gathers financial in- Based on the taxes paid by large for- mitment to the community,” she said. formation so that patients don’t have to provide as CMC-Mercy/Pineville 16,866,526 5.60% profit hospital systems, North Caroli- According to Vidant Duplin’s pol- Hospitals in Charlotte and Pineville much documentation. The checks don’t affect pa- na’s nonprofit hospitals get tax breaks icy, uninsured patients who can’t pay tients’ credit scores. Presbyterian Hospital Huntersville 5,412,786 6.76% worth roughly 4.4 percent of their ex- their bills can qualify for free care if Huntersville Novant’s financial assistance policy and soft penses, the newspapers estimated. their income is less than 200 percent credit checks help explain why several of its hos- About two-thirds of those hospitals of the poverty level and their house- Rowan Regional Medical Center 10,403,840 7.00% pitals are among those in North Carolina that Salisbury spend less than that on charity care. hold net worth is less than $25,000. spend the largest percentages of their budgets on Adam Searing, director of the N.C. For an individual, 200 percent is Valdese Hospital, Burke County 4,874,829 7.31% charity care. Justice Center’s Health Access Coali- equivalent to making about $22,000 a Valdese Financial counselors are trained to make eligi- tion, questions whether many hospi- year. Presbyterian Hospital Matthews 7,492,171 7.42% ble patients aware of the financial assistance pol- tals are doing enough charitable work Officials for Vidant Duplin say Matthews icy. Novant also explains the policy in a brochure to earn their tax exemptions. many patients simply don’t provide CMC-University 10,884,593 9.32% and on its website. “I feel like the hospitals are break- the documentation that the hospital Charlotte “It’s not buried on our website,” said Novant ing the contract they made,” he said. requires to prove that they’re eligible Frye Regional Medical Center * * spokesman Jim Tobalski. “That’s something Jessica Curtis, director of Commu- for charity care. Hickory we’ve improved on.” nity Catalyst’s Hospital Accountabili- “I do believe our charity care could Lake Norman Regional Medical Center * * Thomasville also hosts a free medical clinic run ty Project, said the Observer’s find- be a lot higher,” said Lucinda Craw- Mooresville by nonprofit Davidson Medical Ministries, pro- ings echo what she sees happening ford, the hospital’s vice president of fi- Davis Regional Medical Center * * viding free medical tests to uninsured patients elsewhere in the country. “It’s almost nancial services. “It’s sometimes a Statesville there. a blatant disregard for the needs of the challenge for folks to bring in finan- Thomasville Medical Center President Kathie *These three hospitals did not report their figures to the NCHA. poor,” said Curtis, whose Boston- cial information and to follow up.” Johnson said providing charity care is “part of our based group works to improve access Hospital CEO Jay Briley said that N.C.’s most generous hospitals Charity care mission to take care of all Davidson County.” to care. his hospital outstrips most others spending as “Without this kind of support,” she said. “it To be sure, charity care – medical when judged by a different measure – What hospitals percentage would be very difficult for some people to get the treatment provided for free or at re- the amount of “unreimbursed” care it spent on charity of total care they need.” care in fiscal operating duced rates to low-income patients – provides. In 2010, the hospital report- — STAFF WRITER KAREN GARLOCH CONTRIBUTED. Hospital 2010 expenses is just one of many ways that hospitals ed losing about $1.1 million on Medic- help their communities. aid patients and about $4.3 million on 1 Thomasville Medical Center $7,149,299 13.41% Ways to boost charity care They absorb millions in losses from patients who never paid their bills. Thomasville Patient advocates say expanding eligibility is treating Medicare and Medicaid pa- Duplin, like many other hospitals, Brunswick Novant Medical Center 6,062,374 12.22% 2 just one way to make hospitals more charita- tients because government re- routinely sends collection agencies to Bolivia ble. They also recommend that hospitals: imbursement doesn’t cover their recover some of that money – a prac- 3 Franklin Regional Medical Center 4,388,005 11.29% costs. They also train doctors and tice that can damage a patient’s credit. Louisburg • Make it easier for patients to apply for char- nurses, sponsor wellness programs Duplin’s officials say they’ve beefed 4 CMC-University 10,884,593 9.32% ity care. Some hospitals and hospital systems and support community clinics. up efforts to make uninsured patients Charlotte run “soft” credit checks on uninsured patients. But experts say charity care is by far aware of their charity care policy. 5 WakeMed 67,311,767 9.31% Those checks do not affect a patient’s credit the most important way hospitals can Until recently, Crawford said, pa- Raleigh score but do provide the hospitals enough help the needy. It’s particularly crucial tients who came through the emer- financial information to determine whether they in North Carolina, where the unem- gency department didn’t routinely in- N.C.’s least generous hospitals qualify for charity care. That means patients ployment rate is among teract with a counselor who ex- can get help without the burden of providing the nation’s highest – plained the policy. But the hospital 1 Sampson Regional Medical Center $243,095 0.41% lots of documents. and where roughly one changed that last year, so those pa- Clinton • Post their charity care policies in prominent in five residents under tients now have a chance to talk with a 2 Halifax Regional Medical Center 432,252 0.55% places. More than a third of N.C. hospitals 65 lacks health insur- counselor before they’re discharged. Roanoke Rapids provide no details about their charity care ance. With so many of its patients poor 3 Maria Parham Hospital 440,452 0.57% policies on their websites, the Observer and The While some low-in- and uninsured, Duplin has struggled Henderson News & Observer (of Raleigh) found. Searing come people receive financially in recent years, losing • Be required to report their charity care health care paid for by more than $400,000 in 2010. 4 Chatham Hospital** 133,667 0.61% Siler City spending to the state. Nine states require that the government’s Medicaid program, No rules an accounting of hospital charity care be made many of the working poor make too 5 Duplin General Hospital** 245,321 0.71% public. North Carolina does not. Patient ad- Kenansville much to qualify and don’t get insur- In North Carolina, as in most other vocates say better disclosure would probably ance from their employers. Officials states, hospitals aren’t required to **These hospitals lost money in 2010. encourage some hospitals to provide more SOURCE: North Carolina Hospital Association, American Hospital Directory. with the N.C. Hospital Association, spend even a single dollar on charity financial help to uninsured patients. the group that lobbies for the state’s care. Federal rules require nonprofit AMES ALEXANDER – RESEARCH DAVID PUCKETT – STAFF GRAPHIC hospital industry, say their members hospitals to provide some “communi- LOOK UP YOUR HOSPITAL’S POLICY ONLINE work hard to help the ty benefit,” but they don’t specify poor. Charity care what those benefits should be. For information about charity care policies for individual N.C. hospitals, visit the N.C. Hospital Association’s community spending in North Car- In 2007, the U.S. Senate Finance benefit page: https://www.ncha.org/issues/community-benefit olina rose to about $853 Committee proposed requiring non- One caveat: Many hospitals don’t provide online information about their policies. million in fiscal 2010 – profit hospitals to spend at least almost twice the 5 percent of their budgets on charity amount spent in the care – a standard that only about a Curtis pre-recession days of fifth of North Carolina hospitals met 2006, the NCHA esti- in 2010. mates. That proposal never became law. But some of the hospitals that In Illinois, the state Department of spend the least on charity care simply Revenue last year denied property tax can’t afford to do more, says NCHA exemptions to three hospitals that spokesman Don Dalton. That’s be- were found to be spending less than cause they’re among the state’s most 2 percent of their patient revenue on financially challenged hospitals. Ma- charity care. That followed a 2010 rul- ny are in rural areas. ing by the Illinois Supreme Court, “The resources available for them which concluded that Provena Med- to do vastly more charity care are ical Center wasn’t providing enough probably not there,” Dalton says. charity care to qualify for a tax ex- But experts say it generally doesn’t emption. hurt a hospital’s finances to become No group or agency keeps national more charitable. statistics on what hospitals spend on When hospitals sue patients or turn charity care. But in some states where their accounts over to collection charity care reporting is required, the agencies, their actions often damage data give some sense of how hospitals patients’ credit. Hospitals are losing stack up. money on those patients anyway and North Carolina hospitals appear to would likely experience little finan- be providing less charity care than ROBERT WILLETT - [email protected] cial harm if they forgave more of the those in Texas, one of the few states Sheila Pyles called Person Memorial Hospital to see whether her uninsured daughter, 19-year-old Johnnika Pyles, bills, experts say. that requires hospitals to give a mini- would qualify for charity care after she was discharged and billed $5,468. A 2005 study by the Center for mum level of financial assistance. Studying Health System Change In Texas, most hospitals spend How a hospital profits on a charity case found that bad debt at hospitals de- more than 4 percent of their budgets Johnnika Pyles, a 19-year-old student, had no insurance al about $1,100, so if she paid $2,743, the hospital would clined as charity care policies became on charity care; in North Carolina, when she was discharged in June 2009 from Person Memo- make a profit of more than 50 percent. more generous. Such changes, the stu- most spend less than 3 percent. rial Hospital, north of Durham. When the $5,486 bill ap- And the terms were onerous: If she fell behind on pay- dy found, had “little impact on hospi- North Carolina hospitals provide peared on Pyles’ credit report, Pyles’ mother, Sheila, called ments, the note would require Pyles to pay the full amount, tal bottom lines.” more charity care, on average, than the hospital to ask whether her daughter might qualify for plus any collection and legal fees. Large needs, little help those in California, where hospitals charity care. Pyles, who was treated in the emergency room after an operate on significantly smaller profit Chief Financial Officer James Leis encouraged Pyles to accident, did not sign the promissory note. She received no Some of the least generous hospi- margins. file and mailed her a four-page charity care application and charity care, and a collection agency is still trying to collect tals serve counties where numerous Restrictive charity policies a written agreement called a promissory note. If Pyles paid the bill. residents are poor and uninsured. off half of her debt, the promissory note said, the hospital Chad Brown, the new CEO of Person Memorial, said the North of Wilmington, many fami- In the Blue Ridge foothills that sur- would write off the other half. hospital should be making its charity care policy known and lies in Duplin County work demand- round Caldwell Memorial, many But this arrangement was not charity. It was profit. that Pyles’ experience “is not our practice.” He added that he ing, low-wage jobs in poultry plants or patients could use financial help. Medicare cost reports show that Person Memorial’s emer- did not know how many promissory notes were held by the farm fields. But advocates for Duplin gency room costs are about 21 percent of the charges hospital, but he said he thinks there are only a few. “I don’t +County’s poor say it has been difficult SEE CHARITY, 5A billed. This means Pyles’ care probably cost Person Memori- know if it is acceptable,” he said. — JOSEPH NEFF The Charlotte Observer • charlotteobserver.com PROGNOSIS: PROFITS ■■■ Monday, April 23, 2012 + 5A Proving Ranking high, but is it enough? need isn’t Carolinas HealthCare’s charitable spending is above easy for average, but so are its profits

By Ames Alexander patients and Karen Garloch [email protected] Providing financial details [email protected] can overwhelm people Hospitals owned by Carolinas HealthCare System are among the who are sick or recovering state’s most generous when it comes to providing free care for the needy. By Ames Alexander The system’s hospitals in Mecklen- [email protected] burg, Cabarrus and Lincoln counties, At some North Carolina hospi- which form the heart of its operation, tals, qualifying for charity care can spent about $131 million on charity be onerous. care in 2010. Among the pieces of informa- But critics contend the system tion that Carolinas Medical Cen- could afford to do more. In 2010, the ter-Pineville requested in its 2010 system’s core operation turned a prof- charity care application: it of more than $300 million. • Details on all forms of income, Carolinas HealthCare hospitals in including alimony, child support its three core counties get tax exemp- and unemployment. tions worth more than $100 million a • The tax values and loan year, the Observer estimated. The sys- amounts on all vehicles and real tem owns more than $1 billion in tax- estate owned. exempt property, pays no corporate • The account numbers and income taxes and got sales tax rebates amounts deposited in all checking of about $40 million in 2011. and savings accounts, CDs, stocks Carolinas Medical Center, the sys- and bonds – along with the last de- tem’s flagship hospital, spent about posit in each. $74 million on charity care in 2010, JOHN D. SIMMONS - 2006 OBSERVER FILE PHOTO • The cash value and face values more than any other North Carolina Mizra Yanes, a Spanish language translator, helps with a child’s eye exam at CMC NorthPark, one of four primary of any life insurance and burial in- hospital. It spent about 5.5 percent of care clinics for low-income patients operated by Carolinas HealthCare System. surance contracts. its budget on charity care – among the When people are sick or recov- highest percentages in the state. $22,000 a year for an individual – are eli- needy patients from seeking care. tion, the system said it lost more than ering from serious medical prob- CMC operates four clinics that give gible for free care. Previously, the Through its community clinics, he $66 million treating Medicaid pa- lems, providing all that informa- uninsured patients free or discounted threshold was 150 percent. said, Carolinas Medical Center offers tients in 2010. Like other N.C. hospi- tion can be daunting, patient advo- primary care so they don’t have to get Russ Guerin, an executive vice patients an affordable entry point, tals, the system also reported losing cates say. treatment through the more expen- president, said Carolinas HealthCare while most other hospitals see un- millions treating Medicare patients. “We’ve talked with some people sive emergency rooms. has a responsibility to try to collect insured patients only after they’ve But some agencies – including the who, when confronted with an ap- After outside groups – including the from those who are able to pay. “If ev- come to the emergency room. IRS and the Catholic Hospital Associ- plication like that, said, ‘I didn’t Observer – began to focus on hospital erybody was simply allowed to be “If I don’t see them, I don’t have a ation – say Medicare losses shouldn’t even bother applying,’ ” said Mark charity care in 2010, Carolinas Health- written off as charity care, then guess lot to write off,” he said. be counted as community benefit. Rukavina, executive director of the Care expanded its guidelines to cover who has to make up the difference?” Carolinas HealthCare officials note One reason: Federal studies have con- Access Project, a group working to more patients. Now, uninsured patients Guerin added that hospitals can that the charity care figures don’t in- cluded that efficient hospitals should improve access to health care. earning less than 200 percent of the fed- have generous financial assistance clude other community benefits. In a be able to make a small profit treating Some hospitals make it easier eral poverty guideline – or about policies in writing but still discourage report to the N.C. Hospital Associa- Medicare patients. for patients to qualify. Novant Health, for instance, does “soft” credit checks on uninsured pa- tients to determine whether they’re eligible for charity care. Tax breaks save nonprofit hospitals millions Carolinas HealthCare System, which owns CMC-Pineville, said it By Ames Alexander each year. Catalyst’s Hospital Accountability money at low rates. “would be irresponsible” not to ask [email protected] Contrary to what the name sug- Project in Boston. As a public hospital authority, Car- patients for financial information All but eight of North Carolina’s gests, most nonprofit hospitals bring Virtually all hospitals, nonprofit olinas HealthCare also has the power as it determines whether they are more than 100 general hospitals are in more money than they spend. But and for-profit, provide charity care to of eminent domain, which means it eligible for assistance. nonprofits. they’re required to put the extra mon- the poor and uninsured. Both kinds of can demand that property owners sell “Our process follows industry That means they pay no state or ey back into their operations. hospitals also lose money treating at a fair market value to make room for standard, and we believe it balanc- federal income taxes and no real es- In exchange for their tax exemp- Medicaid patients and those who hospital projects. Hospital officials es the need to make accurate deci- tate taxes on hospital-related proper- tions, nonprofit hospitals are expect- don’t pay their bills. They usually say they’ve never used that power. sions with not overburdening the ties. They also get rebates from the ed to provide benefits to the commu- make up for those losses by marking For-profit hospitals do pay taxes. patient and family with informa- state to compensate them for all sales nities they serve. up charges for patients with private They’re expected to generate profits tion and document requests,” sys- taxes they’ve paid. “There’s a high expectation that health insurance. and to return much of that money to tem officials wrote in response to Collectively, those tax breaks save nonprofits belong to the public,” says Through tax-exempt bonds, many shareholders. the Observer’s questions. them hundreds of millions of dollars Jessica Curtis, who heads Community nonprofit hospitals can also borrow — STAFF WRITER KAREN GARLOCH CONTRIBUTED.

CHARITY Who pays for • from 4A the patients? North Carolina hospitals say The closings of textile plants and they lost $425 million in 2010 furniture factories have left Caldwell treating patients on Medicaid, the County with an unemployment rate government health program for of 13 percent, among the state’s high- the poor and disabled. Hospitals est. Nearly one in five residents lives also say they lost money on unin- in poverty. sured patients and those with About 3,500 of the hospital’s pa- Medicare, the government pro- tients got free care last year, said Don gram for those 65 and older or Gardner, the hospital’s vice president disabled. Therefore, hospitals say of finance. But many more – about they have to charge more to those 7,000 to 8,000 – got something else: who have private insurance. calls or letters from collection Here’s a look at each group’s agencies. share of billed care, according to Rachael Shehan was among them. the N.C. Hospital Association: She estimates her hospital bills now total more than $15,000. The 110-bed hospital put her on monthly payment Medicare, 45% plans that she says she can’t afford. Private insurance, 27% Now, she says, her credit is so bad she has been turned down for a small Medicaid, 16% loan and has no hope of getting a car. Uninsured, 9% “I think (the hospital) should offer Other groups, help,” Shehan said. “There’s an awful 3% lot of people who need it.” At Caldwell Memorial, only pa- Carolinas HealthCare tients who live in Caldwell County, ROBERT WILLETT - [email protected] have less than $3,000 in assets and Mary Jo Warren sings during Bible study. Since she suffered a stroke she hasn’t worked, and she can’t pay hospital System statement earn less than 125 percent of the pov- bills from Sampson Regional Medical Center. The hospital spends less than 1 percent of its budget on charity care. Carolinas HealthCare System on erty level are entitled to free care, ac- Sunday night issued a statement cording to the hospital’s website. pressure, congestive heart disease responding to the Observer’s In 2010, the hospital reported ‘They say, “Ms. Warren, we and broken bones from frequent falls. series on hospitals. Following is spending about $1.5 million of its Until her health worsened, Warren the full statement: $99 million budget on charity care. said she was frugal, hardworking and expect you to pay us money.” I “Carolinas HealthCare System is But Gardner said that represents just a self-reliant. Now she frets about not part of its good works. being able to pay her hospital bills. reading with interest the Charlotte Caldwell Memorial, for instance, say, “I ain’t got any.” And they She gets groceries from a food pantry Observer’s series examining a wide provides about $1.3 million worth of and two local churches. range of operations at healthcare free tests and medical procedures say, “Well, that’s no excuse.” ’ She applied for charity care, and facilities in our region. each year to a clinic that provides Sampson Regional cut 45 percent off “We are, however, disappointed medical help to needy residents. It al- MARY JO WARREN, ON CALLS FROM COLLECTION AGENCIES the balance that she owed. with the lack of understanding of so reported losing about $2.3 million Two months later, a lawyer for the the complexities of the healthcare treating Medicaid patients in 2010. ify eligibility. Others, he said, are “too than 1 percent of its budget. But many hospital wrote Warren two letters de- industry. The rising cost of health- “I have no doubts that we’ve done a proud to take charity care.” of its patients need all the financial manding payment of more than care is an important subject that yeoman’s job of providing service, re- help they can get. The hospital serves $1,000 and threatening a lawsuit. Policies hard to find impacts virtually every segment of gardless of ability to pay,” Gardner Sampson County, a rural community After being contacted by a reporter, our communities, and we are com- said. At some North Carolina hospitals, east of Fayetteville where more than Heinzman said he has asked Warren The foundation that raises money it’s not easy for patients to learn what one in five residents lives in poverty. to apply again for financial assistance. mitted to working with clinicians, for Caldwell Memorial recently financial help is available. Hospital officials say those earning He previously knew nothing about payers, patients and others to find claimed on its website that the hospi- Many patients told the newspaper less than 125 percent of the poverty her inability to work, he said. and implement solutions to this tal gave $18 million to charity care in that hospital officials never men- level can qualify for free care. They Still, calls from hospitals and collec- issue and the many challenges 2010. In fact, the hospital spent about a tioned the availability of charity care. say they’ve been working to get more tion agencies come almost daily, facing today’s healthcare environ- tenth that much. The foundation re- More than 40 hospitals – including patients qualified. rattling her nerves. ment. moved that claim last year, soon after Gaston Memorial Hospital in Gasto- But many patients have not cooper- “They say, ‘Ms. Warren, we expect “We hope that the full content of an Observer reporter asked a hospital nia and Lake Norman Regional Med- ated by applying, says Chief Financial you to pay us money,’ ” she said. “I say, this series more fairly represents executive about it. Gardner said he ical Center in Mooresville – didn’t put Officer Jerry Heinzman. Some simply ‘I ain’t got any.’ And they say, ‘Well, the dedication and commitment of believes the error was unintentional. key details about their charity care don’t care because they don’t intend that’s no excuse.’ ” our caregivers to treating all pa- The hospital operates on a slim policies on the Web in late 2011, the to pay and already have poor credit Fearing more bills, she has been re- tients while navigating the com- profit margin – less than 2 percent in newspapers’ review found. ratings, he said. luctant to seek additional medical 2010. Two-thirds of North Carolina hos- Mary Jo Warren has been swamped treatment. So she now waits until she plexities of the healthcare industry. Gardner declined to discuss any pa- pitals didn’t list their full financial as- by hospital bills. is “really desperate to get some help.” Our goal is and always will be to tients’ accounts with the Observer. sistance policies on the Web. Since suffering a stroke in 2010, And that, she knows, can’t be good increase access to the highest But in general, he said, some patients Sampson Regional Medical Center Warren lost her nursing job and her for her health. quality healthcare for every com- don’t complete charity care applica- was among them. employer-sponsored health insur- — WASHINGTON CORRESPONDENT FRANCO munity we serve and improve on its tions or don’t cooperate in providing The hospital spends less than ance. She’s since been to Sampson Re- ORDOÑEZ AND NEWS & OBSERVER DATABASE EDITOR delivery for all." +documents the hospital needs to ver- $250,000 a year on charity care – less gional several times for high blood DAVID RAYNOR CONTRIBUTED. healthy living AN IMMEDIATE NECESSITY products worth BOSTON COLLEGE LINEBACKER LUKE 9 splurging on KUECHLY COULD BE PERFECT Living Well, 2D FOR PANTHERS SPORTS

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TUESDAY • APRIL 24, 2012 • 75¢ charlotteobserver.com CDEF ■ + Edwards PROGNOSIS: PROFITS THIRD OF FIVE PARTS Stadium trial Hospital suits force has name opens but no with jolt new pain on patients OK, yet BB&T pays for rights; Defense asks judge city backing still shaky to allow probe of key witness’ behavior By Steve Harrison [email protected] By Anne Blythe On the same day the Char- [email protected] lotte Knights said they secured GREENSBORO — It did not take a naming-rights deal with long for the John Edwards trial BB&T Corp. for a new stadi- to get tawdry, and for once it um, the baseball team faced a was not the former presiden- chilly reception from the Char- tial candidate at the center of lotte City Council, which is the salacious allegations. considering giving the team It was Andrew Young, the $8.5 million toward building a former aide who is expected to ballpark uptown. be a key witness for the prose- The team said it needs city cution. help to build the stadium in Lawyers had just selected Third Ward. Total cost is $74 the nine men and seven wom- million, including $28 million en who will spend the next sev- from Mecklenburg County. eral weeks in the jury box It’s unclear whether there is when Judge a majority of council members Catherine Eagles to back the city subsidy. shifted the focus Some council members said from the defen- they believe the team could dant to Young. spend more of its own money on His testimony a stadium. Others questioned will be at the the timing of the subsidy, which Edwards heart of the gov- comes as the city is considering ernment’s claims a property-tax increase. that Edwards, 58, violated cam- “No matter how you look at it, paign-finance laws in his 2008 it’s city money,” said at-large presidential run to cover up his T. ORTEGA GAINES - [email protected] council member Beth Pickering, extramarital affair with Rielle a Democrat. “We are looking at a Joyce Jones had little money and bare-bones insurance when she was hospitalized. Carolinas HealthCare System sued her Hunter. 9 percent property-tax increase. to collect $34,000. “I was willing to pay if they set me up on a payment plan,” she said, “but they just want it all.” With the jury and four alter- We have CATS fare increases. nates cleared from the court- We have water bill increases.” room, Eagles revealed that de- INSIDE Investigation: N.C. hospitals sue 40,000 patients, The city has proposed giv- fense attorneys had asked per- HOW TO REDUCE including many who might have qualified for charity care ing the Class AAA team $6 mil- mission to mention in their YOUR HOSPITAL BILL lion from hotel/motel tax reve- opening statement a one-night Controlling costs isn’t easy, By Ames Alexander and David Raynor nue, which by state law can on- stand that Young, a married ly be used for tourism-related but these tips may help. 1D [email protected], [email protected] man and father of three, had purposes. Those payments with a co-worker in 2007. COLLECTION RULES hen serious abdominal pains sent Joyce Jones to the hospital, she hoped the bill would be spread out over 20 The defense also wanted to CAN HELP PATIENTS would be the least of her problems. She had no job and a bare-bones health insur- years. let jurors know that Young, the North Carolina isn’t among In addition, the city would ance policy that she knew would cover only a fraction of her bill. So it helped ease aide who wrote an unflattering states with safeguards. 9A W give the team $2.5 million. That tell-all book about the 2008 her worries, she said, when a social worker at Carolinas Medical Center-Mercy told her the would essentially be a refund campaign, had telephoned sev- of 90 percent of the property MORE ONLINE hospital had a fund to help patients like her. eral witnesses during the last taxes the team is expected to See more photos and several weeks and asked what pay over 20 years. an interactive map for Jones thought the hospital empt – a distinction that Critics contend those hos- they were going to say at trial. In March, the Knights asked information about your was taking care of the cost. But saves them millions each pitals are financially ruining Barely one hour into the first for $11 million. The city then of- hospital. soon after her two-week stay, year. In exchange, these non- people they could afford to day of testimony, sex and con- fered $9 million, with $4.5 mil- charlotteobserver.com she received a bill for $34,000. profits are expected to pro- help. Carolinas HealthCare niving had already surfaced in lion coming from a portion of In 2006, the hospital sued vide financial help to those System, the multibillion-dol- a trial based on a scandal first property taxes generated from her and put a lien on her small without the means to pay. lar public enterprise that reported by The National En- surrounding property. The THE SERIES west Charlotte home. A wid- But thousands of times a owns CMC-Mercy, has gen- quirer. idea was that the stadium ow, Jones would like to leave year, hospitals are suing pa- erated average annual profits However, in a courtroom SUNDAY would spark development, and the house to her disabled tients instead, an investiga- of more than $300 million packed with media, sketch art- Nonprofits very profitable the city would give the team daughter some day. But the tion by the Charlotte Ob- over the past three years. ists and curious lawyers, Ea- some of that new tax money. MONDAY lien – which will allow the hos- server and The News & Ob- During the five years end- gles muzzled any unprompted After some pushback from Charity care lacking pital to collect money if Jones server of Raleigh found. ing in 2010, N.C. hospitals mentioning of Young’s alleged council members, city staff dies or sells her home – may An in-depth look at some filed more than 40,000 law- sexual liaison. TODAY changed its offer. make that impossible. of those cases suggests most suits to collect on bills. “The court finds there’s no Suing the needy The latest plan would give “All that money they’ve of the patients were unin- Most of those suits were good reason to bring this up in WEDNESDAY the team $8.5 million. It limits got, they should be helping sured, and that a significant filed by just two entities: Car- opening statements,” Eagles Staying strong in Raleigh the tax rebates to just the base- people,” said Jones, now 65. number of them should have olinas HealthCare and said. ball stadium site, which could THURSDAY Like CMC-Mercy, most qualified for free hospital Wilkes Regional Medical The judge did, however, include a hotel. New policies that could help N.C. hospitals are tax-ex- care. SEE HOSPITALS, 8A SEE EDWARDS, 11A SEE STADIUM, 11A

o o WHAT’S THE FUTURE OF 64 42 SOCIAL SECURITY AND MEDICARE? Hornets gear riding a retro trend Congress must restructure Social Security and By Andrew Dunn Today: Slight chance of showers. [email protected] 6B Medicare or they will fail, a new government report says. 2A The Charlotte Hornets are back in style, and retailers are cashing in on the Ask Amy...... 7D The transcendent Anthony Davis retro-chic wave of nostalgia. Business ...... 2B Tom Sorensen: Former Kentucky Wild- The purple and teal of Charlotte’s first Classified...... 6C NBA team grew popular in the early 1990s. Comics...... 6-7D cat Anthony Davis can transform the Now, as the decade’s style enjoys a resur- Editorial...... 10A Bobcats overnight. Sports Horoscope...... 6D gence, so too have the team’s jerseys, shirts Lottery...... 1B Davis Positive ‘Greek’ economic news: and, most prominently, snapback hats. Obituaries...... 4B An HQ for the QC Speculation in recent weeks that the Sports ...... 1C TV ...... 8D Chobani Greek Yogurt will open a North American team’s name could return to Charlotte has made the gear even hotter. Delivery assistance or to sales headquarters in uptown Charlotte. 2B subscribe ...... 800-532-5350 “It’s been on fire,” said Jason Hurley, To subscribe to OnTV magazine Video games: The plot’s the thing assistant store manager of the Hat Shack ...... 877-800-1335 Three new and inexpensive video games will draw at Concord Mills. “It flies off our shelves. It’s one of our top sellers.” 8D players into mysteries. Panthers quarterback Cam Newton © 2012 The Charlotte Observer memorably donned a Charlotte Hornets Vol. 143, No. 115 TODAY’S MUST-READ JEFF SINER - [email protected] cap while sitting courtside next to Mi- Young Achievers: Charlotte teenager Greyson McClus- Carolina Panthers quarterback Cam Newton sported a chael Jordan in the Bobcats home opener key makes the finals of a national invention contest. 4D Charlotte Hornets cap at a Bobcats game in December. SEE HORNETS, 5A

+ 8A Tuesday, April 24, 2012 ■■■ PROGNOSIS: PROFITS charlotteobserver.com • The Charlotte Observer + Iredell hospital sues woman with no job or insurance

By Ames Alexander charity care policy, and they that they didn’t even realize the tal’s current financial assistance [email protected] didn’t know to ask. hospital had sued them until policy, which went into place STATESVILLE — Julie Ritchie When a hospital bill for they were contacted by an Ob- several months after Julie Ritch- had no job and no health insur- more than $13,000 arrived, “I server reporter. They also say ie was hospitalized, offers free ance when she was hospital- remember … going ballistic they don’t recall getting a charity care to uninsured patients with ized with an ovarian cyst. and saying what are we going care application, and that Julie family income less than twice Now she faces another prob- to do?” Tim said. was delirious from pain and the federal poverty guideline. lem: Iredell Memorial Hospital, Collections agencies began medication while in the hospital. For an individual, that amounts the Statesville hospital where calling. Then the hospital sued Tim Ritchie said, “$13,000? to about $22,000 a year. she received treatment in 2008, and won a judgment for the We would have definitely tak- In 2010, the hospital spent has sued her for payment. amount of the debt – plus inter- en advantage of that (charity about 5 percent of its budget on Julie, her husband, Tim, and est and court costs. care application). We would charity care. their teenage child were living in The Ritchies were among have been foolish not to.” “Even with flaws, we’re ap- a two-bedroom house valued at more than 2,000 patients sued Karnap said he’s unsure why parently communicating with $48,000 and surviving on the by the Statesville hospital over the application was never sub- quite a few folks,” Karnap said. money that Tim receives for So- the past five years. mitted in Ritchie’s case. But the hospital seeks court cial Security disability – less than Fred Karnap, vice president But he acknowledged that judgments against patients who $18,000 annually. He’s bedridden of finance for the 247-bed hos- more patients could qualify for fail to pay bills exceeding $250 from back injuries suffered dur- pital, said the hospital’s records charity care. About a year ago, and own houses and property ing an accident in the 1980s. indicate that a financial coun- JEFF SINER - [email protected] he said, the hospital began worth more than $25,000. “We told hospital officials selor gave Ritchie an applica- Julie Ritchie said she doesn’t recall anyone mentioning the sending its charity care appli- “We owe it to everyone else time after time about our situa- tion for charity care while she availability of charity care at Iredell Memorial Hospital. cation along with the legal no- in the community not to let tion,” Tim Ritchie said. was in the hospital. tice before filing suit. those who can pay off the hook The Statesville couple said Later, Karnap said, the hospi- overdue and Iredell Memorial payment arrangement. Iredell Memorial is more too easily,” Karnap said. they don’t recall anyone at Ire- tal sent Ritchie a certified letter would take legal action unless The Ritchies say they don’t re- charitable than most N.C. hospi- — NEWS & OBSERVER DATABASE EDITOR dell Memorial mentioning a saying her account was seriously she made contact to work out a member getting the letter, and tals, Karnap noted. The hospi- DAVID RAYNOR CONTRIBUTED.

Norman Regional Medical Center in HOSPITALS Mooresville for medical services she • from 1A had received eight years earlier. The agency didn’t explain what Center in North Wilkesboro. Each medical services had been provided filed more than 12,000 suits over the in 2000, Brauninger said. She had five-year period, according to state health insurance, she said, and didn’t courts data. Wilkes Regional, which is recall any unpaid bills. managed by Carolinas HealthCare, “I opened the bill and I said, ‘You’ve appears to be the state’s most litigious got to be kidding me,’ ” the Moores- individual hospital. ville resident said. Most N.C. hospitals rarely, if ever, She said she spoke by phone with a sue patients to collect on bills. But vir- bill collector, who hung up when she tually all use collection agencies, asked for documentation. The collec- which can seriously damage a pa- tions agency put the account on her tient’s credit. credit report – a fact she and her hus- Often, the lawsuits hit people who band later discovered when they are among those paying the highest sought a loan to buy a condominium. rates for hospital care: the uninsured. After Brauninger complained to Bills for uninsured patients are usual- the N.C. insurance department, the ly higher because they don’t have in- collections agency contacted the hos- surance companies to negotiate dis- pital, which agreed to take the ac- counts on their behalf. count off her credit report. It’s unclear how many of the patients A spokeswoman for Lake Norman sued in North Carolina lacked health in- says the hospital “takes seriously any surance and substantial income or as- patient complaints” and is pleased sets. But in interviews with 25 of those that Brauninger’s com- patients, the newspapers found 17 of plaint was “resolved to them were uninsured; 10 said they were her satisfaction.” never told about the hospitals’ financial JOHN D. SIMMONS - [email protected] U.S. Rep. Heath Shu- assistance programs. Tony Chris Davis said Carolinas Medical Center officials told him they’d provide financial help. Instead, the hospital ler, a Waynesville Dem- Carolinas HealthCare wins most of sued to collect on its $40,000 bill. “If I’d known this would happen, I would have packed my bags and left,” he said. ocrat, has pushed a bill the lawsuits it files, allowing it to put to ease the damage that liens on the homes of patients. fore filing suit. medical debt can do to a Shuler “We always struggle with, ‘Should New federal requirements “Do we miss some people? We person’s credit rating. we be doing that (filing lawsuits)?’ ” If it survives review by the U.S. Supreme Court, the new health-care law will probably do,” Tarwater said. “We have Medical bills can remain on a credit said Greg Gombar, chief financial offi- affect how hospitals deal with uninsured patients. Detailed rules have yet to 9 million patient encounters each report for up to seven years, even if cer for the Charlotte-based system. be hammered out by federal agencies, but the Affordable Care Act stipulates year. And I’m quite sure once in a the bill has been paid and the balance “But it comes back to a message …: If that hospitals must: while we may miss somebody. … If is zero. you have the ability to pay, you need to that’s brought to our attention … we Shuler wants to change the law so pay because other people are.” • Develop financial assistance policies. Among other things, hospitals must spell will work with that person.” that medical debts of less than $2,500 The system never forces people out whether they offer free or discounted care – and specify the criteria for re- Nationally, it’s not uncommon for are removed from credit reports 45 from their homes, but does collect ceiving financial assistance. The bill doesn’t detail what those policies must re- hospitals to take aggressive collec- days after the balance goes to zero. money after the patients die or sell quire. tions actions. Saying goodbye to good credit their houses, officials say. Some lawmakers had previously talked about requiring hospitals to provide a But some states discourage the System officials say they file suit minimum level of charity care. Congress ultimately did not impose such a require- practice. Illinois prohibits hospitals Experts say many collections agen- only when people fail to answer re- ment. from pursuing legal action against un- cies have an incentive to pursue debt- peated requests for payment. • Limit what they charge. If patients get “medically necessary” care and qualify insured patients who don’t have suffi- ors aggressively. They often negotiate That, they say, is what happened in for the hospital’s financial assistance policy, they can’t be charged more than the cient income or assets to pay their deals with hospitals that allow them Jones’ case. The hospital said it sent “amounts generally billed” to insured patients for the same services. The provi- bills. California, meanwhile, bans hos- to keep between 5 and 25 percent of her five statements and left three mes- sion is designed to stop the practice of charging uninsured patients much more pitals from putting liens on the prima- the money they collect. sages at her home before filing suit. than those with insurance. ry residences of patients who are eli- Charlotte lawyer David Badger Jones says she stayed with her broth- • Refrain from unfair billing and debt collection practices. The law bans nonprofit gible for charity care. speaks of the pitch that a collection er for a long period after she was hospi- hospitals from engaging in “extraordinary collection actions” before making a North Carolina has no such rules. agent made to one elderly woman: talized for pancreatitis, and doesn’t re- “reasonable effort” to determine whether a patient qualifies for the financial Patients are suffering as a result, “You have the right to remain silent.” member receiving the letters. assistance policy. The bill doesn’t define the terms “extraordinary” and “reason- says Searing, of the Health Access Co- Many patients complain that such She had plenty to worry about at able”; that will be up to federal agencies like the IRS. alition. Nonprofit hospitals shouldn’t agencies have destroyed their credit, the time. Her husband had recently • Assess the needs of their communities. Every three years, hospitals must per- be in the business of putting liens on making it harder to buy a home or car. died, and money was scarce. But she form a survey to determine health needs – and develop a plan to meet them. patient’s houses, he contends. The stories have become familiar had one thing – the 1,200-square-foot — AMES ALEXANDER “That’s not strengthening the com- to Care Ring’s managers. In a 2010 home that she and her husband had munity,” he said. “That’s tearing it survey by the nonprofit, about a third worked for 30 years to buy. down.” of the 327 clients polled said their The home has a tax value of posed to pursue charitable missions. $56,000. Collections agents began To sue or not to sue credit had been harmed. $70,000, but Jones now worries that “Pure and simple, suing people is calling every other day. Barber told Tony Chris Davis knows all too the hospital’s lien may cause the fami- not a charitable act, especially when them she couldn’t work and couldn’t Most N.C. hospitals don’t regularly well about such worries. ly to lose it. you’re dealing with people of limited afford to pay the bill. Then a lawyer sue patients. Novant Health, the non- When serious respiratory prob- It wasn’t until 2009 that she discov- financial means,” said Mark Rukavi- for the hospital sent a sheriff’s deputy profit chain that owns Presbyterian lems sent the Yadkin County resident ered the true toll of her unpaid bills. na, who heads the Access Project, a to serve her with a lawsuit. Hospital and 12 other hospitals, has a to Carolinas Medical Center in Octo- Lacking money to repair a leaky roof, Boston-based nonprofit. “I almost passed out,” Barber said. policy against doing so. ber 2008, he had no health insurance she tried to get a reverse mortgage. ‘I almost passed out’ “I was scared I was going to be locked “In health care, where you have and just $1,400 a month in income Lenders turned her down because of up in jail because of that hospital bill.” people battling for their lives …, we from Social Security disability. He the hospital system’s lien, she said. It’s unclear how many of the sued The hospital won a judgment for just decided this is not what a not-for- told hospital officials he was deeply Her daughter offered to use the patients could afford to pay their bills. more than $56,000 in principal, plus profit health-care organization concerned about the cost of care, he equity in her home to raise $10,000 so But the newspapers’ investigation interest – and about $8,500 in attor- should do,” says Novant spokesman said. Jones could negotiate a settlement. found that many of them are among ney’s fees. Jim Tobalski. But following his discharge from Jones said she offered to pay that the working poor. When Barber tried to refinance her Novant’s hospitals are among a the hospital, CMC sent him a bill. The amount, and to go on an installment In a sampling of 100 suits that Caro- home in 2010, the mortgage company growing number that run credit pro- total: about $40,000. plan to repay the rest. The hospital re- linas HealthCare filed against Meck- told her she couldn’t. The reason: The files on uninsured patients to help de- Alarmed, Davis called the hospitals jected her offer. lenburg County residents, the news- hospital had obtained a lien on the termine whether they qualify for fi- and spoke with an official who, he Adam Searing, director of the N.C. papers found that 43 of them either house. With so little income, she nancial assistance. The process said, told him that he wasn’t eligible Justice Center’s Health Access Coali- didn’t own property in the county or needed the extra money a refinancing doesn’t affect patients’ credit. for charity care because he owned a tion, said “the hospital was unwilling owned houses assessed at less than would provide. Suing patients is “very old school,” home and other assets. to be reasonable” in Jones’ case. $100,000. Barber previously worked at a says Cecilia Moore, chief operating of- Carolinas HealthCare said Davis “If you have one person who’s be- Under its current financial assis- Charlotte facility that helps people ficer for Duke University Medical had too much in savings to qualify for ing treated like she’s been treated, I tance policy, Carolinas HealthCare with disabilities. Now she’s on Social Center. “It is not a good use of re- charity care, and that he declined to think you’re failing your says it offers free care to uninsured Security disability herself. sources any more.” “spend down” those savings in order mission,” he said. and underinsured patients who earn For half her life, she said, she saved But like most hospitals, Duke and to qualify for Medicaid, which would Carolinas HealthCare less than twice the poverty level and up to buy her home – an immaculate Novant do use commission-driven have paid his bills. CEO Michael Tarwater have less than $150,000 in home equi- three-bedroom house near University collections agencies. Davis’ two-bedroom house has a said the system treats ty. For an individual, that’s equivalent City with a tax value of $144,000. Jen Algire, former director of Care tax value of about $63,000. He had more uninsured and un- to earning about $22,000 a year. “It’s something I’ve worked hard Ring, a Charlotte nonprofit that tries about $20,000 in savings, he said, but derinsured patients Interviews with 14 patients who for so I can leave something for my to improve access to health care, said needed the money to supplement his Searing than any other N.C. sys- were sued suggest at least five of them three children,” Barber said. “The way she has seen hospitals grow more ag- disability payments. tem. “We never turn off should have qualified for the charity it is now, I might not be able to.” gressive on collections. While he was hospitalized, Davis somebody’s health (care) because care available at the time they were Carolinas HealthCare said it unsuc- “People are declaring bankruptcy said, an official in the business office they don’t pay,” he said. taken to court. cessfully tried to qualify Barber for when they have less than $10,000 in told him that CMC had decided to The number of lawsuits filed by Carolyn Barber is Medicaid. The system said it also debt, partly because they’re being ha- treat his case as charity care. Had he Wilkes Regional has declined mark- grateful to the doctors at evaluated her to determine whether rassed so heavily,” Algire said. known the system would reverse its edly since 2007, when Carolinas CMC-University, who she qualified for financial assistance, Former patients say the bill collec- decision, he would have left CMC and HealthCare began managing the hos- she believes may have but found she had too much in savings tors working on behalf of many N.C. gone to his local hospital, which had pital, system officials note. Carolinas saved her life. She’s less and home equity. hospitals call repeatedly, sometimes previously given him charity care, he HealthCare says it has worked with happy with the hospi- Barber said she deserved help, but with threats and misleading claims. said. the hospital to help it become more tal’s billing office. Barber the hospital didn’t get an accurate pic- In complaints to state agencies, The hospital sued him and won a selective about which cases it takes to Suffering from a re- ture of her finances. Hospital officials dozens of former patients contend judgment. “I had perfect credit before court. The hospital once sued patients spiratory problem that left her gasp- apparently concluded she had too that collections agencies harassed this happened to me,” Davis said. “It with debts as low as $300, but that ing for breath, Barber was hospital- much in savings, she said, because them, sometimes reporting inaccu- has ruined me.” threshold has been increased to $750. ized for 15 days in early 2009. She was they confused her savings with her rate information to credit bureaus or Critics contend it’s inappropriate 63 at the time, with no health insur- sister’s. continuing to pursue them long after Alexander: 704-358-5060 for hospitals to sue patients they ance, no job and a monthly income of Officials for Carolinas HealthCare they paid their bills. — OBSERVER STAFF WRITER KAREN GARLOCH, could afford to help. And they ques- less than $900. say they provide care to anyone who In 2008, Elaine Brauninger re- RESEARCHER MARIA DAVID AND NEWS AND tion why so many lawsuits are filed by But about a month after leaving the needs it, and work hard to determine ceived notice from a collections agen- OBSERVER STAFF WRITER JOSEPH NEFF +tax-exempt hospitals that are sup- hospital, she got a bill for more than whether patients can afford to pay be- cy that she owed about $275 to Lake CONTRIBUTED. What not to cook MARK WASHBURN ON THE BOBCATS if your house is listed for sale WE’RE SUPER BAD Carolina Living In Local & State

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WEDNESDAY • APRIL 25, 2012 • 75¢ charlotteobserver.com CDEF ■ + Young testifies PROGNOSIS: PROFITS FOURTH OF FIVE PARTS to living a lush Hospitals’ clout in capital life in hiding built with money, contacts

Edwards’ former aide and then to hide her from tab- details effort, expense loid reporters once she be- came pregnant. of concealing mistress Young moved from house to house and hotel to hotel on By Anne Blythe a harried cross-country odys- [email protected] sey with a pregnant Hunter, GREENSBORO — While John his wife, Cheri, and – for part Edwards was in the last stages of the journey – the Youngs’ of his 2008 presidential cam- three children. paign focusing on the poor, They stayed in pricey hotel his pregnant mistress and po- rooms and estates in Florida, litical aide were exploring the California and wealthy side of Edwards’ Aspen, Colo. “two Americas.” They lived in the The first two days of testi- gated Governors mony in the criminal trial of Club in Chat- the one-time Democratic ham County and hopeful have focused on posh eventually resorts, big houses in exclu- Young moved into a $1.5 sive neighborhoods and the million house lives of the super rich who the Youngs built just outside can dole out thousands of Chapel Hill. dollars on short notice. Young testified that Hunt- Andrew Young, the former er insisted on staying in fancy campaign aide, was on the wit- hotels that had the “right en- ness stand in a federal court- ergy.” She shopped at Nei- room all day Tuesday and man Marcus and high-end much of Monday. His testimo- food stores and had people ny has detailed how he spent run errands for her. At one the largesse of rich supporters point, Young said, Hunter – first to mollify Edwards’ rest- tried to arrange a deal so she less mistress, Rielle Hunter, SEE EDWARDS, 6A

TRAVIS LONG - [email protected] Bill Pully talks with Gov. Bev Perdue on Feb. 16 during the annual N.C. Hospital Association winter membership meeting in Cary. Morrison ‘pumped A former hospital gerontologist, Perdue has protected hospitals from financial cuts. up’ about new job INSIDE The N.C. Hospital Association rarely loses when it comes to CHS BYPASSES COUNTY protecting the financial interests of its members CMS superintendent How Carolinas HealthCare got help in Raleigh. 8A By Joseph Neff, Ames Alexander and David Raynor gets 4-year contract, [email protected], [email protected], [email protected] $288,000 base salary LAWS FAVOR HOSPITALS Unlike other states, N.C. does little to ensure fair billing. 9A ast year, state Rep. Dale Folwell took aim at a substantial tax benefit for North Carolina’s By Ann Doss Helms nonprofit hospitals: their refund on sales taxes, which averages about $200 million yearly. [email protected] INMATES’ CARE COSTLY Heath Morrison said he’s Hospitals drove a quiet deal on L Folwell proposed limiting refunds given to some of the state’s largest and most profitable “pumped up, excited and rea- DAVID T. FOSTER III - OBSERVER STAFF treating prisoners. 8A hospitals, a move that would have provided state and local governments millions in additional tax dy to go,” as the Charlotte- Heath Morrison, who starts revenue. It was never even discussed in committee. Mecklenburg school board work July 1, spoke Tuesday gave him unanimous approv- at a breakfast meeting and THE SERIES al Tuesday for a four-year at three schools. SUNDAY “The reason this bill never got state’s third-biggest employer. power: former senators Tony contract as superintendent, Nonprofits very profitable a hearing is because big money They are economic engines for Rand and Marc Basnight, Attor- with a compensation package night and spent Tuesday vis- MONDAY bottled it up,” said Folwell, a their communities, providing ney General Roy Cooper and that will top $300,000 a year. iting the Tuesday Morning Charity care lacking Winston-Salem Republican. livelihoods for the families of former House Speaker Jim Starting July 1, he’ll make Breakfast Club, Byers Ele- TUESDAY The hospitals doctors, nurses, janitors and Black, all Democrats. $288,000 a year in base salary mentary, Robinson Middle Suing the needy “came after me executives. They are run by Now, with Republicans in with an opportunity for a 10 School and Providence High with cleats high.” boards of directors, invariably charge of the legislature, more percent performance bonus – a tour apparently designed TODAY N.C. hospitals the movers and shakers in each money is going to the GOP and a similar sum in extra re- to show concern for the city Staying strong in Raleigh are one of the community: legislators, devel- than Democrats: Sen. Pete tirement contributions. and the suburbs. most powerful opers and business owners. Brunstetter, co-chair of the ap- THURSDAY Peter Gorman, his prede- He said he’ll be back in and effective in- The N.C. Hospital Associa- propriations committee, Sen- New policies that could help cessor, had a similar arrange- Charlotte many times before terest groups in Folwell tion leverages these connec- ate Republican leader Phil ment but with a base salary he officially starts work and state politics, de- tions. Its political action commit- Berger and former speaker that was $267,000 when he plans to visit all 159 schools as ploying a squad of lobbyists at tee has handed out more than Harold Brubaker, for example. left. soon as possible. MORE ONLINE the General Assembly and $1 million to state candidates ov- The checks don’t come in Morrison makes $238,000 Morrison was chosen from See more photos and an contributing generously to er the past decade, ranking in the the mail; a local hospital execu- as superintendent of Washoe the three finalists who met interactive map for information elected officials. top 10 PACs for political dona- tive or board member hand- County Schools in Reno, Nev. the public two weeks ago; the about your hospital at Their clout grows from ma- tions. The hospitals have given delivers the contributions to Morrison flew in Monday SEE CMS, 6A charlotteobserver.com. ny roots. Hospitals are the the most to those with the most SEE HOSPITALS, 8A

o o OBAMA VISITS 69 56 CHAPEL HILL Judge rules against plans Today: Partly sunny, with a The president assured chance of late showers. 10B cheering students that the for York County casino recession hasn’t killed the By Andrew Dys Carolina and the state’s top law Ask Amy ...... 7D TV...... 5D American dream. 3B and Jamie Self enforcement officials over the Business...... 2B Delivery Arrest made in Gulf oil spill [email protected] tribe’s gaming rights. Classified .....6B assistance or [email protected] Catawba Chief Bill Harris Comics ...... 6-7D to subscribe A BP engineer stands ROCK HILL — A judge has ruled described the ruling as a “dis- Editorial ...... 10A 800-532-5350 Horoscope ...6D To subscribe to accused of deleting more against the Catawba Indian appointment” because the ca- Lottery...... 1B OnTV than 300 incriminating Nation in its attempt to build a sino would bring thousands of Obituaries ....4B magazine casino on its York County res- jobs and millions in tax reve- text messages. 2A Sports...... 1C ..877-800-1335 ervation, but the tribe vowed to nues to the state. But the ruling Wells Fargo CEO heckled appeal – with the chief calling “is merely a step in our long CHUCK LIDDY - [email protected] John Stumpf interrupted the setback part of its struggle struggle,” he said. “We plan to President Barack Obama laughs as he tapes an appearance on in a “quest for justice.” appeal this ruling.” © 2012 The Charlotte Observer by protesters during the the Jimmy Fallon show at Memorial Hall on the University of Vol. 143, No. 116 Circuit Court Judge J. Ernest State Sen. Wes Hayes, R- bank’s annual sharehold- North Carolina campus in Chapel Hill on Tuesday. Obama also Kinard of Camden on Tuesday Rock Hill, is a vocal opponent ers meeting. 2B spoke to students at Carmichael Arena and urged Congress to ruled against the Catawbas in of the tribe’s attempt to build a keep student loan rates from rising. their lawsuit against South SEE CATAWBAS, 6A

+ 8A Wednesday, April 25, 2012 ■ PROGNOSIS: PROFITS charlotteobserver.com • The Charlotte Observer + Hospital bypassed county to get legislators’ OK

By Karen Garloch psychiatric beds and their offer The modified bill passed that you hoped to pass this leg- and Ames Alexander to pick up expected losses. June 16, just two days before islation based not on its merits [email protected] About half of state-operated legislators adjourned. There but rather by sneaking it [email protected] psychiatric beds have closed in was no debate and no refer- through unnoticed by the Last year, when Carolinas recent years, leaving many pa- ence to the dispute between county. … HealthCare System wasn’t get- tients without places to go. In Carolinas HealthCare and “This willful disregard for ting what it wanted from Charlotte, inpatient occupancy Mecklenburg. open and transparent commu- Mecklenburg County, it turned at CMC-Randolph regularly Hartsell, nication appears to have been a to state legislators for quicker, exceeds 100 percent, and that whose district in- furtive action to capitalize on more favorable, treatment. means that 20 to 30 patients cludes Carolinas our trust and the 70-plus year In the last days of a busy ses- routinely wait in emergency Medical Center- relationship. Mecklenburg sion, the N.C. General Assem- departments for a psychiatric NorthEast in County would have preferred bly passed a law that circum- bed, hospital officials say. Concord, which hearing directly from you vented the county and gave the Lanier Cansler, until recent- Tarwater is owned by Car- about your legislative attempts region’s largest hospital sys- ly the state’s secretary of health olinas Health- at circumvention of county au- tem what it asked for. and human services, had been Care, said he knows the legisla- DAVIE HINSHAW – 2010 OBSERVER FILE PHOTO thority, and is stunned that you The power play started pushing to transfer psychiatric tive action caused hard feel- Inpatient occupancy at the 66-bed CMC-Randolph regularly did not tell us.” when Carolinas HealthCare beds from Broughton Hospital, ings. But he said he introduced exceeds 100 percent, hospital officials say, meaning 20 to 30 The Huntersville hospital is asked for the county’s OK on a state psychiatric hospital in the bill because he agreed with patients routinely wait in emergency departments for beds. on hold. In March, Hunters- its proposal to build a new psy- Morganton, to the community. Cansler’s assessment. “We flat ville commissioners denied chiatric hospital in Hunters- But under existing law, Caroli- out need the beds. Period,” legislators not to make the ex- It was a stunning turnaround the system’s request to rezone ville. County officials delayed nas HealthCare needed Meck- Hartsell said. ception for Carolinas Health- that both offended and im- hospital-owned land at N.C. 115 signing off, worried that a new lenburg’s support to apply for Hartsell said he’d been told Care. pressed county officials. and Verhoeff Drive. suburban hospital could take the transfer of beds. last April by the hospital sys- Jones said he didn’t think the “It’s an example of raw polit- Carolinas HealthCare officials paying patients away from the Early last May, frustrated by tem’s lobbyist, Martha Ann General Assem- ical power that no one else I say they are evaluating their op- county-owned behavioral the county’s delay, Carolinas McConnell, of the possible bly should get in know has,” said commissioner tions and looking for another health center, 66-bed CMC- HealthCare CEO Michael Tar- need for legislation to expedite the middle of a Bill James, who noted that for- site. The project is expected to Randolph. water threatened to build the the matter. He said she re- dispute between mer Gov. Jim Martin and for- cost $30 million, excluding land. Carolinas HealthCare, new hospital in an adjacent turned to him in late May with Mecklenburg mer Mecklenburg commis- They estimate operating losses which manages CMC-Ran- county. But he didn’t have to an official request for help. County and Car- sioners chairman Carla DuPuy of at least $5 million a year for the dolph under a contract with make good on that threat. Once the bill was modified, olinas Health- have been on the hospital sys- first five years. the county, promised to pick On June 2, Sen. Fletcher it didn’t take long for Mecklen- Jones Care. He also said tem’s payroll. All are Republi- “One thing that is absolutely up construction costs and op- Hartsell, a Cabarrus County burg officials to hear about it. county officials cans. certain – and will not change – is erating losses at the new hospi- Republican, modified a pend- Hartsell said he got a call sever- had neither approved nor op- “From a political standpoint, the urgent and compelling need tal. But county officials still ing bill so that Carolinas al days later from County At- posed the Huntersville project they’re the most powerful enti- for more inpatient beds to serve worried that the project would HealthCare would be allowed torney Marvin Bethune, who but had asked for more infor- ty in Mecklenburg County,” our community,” Tarwater said. end up costing taxpayers. to work directly with the state was his law school roommate. mation. James said. “We have no intention of turning Hospital officials found the to transfer beds from Brought- A day or two later, he said, His plea failed. The bill In a letter to Tarwater, Jones our back on this initiative.” delay baffling because of the on, circumventing the need for County Manager Harry Jones passed the Senate on June 7 said: “The only conclusion I demonstrated need for more county approval. showed up in Raleigh to ask and the House nine days later. can draw from your actions is Garloch: 704-358-5078

$100 or less, records show. tends beyond the legislature. HOSPITALS Money flows to power The organization itself is well- They also know how to get the • from 1A When giving to political candidates, the N.C. Hospital Association PAC has targeted its money to those funded, with $4.6 million in reve- ear of the governor. in power. Democrats ran the General Assembly for most of the past ten years. nue during 2010, the most recent As the General Assembly the politicians. Top ten recipients of hospital money since 2000: year available. It paid out $3.2 struggled with the state budget The lobbying goes on all Marc Basnight (D) $38,000 million in salaries and benefits, in 2010, lawmakers made a ten- year, not just in Raleigh, but in including $869,169 to its presi- tative cut of $519 million to take every community with a hospi- Tony Rand (D) $33,000 dent, Bill Pully. effect if expected federal stim- tal. The association expects Beverly Perdue (D) $23,000 The hospital association has ulus funds were not continued. and encourages hospital offi- James Black (D) $23,000 been so successful over the years If the federal funds did not cials to forge relationships Linda Garrou (D) $22,500 that Dalton, the spokesman, come through, the state budget with local lawmakers. Pete Brunstetter (R) $22,000 struggled to name any setbacks director was to make cuts from Association spokesman Don Marc Basnight (D) Tom Apodaca (R) suffered at the General Assem- a prioritized list of the disaster Roy Cooper (D) $21,000 Dalton says staffers visit regu- bly. After a pause, he came up relief fund, the state lottery, larly with hospital CEOs, and Harold Brubaker (R) $18,000 with one: The hospitals pushed a Medicaid, retirement system are expected to ask, “When Tom Apodaca (R) $18,000 bill to cap damages in lawsuits, contributions, and other funds. was the last time you visited Jeff Barnhart (R) $18,000 which foundered and didn’t be- The Department of Health with your legislator?” Top ten recipients over the past year: come law at the time. and Human Services planned Politics of fear That was in 2003. to cut $26 million in Medicaid Since Republicans took control of the General Assembly in Jan. Tilson, the hospital lobbyist, reimbursements, a 1.35 percent Former Sen. David Hoyle 2011, the association has given more to Republicans. pointed to a long-term frustra- reduction for doctors, hospi- knows that relationship from Tom Murry (R) $4,000 tion: The hospitals have long tals and other providers. For- Pete Brunstetter (R) Harold Brubaker (R) both sides. In the 1980s, he Tom Apodaca (R) $4,000 pushed for more state money for mer Secretary Lanier Cansler chaired the board at Gaston the mentally ill, including more announced the rate cuts would $4,000 Memorial Hospital. Thom Tillis (R) for inpatient mental health care. take place Sept. 1. In 2009, as the state faced a Pete Brunstetter (R) $4,000 The conditions for the mentally The hospital association $3.4 billion shortfall, Hoyle pro- Nelson Dollar (R) $3,000 ill are no better than they were 10 geared up. Bill Pully wrote Gov. posed capping Mark Hollo (R) $2,500 years ago, Tilson said. Bev Perdue, re- sales tax refunds William Brisson (D) $2,000 But such setbacks have been minding her that for nonprofits at Eric Mansfield (D) $2,000 rare. More often, the hospitals hospitals and $5 million. get exactly what they want. doctors lose Hoyle’s pro- Susan Hamilton (D) $2,000 In 2011, they got the damage money treating posal would have Jim Black (D) Tony Rand (D) Michael Wray (D) $2,000 cap they’d been seeking, Medicaid pa- affected only a SOURCE: State Board of Elections The News & Observer though the big push came from tients, and that Hoyle handful of the doctors and the N.C. Chamber Pully further cuts state’s biggest of Commerce. The law limits would strain an and most profitable hospitals. medical malpractice awards overburdened system. It would have raised about $15 Hospitals get their way on inmate care for noneconomic damage – A letter-writing campaign million for the state. pain and suffering, emotional followed. Hospital CEOs cop- Hoyle’s idea went nowhere. By Joseph Neff nancial officer at Duke University Health distress and less tangible inju- ied Pully’s letter to their letter- He said he believes hospital [email protected] System. “We don’t want their business. It’s ries – to $500,000. head and sent it to Perdue. For years, the state Department of Correc- disruptive.” representatives talked to every Big workers’ comp charges Doctors, clinics and other member of the Senate Finance tion has been trying to rein in skyrocketing The day after the budget passed, a state practices also wrote Perdue, Committee, arguing that costs of hospital care for inmates – up from lawmaker acting on behalf of WakeMed North Carolina hospitals urging her to not cut provider health insurance premiums $17.5 million in 1999 to $63.8 million in 2011. slipped a bland sentence into a “technical long have received some of the fees. They sent 104 letters in all, would rise if the bill passed. It But prison officials had a problem: Unlike corrections” bill; the requirement that hospi- most generous payments in the including 36 from hospitals. was an effective argument insurance companies that represent regular tals treat inmates for non-emergencies was country for treating patients The governor asked her staff from persuasive people. patients and can negotiate hospital charges quietly deleted. Those hospitals include big covered by workers’ compen- to set up a meeting with Pully “They are the folks back downward, they had no bargaining power. institutions such as Carolinas Medical Cen- sation insurance. That’s a as well as leaders of the groups home, they’re the people we go They generally paid whatever the hospital ter, WakeMed in Raleigh, and Duke. charge absorbed by businesses that lobby for doctors and to church with and golf with,” demanded. Hugh Tilson, lead lobbyist for the N.C. that pay the workers’ comp long-term care facilities. he said. “It puts the fear in you. Paying the list price is expensive since Hospital Association, said he urged hospital premiums. Perdue met with them at 10 You don’t want to be the one North Carolina hospitals generally set their officials to call lawmakers if they didn’t want It’s not a huge business for a.m. Aug. 27 at her office in the blamed for health care costs charges at three times their costs; an inmate to be forced to admit murderers, rapists and hospitals – about 1 percent. But Capitol. being so high.” hospital stay that cost the hospital $10,000, child molesters. it was very profitable: The pol- At 12:30 p.m. that day, the Folwell’s bill went further: He for example, could be billed at $30,000. Sen. Richard Stevens, a Cary Republican, icies paid hospitals 95 percent chief financial officer for the proposed limiting sales tax re- Paying the list price means a 200 percent submitted the amendment. Stevens had of charges for outpatients (an state’s Medicaid office sent an funds to nonprofits to 100 per- profit for the hospital at the expense of tax- heard from officials at WakeMed, who com- average markup of roughly email to staff: “Per Lanier’s di- cent of the first $1 million and 25 payers. plained that they have provided a dispropor- three times costs), and 77 per- rection from the Governor, she percent of tax paid above $1 mil- So the Department of Correction turned to tionate share of inmate care. cent for inpatients (more than has reversed the rate reduc- lion. The cap would have affect- the General Assembly. Last year, prison officials Stevens also said legislative staff were trou- double the costs). tions proposed for 9/1/10.” ed 28 nonprofit hospitals, many thought they had finally fixed the problem. The bled by a provision in the law that could revoke According to a study of 16 Some stimulus funds had of them very profitable, and six new state budget mandated that prisons now a hospital’s license if it didn’t treat inmates. states by the Workers Com- come in, so Perdue had to cut colleges and universities. pay the lesser of 70 percent of charges, or twice In the fall, the Department of Correction pensation Research Institute, only $222 million. But the other According to Folwell, hospi- the rate that Medicaid will pay. Either price opened a $155 million hospital at Central Pris- North Carolina had the highest programs did not fare so well; tals are among the largest users guarantees a profit for the hospital and a signif- on in Raleigh that will diminish, but not elim- payments to hospitals. money was taken from the Di- of tax-funded services such as icant savings for taxpayers. inate, the need for inmates to be seen in out- The N.C. Industrial Commis- saster Relief Reserve, unclaimed police and fire protection. Most Under federal law, all hospitals must see side hospitals. Frank Rogers has been in sion set up a committee to find lottery money, the state’s rainy of them pay no property taxes, anyone who shows up in the emergency charge of the prison’s push on inmate health ways to reduce the payments. day fund and others. In effect, so other taxpayers have to shoul- room. The state budget law would have re- care at the legislature, and he has seen the Hank Patterson, a Chapel Perdue’s budget director der the burden. quired hospitals to admit inmates, not just hospitals’ clout. Hill labor lawyer who chaired skipped over Medicaid, the fifth Cash-strapped public schools treat emergencies. “I was disappointed,” Rogers said of the last- the committee, said the insur- item on the list, and made cuts do not get a sales tax refund, But many hospitals don’t like treating in- minute change. “But I was not surprised.” ance companies wanted to tie from the rainy day fund and an- while wealthy hospitals do, and mates. reimbursement rates to Medi- other management fund. that’s not fair, Folwell said. “Inmates?” asked Kenneth Morris, chief fi- Neff: 919-829-4516 care. Insurance companies Tilson said the governor rec- Hugh Tilson, lead lobbyist generally use Medicare rates as ognized the dangers of cutting among the 10 who registered in the starting point when negoti- Medicaid. 2011 for the N.C. Hospital Asso- ating with hospitals. “She understood the cuts ciation, made no apologies for nual breakfast meeting, said In Charlotte, the Board of WakeMed, there’s a former Ra- The hospital association ob- would be detrimental to the killing the sales tax bills. Sen. Charlie Dannelly, a Meck- Trustees of Presbyterian Health- leigh mayor, a Wells Fargo jected, Patterson said, and the state’s most vulnerable popu- “As nonprofits, any reve- lenburg Democrat who’s not care includes Larry Stone, re- executive, the former head of hospitals prevailed. Reimburse- lations,” he said. nues that we forgo would di- running for re-election. tired president of Lowe’s, and Wake County Schools and a ment was cut but remained tied Perdue said she didn’t need minish our ability to care for “I personally come away Jim Palermo, a retired Bank of former state auditor. Orage to hospital charges, which is in any convincing. Keeping Med- the public,” Tilson said. with the feeling that they’re America executive. Quarles III, president and pub- the hospital’s financial interest. icaid funded as much as possi- Tilson agreed with Hoyle saying they’re struggling. Carolinas HealthCare Sys- lisher of The News & Observ- Patterson said the reduc- ble was her top priority for and Folwell that his members ‘Don’t do anything to hurt us,’ ” tem’s board members include er, is a member of the board of tions were progress, but he ac- hospitals. are the key to his success lob- Dannelly said. NASCAR team owner and Rex Hospital in Raleigh. knowledged that the hospitals Before she ran for the state bying the General Assembly. “You’re not struggling when businessman Felix Sabates, The hospitals perpetuate could erase the cuts simply by House in 1986, Perdue was a “Our success has little to do your CEO’s salary goes up ev- former Wachovia CEO Ken their power by staying in the raising their charges. Many gerontologist at Craven Me- with what I do,” Tilson said. “It’s ery year, in my opinion,” Dan- Thompson, retired Wachovia good graces of legislators. The hospitals raise their charges morial Hospital. When she ran that local relationship between nelly said, referring to Michael executive Mac Everett, and Ed hospital political action commit- 5 percent or more each year. for office, she followed a cam- the community and its legisla- Tarwater, the system CEO who Brown, a former Bank of tee raises small amounts from “The hospitals are very politi- paign plan drafted by a lawyer tors. Most legislators want their had total compensation of America executive who’s now thousands of donors: doctors, cally powerful,” Patterson said. for the hospital association: hospitals to succeed.” $4.2 million in 2011. CEO of Hendrick Automotive. hospital board members, law- “If you are pragmatic, you tread Bill Pully. In Charlotte, Carolinas Many wins, few losses State Sen. Dan Blue of Ra- yers, administrators, pharma- carefully to make progress.” She won. They have been HealthCare System makes lo- leigh, a former House speaker, cists and nurses give in amounts A governor’s help allies ever since. cal lawmakers aware of its Ties between hospitals and sits on the board of Duke Uni- ranging from $15 to $2,800, with needs and challenges at an an- community leaders are strong. versity Health System. At the majority of contributions The hospitals’ influence ex- Alexander: 704-358-5060 + Fox: TOM SORENSEN INSIDE ‘The Mob WHAT’S ON TV? Doctor’ ON THE PANTHERS: FALL PREVIEW HELPS $69 YOU FIND A WINNER ‘They’re meek’ IN COUPONS CAROLINA LIVING SPORTS 2012 TOTAL: $6,230 NBC: ‘Go On’ CBS: ‘Made in Jersey’

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N.C. gubernatorial candidates Walter Dalton and Pat McCrory offer different approaches. Prices soar as hospitals dominate cancer market

SALES TAX Current rate: 4.75 percent statewide plus local tax rates

Dalton: Promises not to increase McCrory: sales tax in his first budget pro- Opposes posal, despite supporting an in- any sales crease earlier this year. Makes no tax hikes guarantee about second budget. MORE ON 4A McCrory, Dalton vary on tax plans First of a series By John Frank [email protected] A defining question in the governor’s race will af- fect the pocketbooks of every North Carolina resi- DAVIE HINSHAW – [email protected] dent: Who should pay taxes and how much? Patients receive chemotherapy at Southern Oncology Specialists in Huntersville, one of the dwindling number of independent oncology Democrat Walter Dalton and Republican Pat clinics in the Charlotte area. Hospitals are increasingly buying doctor groups, and hospital markups on cancer drugs are often higher. McCrory are traveling the state touting wildly differ- ent tax plans as part of their pitch to revive the state’s By Ames Alexander, Karen Garloch and Joseph Neff economy and remedy the persistently high jobless Same drug, different prices [email protected], [email protected] rate. Here’s a look at what several North Carolina hospitals were paid this and [email protected] Dalton offers modest tweaks to the tax code with a year for a typical dose of a common cancer drug under one private Large nonprofit hospitals in North Carolina are dramatically inflat- combination of incentives and tax breaks, while health plan. ing prices on chemotherapy drugs at a time when they are cornering McCrory is pushing for a complete overhaul that AVASTIN: could shift the state’s tax burden by billions of dol- Used to extend life in patients with lung, breast, colon, more of the market on cancer care, an investigation by the Observer kidney and ovarian cancer. lars. and The News & Observer of Raleigh has found. INSIDE Average “I think the tax issue About The newspapers found hospitals are routinely marking up prices on Both have records of has replaced education sales price for 100-unit dose $6,000 cancer drugs by two to 10 times over cost. Some markups are far higher. tax cuts and hikes. 4A as the top issue, as it was during the Hunt, Easley, NC Baptist It’s happening as hospitals increasingly buy the practices of inde- Hospital, $7,649 and, to a lesser extent, Perdue campaigns, because Winston-Salem pendent oncologists, then charge more – sometimes much more – for state races have become nationalized,” said David Carolinas the same chemotherapy in the same office. McLennan, a political science professor at William HealthCare $17,085 Asked about the findings, hospital officials said they are relying on a Peace University, referencing the last three gover- System, Charlotte nors. “Since Ronald Reagan’s election in 1980, every Catawba Valley longtime practice of charging more for some services to make up for Medical Center, $17,256 losses in others. Hospitals have a name for this: cost-shifting. winning presidential candidate is the one perceived Hickory to be the one most able to cut taxes. What we are Duke “The drug itself may just be the vehicle for charging for the services that seeing is McCrory tapping into that trend and the University $22,680 are provided (elsewhere),” said Joe Piemont, president of Carolinas public’s sentiment that lower taxes benefit the econ- Hospital, Durham HealthCare System, the $7 billion chain that owns many of the region’s omy.” 0 $5,000 $10,000 $15,000 $20,000 $25,000 hospitals. “We make literally thousands of trades to have it balance.” Dalton, the current lieutenant governor, wants to SOURCES: Analysis of claims data obtained by The Charlotte Observer and offer small businesses a break by exempting the first The News & Observer, U. S. Centers for Medicare and Medicaid Services. STAFF CHART The rising price of cancer treatment has financially devastated $25,000 in corporate taxable income for businesses many families, while driving up insurance costs and causing some pa- making $100,000 or less and the first $15,000 for tients to put off needed treatments. those making $200,000 or less. His plan includes a $2,000 tax credit for business- “If you have enough money or good enough insurance, it may not be es that hire long-term unemployed workers and sup- INSIDE READ THE SERIES an issue for you,” said Donna Hopkins, CEO of Dynamic Medical So- ports the extension of a federal wind energy tax One patient’s chemo bill Read the Prognosis: Profits lutions, a company that audits medical bills. “If you’re somebody who break. tops $145,000. 7A series, charlotteobserver.com/hospitals SEE TAX PLANS, 4A SEE CHEMO, 6A

76o 47o A ROMNEY REBOUND? Museum confronts era of lynching Today: Mostly sunny and Republican presi- cooler. 16C dential nominee Most provocative exhibit in museum’s Mitt Romney history shows bigotry in Jim Crow South © 2012 The Charlotte Observer hopes to bounce Vol. 143, No. 267 By Mark Washburn back this week [email protected] after a series of Levine Museum of the New South will unveil the bol- missteps. 17A dest and most provocative exhibit in its 20-year history this week, an unsettling chronicle of lynching in America Keeping top-notch and in the Carolinas. NICHOLAS KAMM - AFP/GETTY teachers happy Based largely on photo postcards that circulated as Ask Amy...... 4E Local schools gruesome mementos, the exhibition – “Without Sanctu- Business...... 1D seek ways to ary: Lynching Photography in America” – confronts the Classified...... 6B phenomenon of vigilante executions that peaked around Comics...... 1O keep their best the dawn of the 20th century. JOHN D. SIMMONS - [email protected] Editorial ...... 24A educators on Dealing with sensitive social issues is nothing new for Postcards showing lynchings and a racist sign from a Horoscope...... 4E Lottery...... 1B the job. 1B the Levine, which created in 2004 the long-running and new exhibit on lynching opening Saturday. Movies...... 2E nationally recognized “Courage” exhibit detailing the Obituaries...... 4B Managing when ‘I struggle for school desegregation in the South. profoundly affected American society. Sports...... 1C do’ meets ‘I owe’ But in “Without Sanctuary,” the Levine takes a step fur- “We bear witness to the atrocities and teach this histo- TV ...... 2E Tips to help Delivery assistance or to ther by displaying graphic images of lynchings to confront ry to facilitate cross-cultural discussions in the hope we’ll subscribe ..800-532-5350 newlyweds avoid the theme of bigotry in the Jim Crow era. promote healing – and vigilance about bigotry and vio- To subscribe to OnTV money fights. 1D “We present complex history,” said Emily Zimmern, lence today.” magazine . 877-800-1335 the Levine’s president. “This is an important topic that SEE LYNCHING, 8A

+ 6A Sunday, September 23, 2012 ■■■ FROM PAGE ONE charlotteobserver.com • The Charlotte Observer + Oncologists struggle to stay independent

By Karen Garloch provides around-the-clock Mecklenburg and surrounding and Ames Alexander emergency care. counties. In addition to buying [email protected] How the trend began Hauch’s practice, the system [email protected] purchased NorthEast Oncolo- For the last half of his Health care experts say the gy Associates in 2007, Carolina 30-year career, Dr. Thomas trend toward private oncolo- Cancer Specialists in Rock Hill Hauch provided chemothera- gists becoming employees of in 2008 and Rutherford Inter- py in his own Charlotte offices, hospitals had its genesis in the nal Medicine Associates in resisting the financial pressure Medicare Modernization Act 2009. The hospital has also re- that other oncologists felt to of 2003. With that law, Con- cruited eight medical oncolo- merge with a hospital. gress reduced Medicare reim- gists to staff its new Levine When Hauch died in 2009, bursement to private doctors Cancer Institute. his wife and business manager, for cancer drugs. As a result, That means Carolinas Karon, wanted to make sure his private insurers also cut their HealthCare dominates one of patients continued to receive reimbursement. the most lucrative markets in good medical care. Before that, oncologists the Carolinas. In 2010, she sold the practice, were “making huge profits” on Presbyterian Healthcare, Carolinas Cancer Care, to Car- drugs, said Bob Berenson, a Charlotte’s other major hospi- olinas HealthCare System. She past member of the Medicare tal system, doesn’t own any on- said hospital officials promised Payment Advisory Commis- cology groups and employs to care for patients regardless sion, which advises Congress only six cancer specialists – of whether they had insurance, on changes to Medicare. four in pediatrics and two in just as her husband had. When reimbursement de- gynecologic oncology. But sev- But there was a downside. creased, private oncologists eral private oncologists work The cost of care went up – warned they would stop giving solely with Presbyterian when substantially. chemotherapy in their offices their patients need hospital According to data obtained and predicted that Medicare care. by the Observer, the charge for would end up paying more for Referring to hospitals a dose of Neulasta, a drug used patients to get treated in hospi- to reduce the chance of infec- tal-owned clinics, Berenson Independent oncologists ac- tion for chemotherapy pa- said. knowledge they often refer un- tients, rose from $2,365 to And that’s what happened. insured and underinsured pa- $9,750. Charges for other che- DAVIE HINSHAW – [email protected] Hospital-based outpatient tients to hospitals for chemo- motherapy drugs rose as well. Cancer patients get chemotherapy at Southern Oncology Specialists, a Huntersville office clinics get paid more for pro- therapy. Also, the clinic used to owned by Dr. Bill Mitchell. “It’s a struggle to stay independent in this environment,” he said. viding chemotherapy – even if This transfer of patients is charge $252 for one hour of in- it’s delivered by the same peo- one of the reasons hospital offi- fusing a cancer drug. After ple in the same place that was cials say their prices must be Carolinas HealthCare took ov- Paying a premium for cancer drugs once doctor-owned. higher than those in a private er, that charge rose to $800. Hospitals and hospital-owned clinics tend to charge more than independent doctors for many “You take the same oncolo- doctor’s office. Pressure to sell out common cancer drugs. Here’s what various N.C. hospitals and independent doctors collected gist and suddenly you’re pay- But doctors in private prac- for a typical single-session dose of Aloxi, an anti-nausea drug commonly given to cancer ing … more when nothing has tice, who pay more for cancer What happened with Caroli- patients. Many patients get multiple drugs and rounds of chemotherapy. changed except they have a drugs and don’t get reim- nas Cancer Care isn’t unusual. new plaque on the wall,” Ber- bursed as much as hospitals do, Across the country, nearly Medicare’s payment limit * $184 enson said. say they can’t afford to buy the 400 oncology practices have ( the drug’s average sales price plus 6% ) One doctor’s quest drugs if there’s a chance they been bought by hospitals or 0 300 600 900 $1,200 won’t get paid. formed financial arrange- Hospital and hospital-owned facilities As reimbursement for can- “Most practices can’t carry ments with hospital systems cer drugs declined for private that kind of debt for a long peri- since 2007, according to Com- N.C. Baptist Hospital, What providers collected oncologists, doctors found it od of time,” said Marge Bea- $290 under one national health plan munity Oncology Associates, a Winston Salem harder to stay independent. zley, practice administrator for group that represents indepen- Five of Hauch’s partners be- Cancer Care of Western North dent oncologists. FirstHealth Montgomery Hospital, Troy $497 came hospital employees Carolina. And when hospitals buy the when the prac- Levine Cancer Institute, Charlotte region practices, prices go up. Patients $901 tice sold. One left Not bankrupt, but … are billed based on the hospital (owned by Carolinas HealthCare System) Charlotte, but the fee schedule. other, Dr. Bill Dr. John Pow- Nationally, chemotherapy Catawba Valley Medical Center, Hickory $1,035 Mitchell, struck derly, who owns costs 24 percent more in a hos- out on his own in Carolina BioOn- pital-based outpatient setting Independent oncologists Huntersville. cology Institute than in a doctor’s office, ac- Mitchell jok- in Huntersville, cording to a study by the con- Lake Norman Oncology, $177 Mitchell ingly refers to his says it’s harder sulting firm Avalere Health. Mooresville and Huntersville current practice than ever to re- “The suggestion that when a as “Little House on the Prairie main indepen- Carolina Oncology Associates, Salisbury Powderly (physician) group comes to us $296 Oncology” because he took a dent. ... we raise their prices, that’s loan to open two years ago in a He and his wife sold their not true,” said Carolinas Carolina Oncology Specialists, Hickory $400 small office with minimal house on Lake Norman in 2005 HealthCare President Joe Pie- equipment. Since then, he’s so he could open his Hunters- mont. “When the group comes Oncology Specialists of Charlotte $413 added a doctor and a second ville office. He has cut his staff to us, they charge our prices. … location, but he struggles to re- from 19 to 11 and worries every These are our negotiated rates main competitive. month whether he can pay his *Figure is for the second quarter of 2012. with (private insurance com- Notes: The figures are for 250 micrograms of Aloxi, a typical dose. The Observer was not able to obtain comparable data for Presbyterian Hospital. “It would be easier to go bills. panies).” SOURCE: 2012 claims data obtained by the Observer AMES ALEXANDER – RESEARCH DAVID PUCKETT – STAFF GRAPHIC with the hospital,” he said. “My “No, I’m not bankrupt,” Large hospital systems have and The News & Observer of Raleigh. trade-off is I have my autono- Powderly said, “but I’m at or greater leverage in contract ne- my.” near a point where I have to gotiations with private insur- tems to independent oncology “We take everybody,” Pie- must cover the cost of those Mitchell is one of about 30 consider joining a hospital ers than do smaller doctors’ of- offices because private doctors mont said. non-paying patients, of provid- oncologists in the Charlotte re- simply for the sake of being fices. can refuse to treat uninsured or Hospital officials say their ing services that are not cov- gion who remain independent. able to practice my trade.” But hospital officials say it’s underinsured patients. Hospi- chemotherapy charges are jus- ered by insurance and of sus- Carolinas HealthCare em- unfair to compare their sys- tals cannot. tifiably higher because they taining an infrastructure that ploys 53 medical oncologists in Garloch: 704-358-5078

Such markups are hidden patients covered by Medicaid, Hospitals will likely face CHEMO from patients. CHS, Duke chemo prices higher than most the government program for fewer unpaid bills under the • from 1A Charlotte native Chuck Chemotherapy prices vary wildly, even among hospitals. the poor and disabled. Some federal Affordable Care Act. Moore, the patient in the For- Under one health plan, Catawba Valley Medical Center in independent oncologists ac- That’s because the law, sched- syth case, got nine weeks of Hickory received $1,035 this year for a typical single-session knowledge that they often re- uled to become fully effective doesn’t have that, it can be a chemotherapy for cancer at dose of Aloxi, a drug used to prevent the nausea that often fer such patients to hospitals. in 2014, requires millions of death sentence.” the base of his tongue in 2008 results from chemotherapy. N.C. Baptist Hospital, in Winston- Hospital officials say they people to buy health insurance. After examining some che- and 2009. Though he had good Salem, received just $290. provide counseling and many At the same time, hospitals will motherapy bills collected by health insurance, he still paid Officials with Catawba Valley Medical say market data other cancer services that in- likely face cuts in government the Observer, Hopkins called about $15,000. indicate their chemotherapy charges are in line with those of surers don’t cover. reimbursement for care. the markups “outrageous.” When a reporter told him several other area hospitals. Officials for Carolinas Neither hospital system an- Some of the largest markups the average sales price of the Two of the state’s largest hospital systems – Carolinas HealthCare and Novant, which swered questions about how are made by nonprofit hospital drugs he’d received, he ques- HealthCare System and Duke University Health System – runs four Mecklenburg County much they’ve spent on chemo- chains that generate millions of tioned the hospi- appear to charge more than most hospitals for some com- hospitals, emphasize that they therapy drugs in recent years, dollars of profit each year and tal’s charges. mon cancer drugs, the newspapers found. provide free care to many finan- and how much revenue those have billions in reserves. “I’ve never Carolinas HealthCare said its pricing for chemotherapy is cially needy cancer patients. drugs generated. It’s a mystery to the public had a business “comparable to healthcare providers across the country.” Carolinas Medical Center But Everett said Novant lost how hospitals set their charg- where I could get Officials said large systems see higher volumes of unin- spent about 5.5 percent of its money on outpatient chemo- es. But the newspapers ob- a markup like sured patients and provide more sophisticated services, such budget on charity care in 2010. therapy infusion last year. tained and analyzed a private that,” said as clinical trials. Presbyterian Hospital spent Vulnerable patients database with information on Moore Moore, an as- about 5 percent. more than 5,000 chemothera- sembly plant su- Piemont, of Carolinas It’s understandable why ma- py claims to get insight into pervisor now living near At- Earlier stories in Prognosis: Profits HealthCare, said charges for ny cancer drugs don’t come pricing for cancer patients, a lanta. “It seems almost preda- In April, the Observer and The News & Observer of Raleigh chemotherapy drugs may be cheap, according to those who group that faces some of the tory.” published a five-part investigation showing how nonprofit hos- used to cover costs of other make and administer them. nation’s highest medical bills. Costlier, not better? pitals in N.C. cities have become hugely profitable. money-losing Drug companies must cover The drug data, along with The investigation revealed that Charlotte-area hospitals have: services, such as research and development scores of interviews, help ex- Until recently, those who • Generated some of the nation’s largest profit margins and the emergency costs. Hospitals have to cover plain why hospitals have be- needed chemotherapy had more amassed billions of dollars in reserves. department, overhead. come so expensive – and why alternatives. They could go to • Charged prices comparable to big-city hospitals. which treats a The N.C. Hospital Associa- health care spending now the offices of oncologists who • Consolidated into two large systems – Carolinas HealthCare high number of tion said the costs of handling makes up 18 percent of the na- weren’t employed by hospitals. System and Novant Health – that have leverage to negotiate uninsured pa- and preparing cancer drugs tional economy. Increasingly, however, private higher payments from insurance companies. Piemont tients. “far exceed those required for Among the markups found: oncologists are under financial • Paid top executives millions. At least 25 North Carolina hos- “We cannot most other medications.” • Levine Cancer Institute, pressure to sell their businesses pital executives have received total annual compensation ex- be compared to (an indepen- “Medicines that treat cancer owned by Charlotte-based to hospitals. When they do, hos- ceeding $1 million. dent doctor) who can just are toxic, dangerous chemicals Carolinas HealthCare, this pitals often charge more. • Sued thousands of needy patients, frequently putting liens overtly select who they see,” that demand the highest levels year collected nearly $4,500 for In a review of claims for sev- on their homes and damaging their credit. Piemont said. “We take every- of trained personnel, special- a 240-milligram dose of irino- en cancer drugs, the newspa- To read the “Prognosis: Profits” series, visit body. That requires cost-shift- ized equipment and facilities,” tecan, a drug used to treat peo- pers found that charges for all www.charlotteobserver.com/hospitals ing that is so emblematic of the association said. ple with colon or rectal cancer. but one drug were significantly this industry.” But community oncologists The average sales price for that higher at hospitals and hospi- Novant spokeswoman Kati say they use the same toxic amount of the drug: less than tal-owned clinics – usually chemotherapy claims and lieves the acquisitions of on- Everett pointed to shortcom- drugs in their practices at a $60. more than 45 percent higher. found that hospital-owned fa- cology practices by hospitals ings in the Avalere study, not- much lower price. • Carolinas Medical Center- Levine Cancer Institute, for cilities in the state tend to be have increased costs without ing that hospital patients tend And some experts contend NorthEast in Concord was instance, charges about $106 paid 50 to 150 percent more for improving the quality of care. to be sicker than those treated that hospitals don’t need to in- paid about $19,000 for a one- for each unit of Aloxi, the anti- cancer drugs than indepen- “We’re essentially enriching in doctors’ offices. Comparing flate prices so dramatically. gram dose of rituximab, used nausea drug. But at Carolina dent oncologists. people and getting nothing for prices at hospitals versus doc- Gerard Anderson, who to treat lymphoma and leuke- Oncology Specialists, an inde- A recent study by Avalere it,” he said. “And there are tor’s offices doesn’t provide an heads the Johns Hopkins Cen- mia. That was roughly three pendent clinic in Hickory, the Health, a consulting firm, found higher premiums every year.” accurate picture, she argued. ter for Hospital Finance, thinks times the average sales price. charge is just $50. similar disparities nationally. Shifting the costs Like most hospitals, those hospitals mark up charges on • Forsyth Medical Center in Insurers have found similar Chemotherapy costs 24 percent owned by Carolinas Health- cancer drugs more than most Winston-Salem, owned by No- patterns. more in an outpatient hospital Hospital officials defend Care and Novant are nonprof- other drugs and supplies. One vant Health, collected about At the newspapers’ request, setting than in a doctor’s office, their pricing. its, a designation that provides reason, he suspects, is that pa- $680 for 50 milligrams of cis- Blue Cross and Blue Shield of the study concluded. Unlike many independent them substantial tax breaks. In tients are “not inclined to do platin. The markup: more than North Carolina, the state’s larg- Dr. Ira Klein, assistant to the clinics, they say, hospitals suf- exchange, they are expected to comparison shopping in a life- 50 times the average sales est health insurer, examined chief medical officer at Aetna fer losses from treating pa- provide charity care and other or-death situation.” +price. data from thousands of 2011 insurance company, said he be- tients without insurance and benefits to their communities. SEE CANCER, 7A The Charlotte Observer • charlotteobserver.com NATION/WORLD ■■■ Sunday, September 23, 2012 + 7A

Patient’s chemotherapy charges top $145,000 Carolinas Medical Center-Northeast, in Concord, billed one patient a total of more than $145,000 for six cycles of rituximab, a drug used to treat lymphoma and leukemia. The patient and his employer, a N.C. university, paid more than $130,000. The average sales price for that Feds document amount of the drug: less than $40,000. Following is an excerpt from one of the six bills. A hefty markup The hospital billed the patient more than $24,000 for ten units of rituximab. The patient and his health plan wound up paying most of that amount. The average sales price for that quantity of the drug: less than $6,500. medical errors New plan asks consumers to report unsafe practices

By Robert Pear report information about patient safety events. New York Times “Patient reports could complement and WASHINGTON — President Barack Obama’s enhance reports from providers and thus administration wants consumers to report produce a more complete and accurate un- medical mistakes and unsafe practices by derstanding of the prevalence and charac- doctors, hospitals, pharmacists and others teristics” of medical errors, Clancy said. who provide treatment. Federal officials said the reports would be Fee for injecting drugs Hospitals say they are receptive to the analyzed by researchers from the RAND idea, despite concerns about malpractice li- Corp. and the ECRI Institute, a nonprofit or- On this visit, the hospital billed a total of more than $1,800 for the work that went into injecting ability and possible financial penalties for ganization that has been investigating med- cancer drugs. The patient and his health plan paid most of that. Medicare would have paid less than $550 for those injection services. National studies say that efficient hospitals are able to poor performance. ical errors for four decades. cover costs with Medicare reimbursement. In a flier drafted for the project, the govern- Consumer groups welcomed the federal ment asks: “Have you recently experienced a initiative. The American Medical Associa- SOURCE: Observer research, federal Medicare data. medical mistake? Do you have concerns about tion had no immediate com- AMES ALEXANDER – RESEARCH DAVID PUCKETT – STAFF GRAPHIC the safety of your health care?” And it urges ment, saying it needed to stu- patients to contact a new “consumer reporting dy the details. system for patient safety.” The government Some research suggests says it will use information submitted by pa- that one-fourth of patients in CANCER tients to make health care safer. and out of hospitals experi- • from 6A Federal officials say that medical mistakes ence “adverse events” in their often go unreported, and that patients have Clancy care. Hospital patients inter- In at least two ways, size has potentially useful information that could ex- viewed by researchers in Mas- given hospitals a financial pose reasons for drug mix-ups, surgery on sachusetts reported many events that were edge. the wrong body part, radiation overdoses not documented in their medical records. An Observer investigation and myriad other problems that cause inju- In the reporting system envisioned by the in April showed how hospital ries, infections and tens of thousands of Obama administration, patients and their consolidation has led to higher deaths each year. relatives would report medical errors and prices. When hospitals merge Hospitals and even some doctors say the near misses through a website and in tele- into large systems, they gain le- proposal has merit. phone interviews. verage to negotiate higher pay- “It’s a great concept,” said Nancy E. Fos- For each incident, the government wants ments from private insurers. ter, a vice president of the American Hospi- to know “what happened; details of the While insurers might be tal Association. “The idea is welcome.” event; when, where, whether there was willing to exclude a small clinic A draft questionnaire asks patients to “tell harm; the type of harm; contributing factors; from their networks, they are us the name and address of the doctor, nurse and whether the patient reported the event loath to lose the hospital chains or other health care provider involved in the and to whom.” that have come to dominate mistake.” If the pilot project is cleared by the White many markets. And it asks patients for permission to House, health officials hope to start collect- That has helped some North share the reports with health care providers ing information in May. Questionnaires Carolina hospital chains evolve “so they can learn about what went wrong would be made available at kiosks in hospi- into profitable, fast-growing gi- and improve safety.” tals and doctors’ offices. Fliers describing ants. At Carolinas HealthCare, In seeking White House approval this the project would be given out at pharma- the nation’s second-largest pub- month for a prototype of the reporting system, cies and mailed to patients’ homes with the lic hospital system, the average Dr. Carolyn M. Clancy, director of the federal explanation of benefits sent to them by in- annual profit has exceeded $300 Agency for Healthcare Research and Quality, a surance companies. million over the past three years. part of the Public Health Service, said, “Cur- Reporting is voluntary, and officials said The chain has built up more rently there is no mechanism for consumers to they would keep the information confidential. than $2 billion in investments and owns more than $1 billion in property. Novant had about $1.6 bil- lion in cash and investments in DIEDRA LAIRD– [email protected] Hospital takes aim at 2010 – a threefold increase over Carol Fleming of Huntersville was “petrified” when she saw the decade. her first bill. She exhausted her savings to pay for treatment. A positive for patients is that such profits have improved ac- cancer with ‘moonshot’ cess to quality health care. ‘These hospitals are … With the creation of Levine Houston center plans project the 1990s at an average of more than 1 per- Cancer Institute in 2010, Caro- becoming the Wal-Mart of reminiscent of space push to find cent per year, but the disease remains a top linas HealthCare has recruited killer worldwide. In the United States this specialists from respected in- cures and lower death rates year, estimates are that more than 1.5 million stitutions such as the Cleve- health care, squashing the people will be diagnosed with cancer, and land Clinic and M.D. Anderson By Marilynn Marchione more than 500,000 will die from it. Cancer Center in Houston. Associated Press The MD Anderson program was inspired Size gives hospitals another competition, but without The nation’s largest cancer center is by the goal President John F. Kennedy an- advantage, allowing them to launching a massive “moonshot” effort nounced in 1962 to put a man on the moon by save money when they pur- the low prices.’ against eight specific forms of the disease, the end of that decade. He described it to Con- chase drugs in bulk. similar to the all-out push for space explora- gress that May and in a speech in September at And more than 40 North DR. JOHN PETERSON, WHO FOR YEARS PRACTICED AS A PRIVATE tion 50 years ago. Rice University, a mile from MD Anderson. Carolina hospitals – including ONCOLOGIST IN NORTH CAROLINA The University of Texas MD Anderson The Houston cancer center treats 112,000 Carolinas Medical Center and Cancer Center in Houston expects to spend patients a year and has been building a data- Presbyterian Hospital – are as much as $3 billion on the project over the base of tumor samples and their genetic able to obtain deep discounts cancer test or treatment be- choose not to be treated be- next 10 years and already has “tens of mil- characteristics, especially of breast and on outpatient drugs under the cause of cost. cause of the cost. lions” of dollars in gifts to jump start it now, ovarian cancers. federal 340B program, which Dr. Otis Brawley, the soci- “Those are the ones that said its president, Dr. Ronald DePinho. Looking for fresh treatment ideas requires drug manufacturers ety’s chief medical officer, has break your heart,” she said. One of the cancers is myelodysplastic to provide price breaks to hos- seen the consequences. ‘Oh my God’ syndrome. “Good Morning America” co-an- A year ago, when DePinho became the pitals that treat large numbers When Brawley headed the chor Robin Roberts has that kind and had a center’s new president, he started a compe- of financially needy patients. cancer center at Emory Uni- When Carol Fleming of bone marrow transplant to treat it on Thurs- tition among its researchers to submit ideas Although Congress set up the versity in Atlanta from 2001 to Huntersville was diagnosed day. The others are especially deadly forms for how to make fresh inroads against the program to offset the cost of 2007, he regularly treated pa- with breast cancer in 2008, her of breast and ovarian cancer, along with disease. Six teams were chosen to tackle the treating Medicaid patients, hos- tients who waited too long to husband’s job in Saudi Arabia lung, prostate, melanoma and two types of eight cancers. pitals can buy discounted drugs get treatment – often because provided health insurance. leukemia. Each team has specific goals, ranging for all outpatients, including of financial concerns. But he died of leukemia in The project aims to find cures and lower from basic research to clinical trials that test those with private insurance. “Many folks put off manag- 2010. Ten days later, her insur- deaths. Although no overall benchmarks treatments, biomarkers and diagnostics. “There is no requirement to ing their problems until it’s so, ance was canceled. Within a have been set, individual projects for vari- Some projects are aimed at novel preven- pass the savings on to patients, so bad, they have to come into month, the bills for her chemo- ous cancers have specific goals. tion methods – a mandatory role for any of and they don’t,” said Dr. John the emergency room,” he said. therapy and related services With genetic information and more pre- the federally funded National Comprehen- Peterson, who practiced as a Too often, Brawley said, had topped $65,000. cise drugs, “we have many of the tools we sive Cancer Centers, DePinho said. private oncologist in Sanford such delays cost patients their She recalls opening her first need to pick the fight of the 21st century” The teams will focus on personalizing for 18 years before moving to lives. Patients who initially suf- bill and saying: “Oh my God. and find ways to defeat these cancers, De- treatment according to an individual’s tu- Dartmouth College last year. fered from treatable colon can- Oh my God.” Pinho said. mor genes, real-time assessment of the ef- “These hospitals are driving cer, for instance, sometimes “I remember thinking, ‘I’m Dr. Otis Brawley, chief medical officer of fectiveness of therapies being tried, better out the private practices, and delayed seeking treatment un- in the middle of my battle. How the American Cancer Society, which has no diagnoses and early detection and reducing they’re becoming the Wal- til the malignancy spread to many more treatments am I role in the project, praised DePinho’s effort. side effects of treatment. Mart of health care, squashing the liver and became incurable. going to need?’ I was petrified.” “I’m thrilled to see somebody take the Money for all of the moonshot projects the competition, but without Doctors in North Carolina Presbyterian Huntersville lead,” Brawley said. “The results that I see will come from foundations, gifts from indi- the low prices.” see some patients making simi- provided excellent care, along him promising, in my mind are reasonable,” viduals, grants, revenues from treating the Costs can jeopardize lives lar choices. with help with some of her bills, both in terms of raising money and fighting additional patients the center expects to at- “A lot of patients are forgo- said Fleming, a former CIA cancer. tract, and patents and royalties from discov- Cancer costs more per pa- ing care,” said Dr. David Eagle, agent. She exhausted her savings Inspiration behind the goal eries, MD Anderson officials said. That will tient, on average, than any oth- of Huntersville, who is presi- paying some of the rest. be on top of the $700 million the cancer cen- er medical condition. dent of the Community Oncol- Now she’s living in a small Cancer death rates have been falling since ter spends each year now on research. In North Carolina, Blue ogy Alliance, a national non- apartment, dependent on gov- Cross and Blue Shield said the profit group dedicated to com- ernment assistance. It’s a far cry cost of cancer drugs for mem- munity cancer care. from her life in Saudi Arabia, bers younger than 65 rose from Marge Beazley, who manag- when she lived in a six-bedroom $178 million in 2009 to $211 mil- es an oncology practice in house with marble floors. Transplant overhaul proposed lion last year. Western North Carolina, said “This has happened to me,” By Kevin Sack Using computer simulations, the plan’s New drugs have given hope some underinsured patients she said. “It can happen to any- New York Times architects estimated the changes would pro- to many cancer patients. But wind up with more than body.” After nine years of fitful work, the gover- duce an additional 8,380 years of life from some of those drugs come with $50,000 in annual out-of-pock- — DATABASE EDITOR DAVID RAYNOR nance committee that oversees kidney one year of transplants. annual price tags that rival et expenses. Others, she said, CONTRIBUTED. transplants in the United States proposed a The new allocation plan seeks to elimi- those of a small home. series of tweaks Friday aimed at making bet- nate the worst mismatches between donors Treating a cancer patient ter use of the country’s desperately inade- and recipients by directing the highest qual- with Avastin, for instance, quate supply of deceased-donor organs. ity kidneys to the candidates likely to live the costs about $90,000 a year, How we reported the story Central to the plan is a new index for better longest, said Dr. John J. Friedewald, the com- doctors say. To research chemotherapy costs, reporters for the Observer estimating the quality of the more than 14,000 mittee’s chairman and a transplant nephrol- Much of the bill is picked up and The News & Observer of Raleigh obtained and analyzed a kidneys recovered from dead donors each ogist at Northwestern University’s Feinberg by employers and their workers, database of more than 5,000 chemotherapy claims. year. The top 20 percent of kidneys, as mea- School of Medicine. who pay ever-increasing sums The database includes records from more than 200 North sured by the index, would be directed to those While Friedewald acknowledged that ma- for insurance and other costs. Carolina practices and hospitals that treat cancer patients. candidates expected to live the longest after a ny of the patients most likely to benefit from But no one feels the financial Reporters also examined several dozen itemized bills and transplant – typically younger patients. the changes would be younger ones, he said pain more than patients. In a explanations of benefits from insurance companies, and asked For that fortunate one-fifth, it would be a it would still be possible for some in their 2010 survey commissioned by hospital billing experts to review some of them as well. significant departure from the current wait-list 40s and 50s to make the cut. the American Cancer Society, In addition, reporters interviewed more than 25 cancer pa- system, which operates largely on a first- The new proposal, issued by the kidney 21 percent of people younger tients, along with many hospital officials, oncologists, practice come-first-served basis. But for the other 80 transplantation committee of the United than 65 undergoing cancer managers, national experts and insurance executives. percent, there would be little change in a pro- Network for Organ Sharing, is open for pub- treatment said they had used When calculating the number of cancer specialists employed cess that has been criticized for the number of lic comment until Dec. 14. up all or most of their savings. by hospitals, the newspapers focused on medical oncologists, patients who die while waiting for a match, More than 93,000 people are waiting for a And 19 percent said they or who oversee infusion of cancer drugs. Surgeons and radiolo- deep geographic disparities in waiting times kidney transplant. Last year, 16,813 patients their family members had put gists who specialize in oncology were not counted. and inefficiencies that lead to hundreds of via- received transplants – 11,043 of them from +off getting a recommended ble organs being discarded each year. dead donors – while 4,720 on the list died.