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Missoulian - "Report Outlines Hospitals' 'Charity Care'"

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Location: Helena, MT

Missoulian - "Report Outlines Hospitals' 'Charity Care'"

When it comes to "charity care" and other costs of serving the needy, most of Montana's major hospitals - including St. Patrick Hospital in Missoula - incurred those costs at levels near or above the value of their tax exemption in 2006, says a report released Wednesday by Attorney General Mike McGrath.

But a handful of hospitals did not, including St. Vincent Healthcare in Billings, St. Peter's Hospital in Helena and Bozeman Deaconess Hospital, the report said.

Missoula's Community Medical Center scored in the middle of the pack.
The first-time report also revealed that from 2004 to 2006 nearly 6,000 people a year declared bankruptcy after receiving their hospital bill, and that some of the state's 11 largest hospitals provided charity care in 2006 that was only a fraction of their overall profits.

McGrath, whose office initiated and helped compile the report, said part of his job is monitoring nonprofit corporations, to ensure they are providing "community benefit" in exchange for their tax-exempt status.

The 11 hospitals are nonprofit corporations that pay no income taxes or property taxes.

McGrath said Wednesday the report is not meant to point fingers at any hospital or hospitals, or to draw any conclusions. The information merely allows consumers and policymakers to get a glimpse into one aspect of health care costs and spending in the wake of steady increases in those costs, he said.

Health insurance premiums for a single family average about $12,000 a year, McGrath noted, and while wages in Montana increased

9 percent from 2002 to 2006, health care costs went up 44 percent.

"That's part of what made us interested in pursuing these issues, to figure out for consumers, ‘What are these costs? Where does the money go?' " he said from his Helena office.

The report also lists charges at each hospital for 11 "high-volume" procedures, such as births, chest pain, heart failure and joint replacement. The comparative data and the full report can be found on the attorney general's Web site at

Several hospital officials reacting to the report said the amounts listed for "charity care" ignored the value of many other community benefits they provide, such as local health fairs, the cost of Medicare services for which they aren't paid and other health care services that are not profitable, such as the emergency room.

St. Vincent Healthcare President Jim Paquette also said the Billings hospital booked unusually high profits in 2006, because it was building reserves for a down payment on a major construction project.

"He took a snapshot of one year here," Paquette said. "The data are not comparable. What we're going to have to do now is work to help sort this out, so we have some comparability."

Larry White, the University of Montana professor and former St. Patrick Hospital president who wrote the final report, agreed it would be more accurate to look at a range of years rather than just one year. White was president of St. Pat's for 22 years before retiring in December 2002.

He said the numbers he used for charity care and other costs of serving the needy cover "the lion's share of community benefits."

Highlights of the report include:

Four hospitals provided charity care and un-reimbursed costs for care to low-income patients that exceeded the value of their estimated tax exemptions: St. Patrick Hospital in Missoula, Billings Clinic, St. James Healthcare in Butte and Holy Rosary Healthcare in Miles City.

St. James had the highest proportion, providing this care at a cost nearly five times the value of its tax exemption.

The tax-exemption value for each hospital is the amount of federal and state income taxes and property taxes they would pay if they were for-profit businesses.

St. Peter's, St. Vincent and Bozeman Deaconess had the lowest percentage of charity care, when compared to the value of their tax exemption, with all three at 50 percent or lower.

The same three hospitals scored at the bottom when charity care was measured as a percentage of their 2006 profits. For example, St. Vincent reported $30.4 million in "surplus," or profits, while providing nearly $4 million in charity care, or 13 percent of its profits. However, Paquette said about half of that profit is from "non-operating revenue" that's an anomaly, so the percentage is distorted.

Bozeman Deaconess' charity care of $1.5 million was 9.5 percent of its 2006 profits, which were $15.8 million.

When the cost of "uncompensated care" was compared with the hospitals' operating expenses, all were at or below the national average of 5.7 percent.

Hospitals collected only 1 percent of the debt they were owed when former patients went into bankruptcy, prompting White to question whether hospitals should spend time pursuing a debtor in bankruptcy.

White said hospitals might consider working with their collection agents to encourage them not to push people into bankruptcy, and instead consider writing off the debt as charity care.

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