The New York Times put the financial practices of Oregon’s largest hospital system, Providence Health, under the microscope on page A1 today. What the paper found isn’t pretty.
The Times drew on a lawsuit in Washington state and interviews throughout the Providence system, which includes 51 hospitals and 900 clinics across the West and Texas. (Providence operates six hospitals in Oregon.)
Among the findings, Providence, a nonprofit exempt from tax on profits, paid the consulting firm McKinsey & Co. $45 million for advice on how to increase revenues, through a program called “Rev-Up.”
Providence aggressively pursued payment from Medicaid patients in Oregon, Washington and California, the Times found, seemingly in violation of laws that say hospitals must accept government reimbursement for the patients whose low incomes qualify them for Medicaid and not pursue additional charges.
In return for tax-exempt status, hospitals are supposed to provide a certain amount of free care for patients who cannot afford treatment. The Times found Providence’s efforts wanting:
“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,” the paper found.
“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.”
Oregon hospitals are nearly all nonprofits, and critics have long questioned whether they provide enough charity care. That issue was the subject of a WW cover story in 2016. Lawmakers passed a bill in 2019 establishing minimum levels of charity care at Oregon hospitals.
Providence pushed back hard against the Times story, calling it “absurd” in an internal email sent to staff and issuing a lengthy statement in response.
“The notion that Providence intentionally takes advantage of those who are vulnerable could not be further from the truth of who we are,” the statement said, noting that the Providence system “provided $1.9 billion in community benefit in 2021. This includes $271 million in charity care and $1.2 billion in Medicaid losses.”
Providence acknowledged its charity care percentage has declined but said there’s a reason for that.
“With regard to a decline in charity care levels, it’s important to note that our Medicaid losses have simultaneously gone up,” Providence said. “This is because many people who would have previously qualified for charity care are now covered by Medicaid thanks to the Affordable Care Act.”
Providence also purchased a full page ad today in the front section of The Oregonian extolling its generosity.