Council seeks more details on Alta Bates’ charity care

Alta Bates Herrick Campus on Dwight Way in Berkeley. Photo: Google

Alta Bates Herrick Campus on Dwight Way in Berkeley. Photo: Google

For 20 years, Alta Bates has provided more than 7,000 square feet of space on its Herrick campus for LifeLong Berkeley Primary Care to help it provide high-quality health and social services to under-served people of all ages. Additionally, Alta Bates has contributed money to help LifeLong Medical Care rebuild its West Berkeley campus and funded a portion of Project Respect, a program designed to reduce the number of emergency room visits.

These efforts are all part of Alta Bates’ community benefits — a service Alta Bates must (and is proud to) do as a not-for-profit hospital. But some say Alta Bates is not doing enough, particularly in the area of “charity care,” or providing services to those who cannot pay for health care.

The California Nurses Association, which is locked in a labor dispute with the hospital, is questioning Alta Bates Summit Medical Center’s generosity. As a result of the issues the CNA raised, the Berkeley City Council on July 16 adopted a resolution  requiring Alta Bates Summit Medical Center (ABSMC), a subsidiary of Sutter Health, to file an annual report that includes new information about its charity care. The council will also hold a work session in the fall to learn more about ABSMC’s tax exempt status.

“In 2010, Alta Bates provided $4.8 million in charity care,” said Dan Johnston, a researcher with the Institute for Health and Socio-Economic Policy, the research arm of the California Nurses Association, at a city council meeting on July 16th.

“That seems like a lot of money — and it is,” he continued. “But juxtapose this against the $110 million they made in profit during the same year. Juxtapose that against the $53 million they get in tax exemptions from their nonprofit status.”

A Sutter Health representative, Deborah Pitts, manager of community improvement and community benefit for the company’s East Bay region, also spoke at the meeting. She was brief, saying she chose to forgo the longer presentation Sutter Health had prepared, and only used around 30 seconds of her allotted time to speak.

“Alta Bates Summit is proud of the community benefit that we provide the residents of Berkeley,” said Pitts. “We believe this is a worthwhile discussion to have with the council, but we will only have this discussion if it is not driven by the nurse’s union. Because that’s very clear what the agenda is this evening.”

“Secondly, we want to assure you that we follow the state and federal government (guidelines), which are the entities that govern not-for-profit hospitals,” said Pitts.

Pitts then left the council chambers quickly. Her abrupt departure evoked strong responses.

“It’s shocking and depressing to have the representative of Alta Bates say we’re not going to play ball and … stomp out of the room,” said Councilman Darryl Moore. “It shows this community that they’re not willing to be responsible and transparent.”

Because of ABSMC’s not-for-profit status, state and federal laws require it to put surplus revenues toward benefitting the community in which the hospital is located. In exchange for this service, the medical center is exempt from paying property taxes, income tax on profits,  and almost all state and local sales taxes. ABSMC provided $120 million in community benefits in 2012, according to a long report readied by ABSMC but not presented by Pitts to the council.

But representatives from the CNA said the term “community benefits” is a catch-all phrase that does not provide transparency. Some of the donations go to benefit the hospital, not the poor people in the community who need it the most.

“Charity benefits” can be stretched to mean just about anything Sutter Health wants it to mean, said Pilar Schiavo, a registered nurse. ABSMC’s “community benefits” included contributions to their own for-profit cancer center, she said. “That is a community benefit — when they give themselves money.”

Sutter Health’s longer statement — that Pitts declined to communicate at the meeting — said there are, in fact, very clear definitions of what can and cannot be counted as community benefits, including community benefit programs developed in response to specific community need. Charity care is only one piece of community benefits.

In addition to working with Lifelong Medical Care, ABSMC has worked with the Berkeley Health Department to develop a respite care program for homeless and has contributed $300,000 to La Clinica de la Raza.

Moore and other Berkeley City Council members said they wanted to know more specifics about what ABSMC was doing for Berkeley’s most needy. The hospital has been providing a report about its community benefits for years, but the council voted to require it to break down the numbers more and provide more detail about its charity care contributions.

But the provision of additional charity care may be beyond Berkeley’s jurisdiction. “Charity care” lacks a uniform definition at both the federal and state level; in addition, there are no federal or state regulations that set out any requirement for the amount of charity care that must be provided. If Berkeley is seeking to make its not-for-profit hospitals more generous in the amount of charity care they provide, it might be a battle set up to be taken at the state or federal level.

In addition, as Pitts noted in Alta Bates’ statement, it is important to remember the Patient Protection and Affordable Care Act includes provisions that will expand community benefit opportunities with the assumption that the law will decrease the need for charity care in the future.

Said Councilman Moore, “People are saying we’ll just wait for Obamacare; we’re always just waiting. I’m saying we need this report today, now. We don’t need to wait for a year from now.”

Julia Hannafin is a summer intern at Berkeleyside and a student at Columbia University studying creative writing and American studies. She writes for the music blog The Metropolitan Jolt.

Related:
UC, Sutter nurses on strike over contracts, patient care (05.22.13)
Nurses strike at Alta Bates, 10 other hospitals (06.13.12)
Nurses’ strike draws cheers and honking horns (09.22.11)

Berkeleyside publishes many articles every day. To see all our stories in chronological order, and read ones you may have missed, check out our All the News grid.

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  • Mrdrew3782

    the hospital in the picture above is of Summit Medical Center which is in Oakland. The caption reads that it is in Berkeley.

  • emraguso

    Thank you — we will fix this.

  • Mm

    Love these interns! Real reporting!

  • The_Sharkey

    Sounds like some pretty dirty tactics from the CNA. Randomly lashing out and trying to cause trouble when their demands aren’t met.

    The more frequently they strike and the more ridiculous their shenanigans get the less I support the nurses in situations like this.

  • AnthonySanchez

    As one of the principal authors (along with Moore and Anderson: http://www.ci.berkeley.ca.us/Clerk/City_Council/2012/11Nov/Documents/2012-11-
    13_Item_18_Alta_Bates_Summit_Medical.aspx) of the item to inquire into and evaluate the levels of charity care by Alta Bates, here is what we found to be a very important number: in 2010, the Berkeley campuses of the Alta Bates Summit Medical Center only provided $4,802,839 in charity care compared to $550,311,992 in operating expenses (less than 1%), while net income (technically, nonprofits cannot have “net profit”) reached $108,345,125.

    The issue is not only very important locally, but Statewide -, according to a State audit, there is no statutory standard or methodology requiring nonprofit hospitals to calculate the cost of uncompensated charity care on a uniform basis, and many nonprofit hospitals provide significantly less charity care than what their net incomes would recommend to justify their tax-exempt status.

    As a result, we’re seeing more and more nonprofit hospitals operate like for-profit hospitals in terms of executive compensation and “net incomes,” all while consolidating services. The worksession this fall will be a great opportunity to ensure that we, as a community, get a good deal out of subsidizing nonprofit hospitals that are seeing record net incomes and we are seeing many people without health insurance pushed to the brink when an emergency arises.

  • fran haselsteiner

    One big problem is that many people who go to the ER should actually see a primary care physician. What’s needed is a walk-in clinic for such services.

  • fran haselsteiner

    What, exactly is the purpose of this study? What is the perceived problem? No one has reported that Alta Bates has dumped charity patients. The quality at the ER is very good. However, Alta Bates ER is extremely busy, resulting in very long wait times. If possible, they should add staff to move through the patients more quickly. They might also seek to place infectious patients in a separate waiting area.

    As I stated earlier, it’s well known that many people seek medical help at the ER when they should be seeing a primary care physician. I once experienced medical care in Canada. I didn’t know why I was in so much pain. I walked into the clinic, got a time within two hours, and almost immediately saw a doctor. While I was there, a patient was being taken to the hospital. My problem was resolved with a prescription.

  • Eric Weaver

    The article makes it clear why this is important. If Alta Bates is going to act like a for-profit it should be taxed like one to help finance care of the uninusured.
    “The issue is not only very important locally, but Statewide -, according to a State audit, there is no statutory standard or methodology requiring nonprofit hospitals to calculate the cost of uncompensated charity care on a uniform basis, and many nonprofit hospitals provide significantly less charity care than what their net incomes would recommend to justify their tax-exempt status.”

  • guest

    The fact the Sutter Health representative Deborah Pitts spoke for about 30 seconds and then left the building says to me that Alta Bates isn’t being upfront. If they have nothing to hide then discuss it. If they have nothing to hide, it won’t help the CNA get leverage. Alta Bates Sutter gets $53 million in tax exemptions based on their nonprofit status, but only provide $4.8 million in charity care! I think there is a need for a serious look at Alta Bates/Sutter Hospitals books and their tax exempt status..

  • AnthonySanchez

    In full disclosure, I am well aware of the dynamic between CNA and Sutter and the implications of this item, but that shouldn’t allow us to discount the actual issue of nonprofit hospitals behaving like corporate entities while we subsidize them with tax-exempt status. If Sutter is not paying its fair share to the community in exchange for its favorable tax status, that’s an issue that stands on its own, no matter how labor relations color it.

    Also, in full disclosure, my fiancee works in the industry as managements, and I can tell you -there are labor-management issues, and then there is Sutter -a player than many existing providers are watching closely. Sutter is applying corporate-type practices to a nonprofit model (in same cases that’s good, and in many, that is bad) that are predicated on consolidation and anti-union activities, all while taking full advantage of their tax exemption and amassing and redirecting large “net incomes.”

    Regardless of feelings about CNA and Union in general, its important to note and monitor the activities of Sutter, because they will likely be the new norm for other providers as changes occur in the market due to health care reform.

  • Hildah

    Why should just hospitals be investigated why not include all non or not for profit organizations in the City that are exempt from paying real estate taxes.

  • AnthonySanchez

    Thanks a great question. Practically speaking, one doesn’t investigate everyone -size is one factor, and, there has to be a reason/suspicion to justify singling out an entity for this type of inquiry.

    In this case, Alta Bates is one of the largest non-profits in Berkeley (in terms of revenue), and there is cause based on the required, but limited information provided by Alta Bates themselves, and several reports -most notably fro the State Auditor on charity care.

    I hope that adequately answers your question.

  • Sally Williams

    I left a message amending the article and it wasn’t posted.

  • Lost in Jesse’s Inbox

    It would be so awesome if Jesse would find time in his busy schedule to respond to email from his voting constituents. He was helping me with a matter involving city intransigence over RPP and stopped responding some months ago.

    It’s great that he’s engaged in issues beyond the scope of a city council member — perhaps those will get him to a higher office some day — but not at the expense of his current constituents.

  • http://francesdinkelspiel.com/ Frances Dinkelspiel

    Sally, your previous comment was not deleted. I don’t know why it did not show up. Perhaps you can repost it?

  • LowerMyHospitalBill

    Two points:

    First, “charity” care (free or discounted) should be the first community benefit priority for the hospital. It is, after all, a hospital. Alta Bates should spend NO money on other community benefit programs until all people in their community who need financial assistance are adequately served. People who need financial assistance should be defined as anyone who would be financially stressed by paying for hospital care.

    Second, the Affordable Care Act created section 501(r) of the Tax Code, which applies to tax-exempt hospitals. With passage of that law tax-exempt hospitals are required, for the first time, to create and “widely publicize” a “Financial Assistance Policy” (FAP). The Policy must, under the law, make known to anyone who needs them that discounts or full write-offs are available. It must also spell out in detail the eligibility criteria for discounts or write-offs, and spell out in detail the amounts and applicability of these as well.

    A look at Alta Bates’ website will quickly reveal that, although they have been required to have a FAP (and a link to it on their website) as described above since at least 2011, they do not. As long as Alta Bates does not comply with 501(r) of the Tax code its patients will not know that discounts or write-offs are available, and will not apply for them. This defeats the purpose of 501(r) and could (should?) result in IRS enforcement actions against it, including compelling it to comply with the specific terms of the law. If it did comply it is almost certain that a large percentage of the over $100 million in untaxed “surplus income” it received last year would be spent serving its fundamental purpose (and reason for tax-exemption), providing hospital services to those who cannot afford to pay the artificially inflated prices in its “charge master” list. The only parties inconvenienced by that would be those who want to decide on their own (executive, trustees) how the “surplus income” should be spent, whether for the most fundamental and pressing community need or not.

    Perhaps the City Council could ask Alta Bates about this.

  • AnthonySanchez

    Hello Mr. [Withheld for Privacy],

    Your email is not lost. In fact, we’ve been talking for a while and only recently we have not responded, because as you have guessed it, City Staff are not giving us a straightforward answer.

    I apologize that you feel the way you do, and I will put more pressure again on staff when I get back, but people get the misconception that Councilmembers run the City and that we can fix anything. In reality, staff can be very rigid and set on their way of doing things, and technically Councilmembers cannot do anything other than try to go through the City Manager, who is on vacation at this moment.

    We get literally get hundreds of emails a day from constituents and we do out best to respond to them all in a timely fashion -9 times out of 10, we get an immediate successful resolution.

    Again, I apologize for your frustration and we take responsibility. Bureaucracy is not something even a Councilmember can effectively take on every single time.

    We’ve been dealing with a red curb situation on Sacramento street for over 2 years now, just to give you idea, because staff does not want to do anything that is more difficult than slapping paint on a curb, taking away much needed neighborhood parking spaces to fix a line of sight issue that have other solutions that require a bit more creative thinking.

    When I get into the office on Monday, I will forward you recent email conversations with staff on your issue. We’re not where we want to be at on the issue, hence the non-resolution, but I apologize not telling you sooner that we’re waiting on staff.

  • Sally Williams

    This information appears to be incomplete thus misleading. Sally Williams

  • Gimmie gimmie

    Gimmie gimmie.

  • Found in Anthony’s reply

    Thanks — I’ll look forward to your email. It would indeed be helpful to know that you are working it as best you can: much prefer that to silence. And thank you again for getting the quick result on the part of the street for which the signs were simply wrong.

    More broadly, I hope that there is some framework in which councilmembers can convey to the manager that staff have what I would term a performance issue. If you transferred the circumstances of the current issue — a year of heel dragging, ignoring email, voice mail, in-person visits, resident petitions, contact from your office — to the private sector, they’d all be looking for new jobs. Standards in the city may be more lax, but at some point there should be a moment of accountability.

  • fran haselsteiner

    Think carefully: Would it be better if Alta Bates were for-profit? Is this investigation political in nature? We need a thriving hospital here in Berkeley, and we need to keep its crisis center. Have you been to the waiting room of the cancer center? It’s packed, all the time. At any time, about one-third of people have cancer. And, I daresay, not all Alta Bates cancer patients have insurance.

    Alta Bates nurses are truly hardworking and great. So are its surgeons and oncologists and all the other people who work there.

    While asking for this review, is the Berkeley City Council also asking for an audit of the CNA? Nothing is black and white.

    I have a feeling, after this review, that the council will feel pretty sheepish about this seeming attack on Alta Bates. Or I will. All I know is that my husband, who has had cancer for seven years and is terminal, is still alive because of Alta Bates.

  • AnthonySanchez

    Thank you, Sally, for all our your work with the CHC!

  • LowerMyHospitalBill

    What’s missing?

  • h.t

    Herrick campus is in Berkeley

  • h.t

    This picture is in Berkeley on Milvia st.

  • andrew johnson

    When I talk to staff at ABMC, I hear of closed pharmacies, of a moratorium on overtime, of employees being told to use up their vacation time… and a general feeling that financial problems are coming to a head. How much longer will Sutter Health keep ABMC operating in Berkeley?

  • Mrdrew3782

    The original picture was of Summit Medical Center in Oakland with a caption the read it was in Berkeley. They changed the picture to Herrick Campus after the comment was made.