There they go again. California's billion dollar hospital industry is once again wailing the sky is falling if nonprofit hospital giants are expected to verify that they provide adequate charity care and community benefit services in exchange for being rewarded with tax exempt status.
In a recent Bay Area News Group commentary (March 19), a top executive of the wealthy hospital lobby made the ludicrous claim that this modest proposal would result in millions in lost wages and state tax revenue, higher unemployment and less access to care.
Readers should judge for themselves.
At issue is a bill, Assembly Bill 503 authored by Assemblyman Bob Wieckowski of Fremont and Assemblyman Rob Bonta of Oakland and sponsored by the California Nurses Association. The Greenlining Institute and California Rural Legal Assistance Foundation are co-sponsors.
AB 503 would simply set uniform statewide standards that currently don't exist in federal or state law on what counts as charity care and a community benefit program.
It also directs hospitals to inform the state how they are meeting that standard. The only penalty is a small fine for hospitals that fail to report.
Californians may well wonder why the hospital industry, for the second year in a row, has mounted a ferocious lobbying campaign, threatening and intimidating state legislators to kill this legislation and suggesting their very survival is at stake.
Perhaps there is some fire behind all that smoke.
Some nonprofit hospitals have engaged in questionable practices of what they count as a community benefit, from marketing to ordering nurses to "volunteer" at fairs promoting their corporate employer to "controlling costs" by cutting patient services.
Some count "bad debt," uncollected fees from the uninsured or Medicare as "charity care" after inflating their prices by five or 10 times their actual costs.
And some just skimp on any community benefit or charity care. A lengthy research investigation by CNA in 2012, using public records, found that California nonprofit hospitals collected $1.8 billion in public subsidies as a result of their tax-exempt status beyond what they provided in charity care the prior year. The result was a huge fiscal hit, more than $1 billion just to local governments in lost revenue -- a real loss, not the fictional one advertised by the hospital lobbyists.
Twice in the past decade, the California State Auditor's Office has bemoaned the wide variance in what nonprofit hospitals claim as their community benefit. In a state legislative hearing in 2012, Principal Auditor Grant Parks said current permissive state law on what counts as community benefit is "fairly permissive ... it's like the Wild West of what is required."
AB 503 seeks to curb the abuses. It would clearly define charity care as the direct provision of medical care to the uninsured or underinsured, not those activities that are accounting shell games or other dubious operations intended to boost the company's bottom line with little connection to actual delivery of care.
Community benefit is a broader category that, under AB 503, would include charity care, but also other public programs such as funding without charge school health centers or community health services for vulnerable populations.
Community representatives from underserved populations and a public health department would meet with each hospital to review how it is serving the public interest.
Children's hospitals, small rural facilities and all public hospitals are exempted from the law.
That's it. If the hospitals are truly meeting their public obligation, as they claim, they have nothing to fear from verifying it, as required by AB 503.
Or maybe some just fear that ending abuses will dent the massive profits so many nonprofits accumulate at taxpayers' expense, and the lavish compensation for the 100 nonprofit hospital executives who get pay packages of more than $1 million each.
AB 503 will help ensure the nonprofit hospital giants adhere to the social mission of caring and public accountability so many of them profess to embrace.
Malinda Markowitz is a registered nurse and co-president of the California Nurses Association/National Nurses United.