Physician viewpoint: Nonprofit hospitals' charity care totals based on 'creative accounting'

Several physicians expressed their opinions about nonprofit hospitals' financials in response to an article published by The Wall Street Journal on the tactics nonprofit hospitals use to collect unpaid bills.

The WSJ article specifically highlighted Mary Washington Hospital in Fredericksburg, Va., and other nonprofit hospitals in the state that sue patients to collect unpaid medical bills. A spokesperson for Mary Washington Hospital told WSJ that uninsured patients receive an "across-the-board discount of 30 percent" on the cost of their care. She also said the hospital "provides millions of dollars annually in charity care and other community benefits."

In a letter to WSJ, Donald W. Miller Jr., MD, questioned the charity care totals touted by Mary Washington Hospital and other nonprofit healthcare organizations.

"I suspect nonprofit hospitals' 'millions of dollars annually in charity care' includes, besides puffery, much creative accounting," he wrote. That charity care always starts with hyperinflated charges that no one — except the uninsured — actually pays, and probably ends as the sum of uncollectible debt and 'across-the-board discount[s]' for the uninsured. Is a 30 percent discount really charity, when discounts to the insured and those with Medicare or Medicaid can be as high as 90 percent?"

Another physician who wrote to WSJ said he understands the challenges of collecting from patients.

"Mary Washington Hospital is fantastic, and must be paid for the great healthcare provided daily to everyone seeking help," wrote Steve Laverson, MD. "As a doctor who in my 26-year career has written off over $8 million of free care to the uninsured (and mostly ungrateful, who offer no attempt to pay), I've never taken a patient to court or garnished wages but still remain liable for the results of my treatment. A $1,500 procedure I perform to fix a torn up face or finger is worth over $1 million in court if one of these uninsured or nonpaying patients is unhappy with their outcome. Doctors get zero tax breaks for the billions of dollars of free care we provide annually."

Access the letters physicians sent to WSJ here.

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