HEALTH CARE//SAN LEANDRO HOSPITAL | An eagerly-awaited state audit requested last August by State Sen. Ellen Corbett found the amount in community benefits offered by non-profit hospital providers is not reliably tied to its valued tax-exempt status.
The findings issued Aug. 9 by state’s auditor showed non-profit providers could not use community benefits such as free or reduced costs medical care for the poor to justify tax exemptions from the state, estimated in the millions. Although providers are required by law to report the amount of benefits bestowed upon the local community, there is no uniform metric used by all non-profit health care providers, the report said.
Four hospitals were specifically studied in the audit. They include, Sutter Health facilities, San Leandro Hospital and St. Luke’s Hospital in San Francisco along with El Camino Hospital in Los Gatos and Mission Hospital in Laguna Beach.
“We saw that each hospital had its own method to calculate its costs to provide health care services for which it did not receive compensation (costs of uncompensated care),” said the audit. “Indeed, no statutory standard or methodology for calculating these amounts exists.”
The audit revealed all four facilities not only counted its charity care among its community benefits, but also unpaid bills derived from Med-Cal and other county programs for indigent care.
The state auditor also recommended the State Legislature propose a state law or direction to its health care agency for the creation of a standard methodology to calculate community benefits.
“Communities across California are served by nonprofit hospitals, and we need to make sure they are honoring their commitment to serve the public that comes with their special tax-exempt status,” said Corbett. “This audit makes clear that there are no uniform standards or requirements for nonprofit hospitals, when it comes to charity care.”
In many ways, the request for a state audit by Corbett stemmed from the on-going and uncertain fate of San Leandro Hospital, located in her East Bay district. After a long and contentious legal and political battle between the Eden Township Healthcare District with Sutter Health over possession of the facility’s title of ownership, little is left in the political bag of tricks.
In addition, last week, Corbett convened the Senate Select Committee on Charity Care and Nonprofit Hospital to discuss the audit and featured testimony from labor union officials and a single representative from the California Hospital Association, who contend other voices from the health care industry were not heard during the hearing.
In the meantime, the fate of San Leandro Hospital remains in the balance. Sources on the union side of the fight to keep the facility open as a general service hospital contend their fate is inextricably tied to that of St. Luke’s in San Francisco. Sutter and the San Francisco Board of Supervisors are currently hashing out an arrangement to build a new facility at Cathedral Hill in return for operating St. Luke’s, a facility known to serve many of the city’s underinsured and poor residents.