Betting on indigent care at New York hospitals

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It would seem extraordinarily difficult to conflate the executives of New York hospitals with the Fedora-sporting ne'r-do-wells of "Guys and Dolls." But to the great detriment of the Empire State's patients, two new reports brought that remote possibility much closer to reality.

Those reports, by the non-profit Community Service Society of New York and the Journal News, a newspaper located just outside of New York City, concluded that hospitals were shrugging off mandates to provide access to charity care to patients and also are an impossibly long way from capping pay to leaders at hospitals receiving Medicaid funding.

A pay cap was ordered last month by New York Gov. Andrew Cuomo in a bid to keep compensation at not-for-profit organizations that receive government funding in check. But according to the Journal News, 177 hospital executives in just a sliver of New York earned more than the cap in 2010. Since Cuomo's order doesn't rule out the use of private funds to pay executives, it's unlikely that cap will ever be met.

Meanwhile, the CSSNY study indicated that hospitals were systematically making it difficult for uninsured patients to qualify for or even apply for charity care, even as those institutions helped themselves to funds from the state's $1 billion-plus indigent care pool to cover that specific purpose. The money is collected partly through surcharges imposed on the bills of insured patients and partly through federal funding.

One of the major plotlines of "Guys and Dolls" was Nathan Detroit's search for a surefire wager against Sky Masterson to help bankroll his illegal floating craps game--a quest that ultimately failed. The hospitals execs found that "can't lose" bet, an achievement for which they should not be particularly proud.

Here's how they accomplished it: According to the CSS, 66 percent of the state's hospitals violated state laws or state Department of Health guidelines governing charity care, or imposed extra barriers to obtaining financial assistance. Those hospitals collected $463.7 million from the indigent care pool.

In fact, 20 hospitals don't post charity care guidelines or applications within the walls of their facilities or on their websites--blatant violations of state law. They collected more than $87 million from the pool.

Meanwhile, those patients' debts were often referred to collection agencies, ruining their credit while leaving them on the hook for full charges far beyond what an insurer would pay under contracted rates. According to the New York Times, some patients will be paying off hospital debts for the rest of their lives.

But as author Damon Runyon was fond of saying, the race is not always to the swift nor the battle to the strong--but that's how you bet.

The large bore implementation of the Affordable Care Act in 2014 will change the way the indigent care pool is funded--federal funds will be reduced, and hospitals won't be able to use bad debt as part of the federal funding formula. They could cut the salaries in the executive suites to satisfy Cuomo and help fund that impending shortfall, but I'm not holding my breath.

"Guys and Dolls" ended with the former group somewhat reformed by the latter. Nathan Detroit and Sky Masterson settled down into relatively honest trades and married their long-suffering girlfriends.

Of course, musical comedies that are Broadway smashes usually have happy endings. The human comedy going on in the rest of the state of New York isn't so predictable. But I have a really good idea where I should lay my money. - Ron (@FierceHealth)