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New Study Finds Not-For-Profit Community Hospitals Play Vital Role in Caring for State's Medi-Cal, Charity Care and Emergency Room Patients

SAN FRANCISCO, Calif,. December 4, 2001 - A first-of-its kind statewide study released today outlines the vital role of not-for-profit community hospitals in the delivery of health care in California and specifically in meeting the needs of the most vulnerable health care consumers. The report, "Mission Critical", found that not-for-profit community hospitals carry a significant load in caring for low income, underserved and emergency patients.

The report, available at www.cattaneostroud.com, also found that not-for-profit community hospitals provided nearly one billion dollars in charitable care (free health care) and community benefits in one year alone (1999).

"Not-for-profit community hospitals are absolutely essential to California's health care delivery system," said Penny Stroud, author of the report and founder of Cattaneo & Stroud, a management-consulting firm focused exclusively on health care issues. "We found, in specific measurable terms, that not-for-profit hospitals are leading the way in providing essential health care services, charity care, access to vulnerable populations and advancing medical research and innovation," continued Stroud.

Responding to the report, community and health care leaders agreed that not-for-profit community hospitals are integral in the delivery of care in California, particularly for underserved populations.

"Latino families — and particularly Latino children — are uninsured and underinsured to a much greater extent than other California families. Not-for-profit community hospitals assume much of the responsibility of making sure Latinos get the quality care they might otherwise go without," said Edwin Rivera, policy director for the Latino Coalition for a Healthy California.

"Not-for-profit, voluntary hospitals have served their communities through thick and thin and are invested in the health of the public," said Linda B. Miller, President of the Washington, DC-based Volunteer Trustees Foundation, a national organization of not-for-profit hospital and health system governing boards.

The study is the first comprehensive evaluation of its kind in California. Key findings include:

Not-For-Profit Community Hospitals Represent Only 46% Of Facilities But Provide The Majority Of Care To California Patients.

61% of all emergency visits in California in 1999 were handled by not-for-profit community hospitals.
59% of all births were delivered in not-for-profit community hospitals.
More than 60% of pediatric, obstetrics, neonatal, surgery and transplant services were provided at not-for-profit community hospitals.
54% of California's Medi-Cal patients were cared for at not-for-profit community hospitals.
Of the 47 designated trauma centers in the state, 68 percent (32) are in not-for-profit community hospitals.
Not-for-profit community hospitals are particularly vital to the most vulnerable populations — children, seniors, Medi-Cal patients, indigent, critically ill and emergency patients.

Not-for-Profit Community Hospitals' Provide the Bulk of Charity Care in California.

Not-for-profit community hospitals reported more than $991 million in charity care, research and education in 1999. On a per facility basis, they provided $2.4 million in charity care and spent an additional $2 million for research and education.
73% of all unfunded charity care in California was provided by not-for-profit community hospitals in 1999.
28% of the state's county indigent patient discharges were seen in not-for-profit community hospitals.
17% of county indigent outpatient visits were provided by not-for-profit community hospitals.
Community benefit services provided by not-for-profit community hospitals include, among others, charity and indigent care, free health screenings, primary care clinics and immunizations, medical research, medical counseling and support groups, health information resources, donations of employee time and expertise and community health education.

Not-For-Profit Community Hospitals Are Innovators In Advancing The Quality Of Care And Outcomes Through Extensive Research And Clinical Initiatives.

Because they do not have shareholders, not-for-profit community hospitals are able to invest excess funds into facilities and equipment improvements, advancing quality of care, research and education.
California's not-for-profit community hospitals spent almost $460 million on research and education in 1999.
Research institutes at California's not-for-profit medical centers have led to knowledge and discoveries that advanced our understanding and treatment of bone marrow transplantation, breast cancer and other severe and chronic diseases.
Not-for-profit health systems' clinical initiatives are advancing health care quality and reducing costs through defining and disseminating best practices for treatment of common diseases such as congestive heart failure and diabetes, and common procedures such as hip replacements and cardiac surgery.
Not-for-profit health systems and hospitals are leveraging the resources of their organizations and affiliated physicians to develop innovative systems to use technology to improve the quality and efficiency of health care, with electronic medical records and web-enhanced systems for scheduling, pharmacy management and patient-centered care.

The report also outlines the mounting economic challenges facing not-for-profit community hospitals and indeed the majority of all hospitals in California. Low and reduced reimbursement rates, the impact of managed care, increased pharmaceutical and technology costs, a nursing shortage and a multiplicity of unfunded mandates are resulting in hospitals closing or reducing services, according to Cattaneo & Stroud. For example, California's MediCal rates are the lowest in the entire nation and almost half the amount of payments in New York. In 1999, 57% of California hospitals reported operating deficits: that figure rose to more than 64% of California hospitals in 2000.

According to the report, in this exceptionally challenging financial environment, one of the most important aspects of the not-for-profit model for health care is access to tax exempt financing. Without it, many not-for-profit community hospitals simply could not survive.

"While the medical and community benefits flowing from not-for-profit community hospitals are invaluable, many of these hospitals face daunting economic challenges that threaten their very survival," continued Stroud. "Protecting and nurturing these assets should be a top priority of the governments, businesses and communities that benefit from their existence."

"This report makes an important contribution to the current public dialogue regarding the roles and contributions of California's nonprofit hospitals," said Joseph M. Hafey, President and CEO of the Public Health Institute. "Equally important, it raises critical public policy issues that must be addressed surrounding the financial crisis facing not-for-profit and public hospitals in California."

Rivera of the Latino Coalition for a Healthy California agreed: "Particularly in this rapidly changing health care climate where millions of Californians are struggling to receive care and many hospitals are closing or cutting services, we should be working to support and preserve not-for-profit community hospitals."

"This timely report should remind every legislator and public policy expert of the importance of protecting the nation's not-for-profit hospitals," said Miller of the Volunteer Trustees Foundation.

Data used in this report includes hospitals reporting financial data to the Office of Statewide Planning and Development in the years 1995-1999. Statistics are for 1999 unless otherwise noted.

Media Contact
Penny Stroud
Cattaneo & Stroud, Inc.
(650)692-8884
pstroud@cattaneostroud.com
www.cattaneostroud.com

Mission Critical: The Essential Role of Not-for-Profit Community Hospitals to California's Health Care Delivery System was authored by Penny Stroud, a founder of Cattaneo & Stroud, Inc., a management consulting firm specializing in the health care industry. The firm has more than two decades of consulting and research experience in the health care industry, and has addressed a variety of public policy issues such as HMO enrollment, Medicare risk plans, medical group failures and the impact of payer on specialty care access. Stroud's research on the impact, community benefits, and scope of services of not-for-profit community hospitals was sponsored by Sutter Health, one of the nation's leading not-for-profit networks of community hospitals, health care centers and physician groups, located in Northern California. Data used in this report includes hospitals reporting financial data to the Office of Statewide Planning and Development in the years 1995-1999. Statistics are for 1999 unless otherwise noted.