Vital Signs
Who’s tracking the health of Georgia hospitals?
How bad do Georgia hospitals have it?
Down under the Gold Dome, hardly a day goes by that lobbyists and hospital administrators aren’t complaining about Medicaid cuts, rising malpractice premiums and the conspicuous blood-red ink on their financial ledgers.
The oft-cited figure is that two-thirds of the state’s hospitals are operating at a loss.
Take a quick look at the state Department of Community Health’s annual Hospital Financial Survey and the figures back up the dire predictions. The list is dotted with hospitals losing hundreds of thousands to tens of millions of dollars each year. Recently, some of the largest providers of care to the indigent — Grady Memorial in Atlanta and Medical College of Georgia in Augusta — have had to start charging the uninsured or turning them away.
But all is not as it seems with the financial statements that the state receives from its hospitals — at least if you compare those figures with the ones hospitals are handing over to the IRS. There is still suffering among many small, rural hospitals, but according to federal figures, only a third of the state’s hospitals lost money in 2002. Many facilities that reported losses to the state actually made millions.
The disparity is disturbing in that hospitals have been using the doomsday figures on file with the state to build the case in the Legislature for special protections — especially for nonprofits — that limit competition. But the opportunity for duplicity could be changing.
Last year, Rep. Austin Scott, R-Tifton, received some 1,500 letters from employees at Tift Regional Medical Center in Tifton and Phoebe Putney Memorial in Albany. The letters expressed employees’ concerns about proposed Medicaid cutbacks, and warned of layoffs and cuts to hospital services. Scott still has many of them, tucked in a small box on the floor of his Capitol office.
After the letters started arriving, Scott grew concerned. The son of a surgeon and hardly your caricatured Republican, Scott was more than willing to vote for tax increases to pay for health care costs. He even favors the wholesale purchase of prescription drugs from Canada to drive down U.S. prices.
So the Tifton lawmaker called Phoebe Putney, a nonprofit hospital, to talk about its problems. Like many Georgia hospitals, the facility reported a whopper of a loss in its annual Financial Survey — $57 million. That number represented Phoebe Putney’s net revenues minus net expenses.
But when the lawmaker asked Phoebe Putney’s executives for a look at the hospital’s financials, he says they balked.
The reason might be that while Phoebe Putney reported the $57 million loss to the state, the hospital claimed a $28 million gain on its 2002 tax return, according to public records available through Internet nonprofit database GuideStar. Phoebe’s CEO, Joel Wernick, pocketed a cool $533,000 that same year.
Phoebe Putney isn’t alone. Hutcheson Medical Center in Ft. Oglethorpe reported a 2002 loss of $942,738. But they noted a $228,209 gain to the feds. Higgins General in Bremen claimed a $613,489 loss. Its IRS form shows a profit of nearly $2 million. The list goes on and on, with at least 25 other hospitals giving a glum picture to the state and a gleeful one to the IRS.
The federal forms paint a more accurate picture of a hospital’s finances, taking into account investments and other operations run under the umbrella of the facility, says Phoebe Putney Chief Financial Officer Kerry Loudermilk.
Scott, who has compiled a survey of 34 nonprofit Georgia hospitals, has found that they’re sitting on more than $2.6 billion of surplus cash and marketable securities. Meanwhile, the state’s own reserves have dwindled from $700 million just a few years ago to about $40 million — much of that money having been spent on health care. What’s more, hospital authorities are supposed to set prices so that they cover expenses and maintain just enough reserves to pay one year of bond indebtedness, as well as reasonable reserves for future construction projects. Scott says his figures bring up the obvious question of whether nonprofits are abiding by the rules.
“He’s kind of passing around half of the story, and I don’t think he wants to hear the whole story,” Loudermilk says of Scott.
The question Loudermilk raises is, “What do you do with money left over?” Phoebe Putney puts it back into patient care, he says, and the money generated by Wall Street helps keep rates down.
Regarding the gap in the reports to the state and the feds, however, Loudermilk says it “surprises me.” He couldn’t comment further.
The discrepancies trouble Scott.
“We obviously don’t have a true picture,” he says. “It gets back to the integrity of the medical financing story.” How are hospitals making more money when the state is cutting reimbursements to Medicaid and the state employees’ health plan? Why are the hospitals lobbying for help they might not need? And why are the state and federal numbers so different?
“I don’t know yet,” Scott says.
Andy Boisseau, spokesman for the Department of Community Health, says, “We do not audit those [state] surveys, and of course, they’re self-reported.”
Yet DCH does take those surveys seriously. The agency uses them to determine which hospitals are taking on the most indigent care, and therefore, which hospitals get the most state funding.
Like Scott, Boisseau says he’s stumped as to why there’s such a huge difference between state and federal disclosures, especially Phoebe Putney’s.
“I certainly can’t explain that,” Boisseau says. “You would think even if they were reporting different things to the state and the feds, they would be a little closer than that.”
To make the financial machinations more transparent, Scott offered on March 17 an amendment to a Medicaid bill in the House. It would have required that hospitals provide the same information to the state that they do to the federal government.
But House Democratic Caucus Chairman Calvin Smyre, D-Columbus, ruled that the amendment to the Medicaid bill wasn’t germane.
Though rebuked in the House, Scott appears to be gaining some traction with his cause. A state senator asked him Tuesday morning for the IRS documents filed by the hospital in the senator’s district. He’s hopeful that his efforts won’t die.
“If we’re going to give them the advantages that we give them, then we expect them to operate in a manner that is, quite honestly, above reproach,” Scott says. “These organizations ... should be run in an honest, ethical, straightforward manner.”
kevin.griffis@creativeloafing.com
Down under the Gold Dome, hardly a day goes by that lobbyists and hospital administrators aren’t complaining about Medicaid cuts, rising malpractice premiums and the conspicuous blood-red ink on their financial ledgers.
The oft-cited figure is that two-thirds of the state’s hospitals are operating at a loss.
Take a quick look at the state Department of Community Health’s annual Hospital Financial Survey and the figures back up the dire predictions. The list is dotted with hospitals losing hundreds of thousands to tens of millions of dollars each year. Recently, some of the largest providers of care to the indigent — Grady Memorial in Atlanta and Medical College of Georgia in Augusta — have had to start charging the uninsured or turning them away.
But all is not as it seems with the financial statements that the state receives from its hospitals — at least if you compare those figures with the ones hospitals are handing over to the IRS. There is still suffering among many small, rural hospitals, but according to federal figures, only a third of the state’s hospitals lost money in 2002. Many facilities that reported losses to the state actually made millions.
The disparity is disturbing in that hospitals have been using the doomsday figures on file with the state to build the case in the Legislature for special protections — especially for nonprofits — that limit competition. But the opportunity for duplicity could be changing.
Last year, Rep. Austin Scott, R-Tifton, received some 1,500 letters from employees at Tift Regional Medical Center in Tifton and Phoebe Putney Memorial in Albany. The letters expressed employees’ concerns about proposed Medicaid cutbacks, and warned of layoffs and cuts to hospital services. Scott still has many of them, tucked in a small box on the floor of his Capitol office.
After the letters started arriving, Scott grew concerned. The son of a surgeon and hardly your caricatured Republican, Scott was more than willing to vote for tax increases to pay for health care costs. He even favors the wholesale purchase of prescription drugs from Canada to drive down U.S. prices.
So the Tifton lawmaker called Phoebe Putney, a nonprofit hospital, to talk about its problems. Like many Georgia hospitals, the facility reported a whopper of a loss in its annual Financial Survey — $57 million. That number represented Phoebe Putney’s net revenues minus net expenses.
But when the lawmaker asked Phoebe Putney’s executives for a look at the hospital’s financials, he says they balked.
The reason might be that while Phoebe Putney reported the $57 million loss to the state, the hospital claimed a $28 million gain on its 2002 tax return, according to public records available through Internet nonprofit database GuideStar. Phoebe’s CEO, Joel Wernick, pocketed a cool $533,000 that same year.
Phoebe Putney isn’t alone. Hutcheson Medical Center in Ft. Oglethorpe reported a 2002 loss of $942,738. But they noted a $228,209 gain to the feds. Higgins General in Bremen claimed a $613,489 loss. Its IRS form shows a profit of nearly $2 million. The list goes on and on, with at least 25 other hospitals giving a glum picture to the state and a gleeful one to the IRS.
The federal forms paint a more accurate picture of a hospital’s finances, taking into account investments and other operations run under the umbrella of the facility, says Phoebe Putney Chief Financial Officer Kerry Loudermilk.
Scott, who has compiled a survey of 34 nonprofit Georgia hospitals, has found that they’re sitting on more than $2.6 billion of surplus cash and marketable securities. Meanwhile, the state’s own reserves have dwindled from $700 million just a few years ago to about $40 million — much of that money having been spent on health care. What’s more, hospital authorities are supposed to set prices so that they cover expenses and maintain just enough reserves to pay one year of bond indebtedness, as well as reasonable reserves for future construction projects. Scott says his figures bring up the obvious question of whether nonprofits are abiding by the rules.
“He’s kind of passing around half of the story, and I don’t think he wants to hear the whole story,” Loudermilk says of Scott.
The question Loudermilk raises is, “What do you do with money left over?” Phoebe Putney puts it back into patient care, he says, and the money generated by Wall Street helps keep rates down.
Regarding the gap in the reports to the state and the feds, however, Loudermilk says it “surprises me.” He couldn’t comment further.
The discrepancies trouble Scott.
“We obviously don’t have a true picture,” he says. “It gets back to the integrity of the medical financing story.” How are hospitals making more money when the state is cutting reimbursements to Medicaid and the state employees’ health plan? Why are the hospitals lobbying for help they might not need? And why are the state and federal numbers so different?
“I don’t know yet,” Scott says.
Andy Boisseau, spokesman for the Department of Community Health, says, “We do not audit those [state] surveys, and of course, they’re self-reported.”
Yet DCH does take those surveys seriously. The agency uses them to determine which hospitals are taking on the most indigent care, and therefore, which hospitals get the most state funding.
Like Scott, Boisseau says he’s stumped as to why there’s such a huge difference between state and federal disclosures, especially Phoebe Putney’s.
“I certainly can’t explain that,” Boisseau says. “You would think even if they were reporting different things to the state and the feds, they would be a little closer than that.”
To make the financial machinations more transparent, Scott offered on March 17 an amendment to a Medicaid bill in the House. It would have required that hospitals provide the same information to the state that they do to the federal government.
But House Democratic Caucus Chairman Calvin Smyre, D-Columbus, ruled that the amendment to the Medicaid bill wasn’t germane.
Though rebuked in the House, Scott appears to be gaining some traction with his cause. A state senator asked him Tuesday morning for the IRS documents filed by the hospital in the senator’s district. He’s hopeful that his efforts won’t die.
“If we’re going to give them the advantages that we give them, then we expect them to operate in a manner that is, quite honestly, above reproach,” Scott says. “These organizations ... should be run in an honest, ethical, straightforward manner.”
kevin.griffis@creativeloafing.com