Tobacco money to help repay local hospitals for free care
It's payback time for five area hospitals the state says have provided more than their fair share of care to patients who couldn't or wouldn't pay.
As part of Pennsylvania's more than $11 billion share of a national settlement with the tobacco industry over the hazards of smoking, four general hospitals and one psychiatric hospital in the area will receive checks ranging from nearly $20,000 to more than $85,000.
The money represents a drop in the $900 million bucket of free care Pennsylvania's hospitals deliver each year, but is appreciated all the same.
"Isn't it wonderful?" said Jim McGuire, spokesman for Sacred Heart Hospital, a Catholic hospital in center city Allentown struggling to remain independent.
Sacred Heart is one of 118 hospitals statewide to be compensated in the first round of tobacco payments.
Others include St. Luke's Quakertown Hospital in Bucks County, Gnaden Huetten Memorial Hospital in Lehighton, Pocono Medical Center in East Stroudsburg, and KidsPeace's National Hospital for Kids in Crisis in North Whitehall Township.
Surprisingly, Easton Hospital in Wilson did not make the cut.
For years, the financially distressed Northampton County hospital has provided millions in uncompensated care to poor and elderly patients, petitioning state and federal legislators for better reimbursements.
On average, however, in 1997-99, the years considered, Easton Hospital's Medicaid population accounted for a little more than 6 percent of its daily inpatient business.
At some other hospitals, the portion ran as high as 80 percent.
"That doesn't mean Easton Hospital cared for less needy patients. It just means we drew the line at [the top] 50 percent," said Nancy Bell, vice president of health care finance and insurance for the Hospital & HealthSystem Association of Pennsylvania, the Harrisburg agency that helped set the criteria.
To get the checks, hospitals had to meet a formula based on a three-year average of net patient revenues and days of inpatient care for Medical Assistance and disability patients.
Net patient revenue is the money hospitals have at the end of each year after paying bills on their day-to-day business with reimbursements from insurers, patients and government programs. Medical Assistance and disabled patients are those who receive state and federal health benefits under Medicaid and Medicare.
"This payment is recognition of hospitals that paid a good amount of charity care," said Jay Pagni, spokesman for the state Department of Public Welfare.
Hospitals that qualified will get federal matching checks as well.
Besides Easton, hospitals that didn't get uncompensated care payments from the tobacco settlement this time included Lehigh Valley and other St. Luke's hospitals, but all could qualify in years to come, Pagni added.
Next year, in fact, a hospital can qualify for its uncompensated care as well as some extraordinary expenses for poor and disabled patients.
Becoming for-profit, as Easton Hospital plans to do in a purchase agreement with Community Health Systems of Tennessee, will not exclude the organization from consideration.
LVH spokesman Brian Downs said he assumed his hospital's net patient revenues or year-end surpluses kept it off the first list.
"There's a possibility we could get on the second," he said.
Officials at St. Luke's Quakertown said they expected a $22,930 federal check on top of the $19,934 from the state. Both checks would help offset $132,918 in free care and $1 million in partially paid services delivered in the fiscal year that ended on June 30, according to spokeswoman Patty Stinner.
Gov. Tom Ridge signed the historic settlement legislation into law on June 26, making Pennsylvania one of only eight states to earmark all tobacco settlement money for health-related programs.
The $15 million released to hospitals for uncompensated care last month is on top of the nearly $235 million the commonwealth gave Pennsylvania hospitals last year for charity care and 10 percent of the hundreds of millions of tobacco settlement dollars to be released to various health care organizations over the next 25 years.
In addition to paying for charity care and bad debt, tobacco money will help pay for investments in biotechnology, medical research, health insurance for low-income working adults, home care for older adults and smoking cessation for teens.