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KH board votes, 6-3, to change charity policy

Posted: August 26, 2014 7:28 p.m.
Updated: August 27, 2014 5:00 a.m.

On a split, 6-3, vote, the KershawHealth Board of Trustees, voted at its meeting Monday to approve a new version of its financial assistance, or charity, policy. The new policy will go into effect Oct. 1, the beginning of KershawHealth’s fiscal year.

Currently, the policy allows patients whose household income meets 200 percent of federal poverty guidelines (FPG) to receive a 100 percent discount on care received from KershawHealth. Those whose household income reaches up to 300 percent FPG receive a 75 percent discount; those up to 400 percent FPG, a 50 percent discount.

The new policy reduces the charity care (100 percent discount) limit to 138 percent FPG and does away with any discounts for patients whose household incomes are above that 138 percent mark.

According to information presented by KershawHealth Executive Vice President and COO/CFO Mike Bunch during Monday’s meeting, the healthcare organization expects to reduce charity care write-offs -- which are projected to be $15.7 million by the end of the current fiscal year -- by $2.1 million.

“Ironically, this level of write-offs threatens the sustainability of our mission to care for all the patients who come to us,” interim CEO Terry Gunn said in a press release on Tuesday. “And so we have to find the right balance between honoring our mission and remaining financial viable. We believe the new policy achieves that balance.”

Some portion of the write-off savings will be offset by increases in bad debt, Bunch said.

Cathy T. Anderson, of Cassatt, the wife of a heavy equipment operator, mechanic and logger who has chronic lymphocytic leukemia (CLL), told trustees the new policy “scares me to death.”

Anderson, speaking to trustees during public comment at the beginning of Monday’s meeting, said her husband suffered pneumonia or bronchitis for many years before being diagnosed with CLL at the Healthcare Place at Bethune.

“After some time, he was in the hospital with breathing problems and rushed upstairs to ICU where he was placed on a ventilator for several days,” she said. “At this time, he had no insurance and we were facing expenses we could not pay. During this time, it was determined he had an immune deficiency and was started on IVIG (intravenous immunoglobulin) treatments every four weeks, which is now every three weeks.”

Anderson said she and her husband successfully applied for KershawHealth’s financial assistance and continues to receive treatments at the hospital. If not for KershawHealth, she said her husband would be dead.

“Your policy change as proposed frightens me because we are near the 150 percent FPG level,” Anderson said.

She said a mistake was made in this year’s application for financial assistance, marking their income level at 300 percent FPG, forcing them to spend in excess of $1,500 from January through May. She said they are also paying for his medications and oxygen out of pocket.

“With this proposed change, that $1,500-plus figure would change to $6,000 with seven months left in this year,” Anderson said. “I now have insurance through the Affordable Care Act … and it’s a joke. The premium is $479.97 that is government subsidized, and I pay $80 a month for supplemental policies that, supposedly, offset the deductible.”

But, she said, those policies will never pay a dollar unless she is diagnosed with cancer or needs a lung transplant or other catastrophic disease or need.

“We are not eligible for any other programs. Therefore, I am asking you to reconsider the percentages in making your decision. From what I understand, people in South Carolina are eligible for Medicaid below the (138) percent level. We, surely, aren’t the only blue collar workers who have worked all of our adult lives that this is going to adversely affect. If we were above the 200 percent level, we would be able to seek other options. We live a very simple lifestyle, and this scares me to death,” Anderson said.

Three trustees sympathized with Anderson’s story, as trustees Eric Boland, Bobby Jones and Paul Napper voted against the policy change.

“I don’t believe we can save this hospital on the backs of the people that can afford it the least,” Napper said before the vote. “At the present time, I believe we’re collecting 31 cents on every dollar from the people that can pay. I would like to see us focus more on that than on the indigent people. Then, once we get that focused on, go back to the people that can’t.”

As executive director of the ALPHA Center, Napper explained that clients pay for its services on a sliding scale. Those that can’t pay at all perform community service, he said, as set by the state legislature.

“My comments are pretty much about the indigent. I’ve been poor and I know what poor feels like. And I know what the working poor feels like. Until we can see a better recovery rate than 31.4 percent, I think that’s the end -- of people that are proving they can pay -- that’s what we need to be looking at, at this point, instead of looking at the indigent people that are people that can’t pay,” Napper said, who emphasized he was not attacking Bunch for bringing the amended policy forward.

Bunch said there is an assumption that KershawHealth is not collecting what it needs to collect from those who can pay.

“I think we do a good job of that,” he said. “If you look at our (accounts receivable) days as an indicator, it’s really strong. Really, by contract -- most of the other payers are -- we have ways to tell where money’s being left off the table, and we go after it. (That) 31 percent also includes self-pay as well. It’s a weighted average.”

Jones asked what other hospitals the size of KershawHealth have for their polices. Bunch said there is movement in the immediate healthcare community toward policies where free care is only provided to those with household incomes at 100 percent FPG.

“So, (ours) is 38 percent more generous,” Bunch said.

A short time later, Jones said a number of people have approached him about the change, perhaps more than on any other recent issue.

Board Vice Chair Dr. Tallulah Holmstrom asked whether or not KershawHealth is conducting any kind of outreach to indigent patients about the policy change. Bunch said patients will learn about the change as they start new accounts. Those patients that are above the 138 percent FPG level will also be counseled about insurance products, such as those resulting from the Affordable Care Act.

Bunch also said that KershawHealth will continue to offer payment plans for patients above the 138 percent mark who have difficulty paying their bills. If, after agreeing to a payment plan, a patient does not pay, their account would be sent for debt collection. Even then, Bunch said, collectors will likely work out reasonable repayment terms. Only after those steps, if the patient still refuses to pay, would their account be subject to the state’s tax refund set-off program.

Furthermore, Bunch said that patients receiving current or ongoing treatment under the current policy will continue to receive free or discounted care under the original policy.

“If a patient has a knee replacement, for example, and there’s 10 physical therapy treatments ordered, and there’s nine left after the (new) policy goes into place, then we would honor those nine” under the sliding scale policy, Bunch said.

It would only be when a patient comes in for completely new services that they would be subject to the new policy, he said.

Trustee Derial Ogburn made the motion to approve the amendment by Trustee Derial Ogburn, and seconded by Trustee Steve Holliday Jr.

“My heart goes out to poor people, too,” Ogburn said. “I was just thinking a while ago that in the days coming up, when I was a kid, we were picking cotton here. And my heart breaks for people like that. We’ve got a lot of poor people in this county and it’s getting worse as time goes on. But we are here to provide care for this community and if it were not for the meaningful use (special Medicare revenue) money last month, we would’ve taken a pretty big bath in losses for the month.

“I know this is not a heck of a lot of money, but if we don’t start doing something, to close that gap between our income and our expenses, we’re going to shut the doors. I don’t have a solution. I don’t know what the solution is, but, clearly, we’ve got to make some adjustments. It pains me.”

Boland -- who is the headmaster at Camden Military Academy -- said a lot of the people who work for him are struggling.

“I know we need to do things to get us more fiscally responsible in the hospital and I think coming up with this plan are the things that we asked Mike to do, and asked Terry to do,” Boland said. “However, I have just some problems with it, because I see some people that I know and represent struggle with that. So, I represent people of my area as well as … I have to be fiscally responsible for the hospital, too, so I’m really torn with this.”

With that, the board voted with Boland, Jones and Napper voting against, and Chair Karen Eckford, Holliday, Holmstrom, Ogburn and trustees Susan Outen and Wayne Tidwell voting in favor.


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