Reving-Up Profits

In 2018, senior executives at one of the country’s largest nonprofit hospital chains, Providence, were frustrated. They were spending hundreds of millions of dollars providing free health care to patients. It was eating into their bottom line.

The executives, led by Providence’s chief financial officer at the time, devised a solution: a program called Rev-Up.

Rev-Up provided Providence’s employees with a detailed playbook for wringing money out of patients — even those who were supposed to receive free care because of their low incomes, a New York Times investigation found.

In training materials obtained by The Times, members of the hospital staff were instructed how to approach patients and pressure them to pay.

“Ask every patient, every time,” the materials said. Instead of using “weak” phrases — like “Would you mind paying?” — employees were told to ask how patients wanted to pay. Soliciting money “is part of your role. It’s not an option.”

If patients did not pay, Providence sent debt collectors to pursue them.

More than half the nation’s roughly 5,000 hospitals are nonprofits like Providence. They enjoy lucrative tax exemptions; Providence avoids more than $1 billion a year in taxes. In exchange, the Internal Revenue Service requires them to provide services, such as free care for the poor, that benefit the communities in which they operate.

But in recent decades, many of the hospitals have become virtually indistinguishable from for-profit companies, adopting an unrelenting focus on the bottom line and straying from their traditional charitable missions. (...)

Founded by nuns in the 1850s, Providence says its mission is to be “steadfast in serving all, especially those who are poor and vulnerable.” Today, based in Renton, Wash., Providence is one of the largest nonprofit health systems in the country, with 51 hospitals and more than 900 clinics. Its revenue last year exceeded $27 billion.

Providence is sitting on $10 billion that it invests, Wall Street-style, alongside top private equity firms. It even runs its own venture capital fund.

In 2018, before the Rev-Up program kicked in, Providence spent 1.24 percent of its expenses on charity care, a standard way of measuring how much free care hospitals provide. That was below the average of 2 percent for nonprofit hospitals nationwide, according to an analysis of hospital financial records by Ge Bai, a professor at the Johns Hopkins Bloomberg School of Public Health.

By last year, Providence’s spending on charity care had fallen below 1 percent of its expenses.

The Affordable Care Act requires nonprofit hospitals to make their financial assistance policies public, such as by posting them in hospital waiting rooms. But the federal law does not dictate who is eligible for free care.

Ten states, however, have adopted their own laws that specify which patients, based on their income and family size, qualify for free or discounted care. Among them is Washington, where Providence is based. All hospitals in the state must provide free care for anyone who makes under 300 percent of the federal poverty level. For a family of four, that threshold is $83,250 a year.

In February, Bob Ferguson, the state’s attorney general, accused Providence of violating state law, in part by using debt collectors to pursue more than 55,000 patient accounts. The suit alleged that Providence wrongly claimed those patients owed a total of more than $73 million.

by Jessica Silver-Greenberg and Katie Thomas, NY Times | Read more:
Image: Illustration by Mel Haasch; Photographs by Jovelle Tamayo for The New York Times