BREMERTON — Harrison Medical Center has paid out less in charity care and employed aggressive tactics to collect unpaid medical bills since affiliating with Tacoma-based CHI Franciscan Health in 2013, according to a report released Tuesday by a labor union representing hospital employees.
Based on interviews with dozens of patients, surveys and a review of 274 lawsuits filed by a collection agency against patients in Kitsap County last year, researchers determined some Harrison patients weren't informed of financial assistance programs available, and the company handling billing for CHI Franciscan was quick to send unpaid accounts to collections even when patients offered to enter into payment plans.
In short, the report alleges nonprofit Harrison Medical Center has failed to carry out its charitable mission since joining CHI Franciscan.
"Charity care at Harrison has diminished to near insignificance," UFCW 21 research director Mark Auerbach said at a press event held Tuesday in Tacoma.
CHI vice president of communications and government relations Cary Evans rejected the report's conclusions on charity care.
"As a nonprofit charitable organization, we are committed to providing the highest quality care to everyone who needs it," Evans said. "We completely cover the cost of care for people whose income is lower than 300 percent of the federal poverty level — that is triple the income level required by state law."
CHI Franciscan spent $20 million on charity care system-wide in fiscal year 2017, including $3 million at Harrison, according to a spokesman.
UFCW 21 is not an impartial watchdog. The union represents employees at Harrison Medical Center who are seeking new contracts with CHI Franciscan and members have come out strongly against plans to close Harrison Bremerton.
However, the union isn't the only group investigating CHI Franciscan's financial practices. Earlier this summer, state Attorney General Bob Ferguson filed an antitrust lawsuit against the medical group, claiming its partnerships with The Doctors Clinic and WestSound Orthopaedics hurt competition and resulted in price fixing in the Kitsap market. Days later, Ferguson filed another suit against CHI Franciscan over its handling of charity care at St. Joseph's hospital in Tacoma.
State law requires hospitals to establish charity care programs that cover the cost of services for patients who can't afford to pay. Charity care expenses plummeted for hospitals following the rollout of the Affordable Care Act and Medicaid expansion in 2014, which extended insurance coverage to more low-income people.
The UFCW 21 report contends changes under the Affordable Care Act don't fully account for the decline in charity care at Harrison Medical Center, which saw charity care costs plunge from $9.6 million in 2014 to $1.3 million in 2016, a drop of 86 percent.
The report notes the amount Harrison spent on charity care in 2016 was less than the value of the annual property tax exemption it receives as a nonprofit — about $1.6 million. The study also found Harrison ranked 17th among 18 comparable Puget Sound hospitals based on the amount it spent on charity care compared with its total revenue from patient services in 2016.
Comparing costs between hospitals can be tricky, as each hospital serves a different mix of patients. Kitsap County, for example, had the lowest proportion of uninsured residents in the state in 2014, one factor that could influence charity care costs at Harrison.
UFCW 21's Mark Auerbach said the report's conclusions on charity care were backed up by testimony from patients saddled by medical bills they can't afford.
"I think the real story is what people are telling us," Auerbach said. "All the numbers are indicators, but they don't tell you what the human experience is."
According to the report, many patients told researchers they were not informed the hospital offered financial assistance. Instead, the report claims patients were pressured to pay the out-of-pocket cost for their care up front. Unpaid accounts were quickly turned over to "relentless" collection agencies, which sometimes sued patients and collected amounts far higher than the original bill.
"I was shocked to see relatively manageable bills escalate into crushing financial burdens," said Mike Rodriguez, who reviewed court records for the study.
Authors of the report suggest CHI Franciscan is under pressure to maximize revenue due to the financial struggles of parent company Catholic Health Initiatives, which is executing a turnaround strategy this year.
"They're trying to get more money faster from patients," Auerbach said.
The report concludes by offering recommendations for CHI Franciscan to improve its financial assistance and billing practices, and suggests those programs be subject to "ongoing community oversight."
The Tuesday event in Tacoma drew a small crowd of union supporters, patients and church leaders. Bremerton City Councilman and mayoral candidate Greg Wheeler spoke in support of the reforms outlined in the report.
Rodriguez said UFCW 21 plans to expand its study to other Washington communities. The full Harrison report can be downloaded at keepkitsaphealthy.com.