Nonprofit hospitals are obligated to offer discounted health care, but some patients slip through cracks
All the big hospitals in the Philadelphia area are nonprofit, and that means they receive federal, state and local tax breaks. In exchange, nonprofit hospitals are required to provide free or discounted care to those who can't afford to pay. However, our investigation found the law is vague, and some patients may be falling through the cracks.
Despite walking with a cane and struggling to stand for long periods of time, Denise Costa-Mudrey spends a few hours a day as a lunch aide at a school in Stratford, New Jersey. It's a job, she says helps her pay off medical bills.
In 2022, Costa-Mudrey says she went in for a follow-up surgery at Jefferson Hospital after a knee replacement at a different facility, but still struggles to walk. She says the bill was higher than expected because there was a complication, and she was put in a medically induced coma for two weeks.
CBS Philadelphia
"And when I came out of it and they took the tube out, and then they told me everything that happened, and I was just in shock," Costa-Mudrey recalled.
Costa-Mudrey, who's on social security disability and Medicare for insurance, is still getting bills for that hospital stay. She told CBS News Philadelphia that she struggles financially and was eventually able to work out monthly payments with collection agencies, which take over the debt of health care systems, so she can get by.
Costa-Mudrey isn't alone, and some patients are worse off than her. The CBS Data Team looked at the latest numbers available and, on a 2022 tax form in a section for "bad debt expense," Jefferson says it sent bills totaling nearly $8.5 million to patients who were "eligible under the organization's financial assistance policy."
CBS Philadelphia
Federal law requires nonprofit hospitals to provide "sufficient" community benefits and a written financial assistance policy in exchange for those big tax breaks. However, the law does not specifically define the meaning of sufficient community benefits.
"When nonprofit hospitals behave like for-profits, the community is not really getting their side of that bargain," said Dr. Vikas Saini, the president of the Lown Institute, a research organization for health care.
CBS Philadelphia
According to that 2022 tax form, Jefferson details its financial assistance policy, saying in part, "a patient may qualify for discounts on medical care if there is no health insurance available, or has health insurance, but that insurance does not fully cover the medical care needed."
We found the policy online and on Costa-Mudrey's bills, it says to call Jefferson to see if you could be eligible for financial assistance. Costa-Mudrey says that's how she got set up on the monthly payment plans.
In a statement to CBS News Philadelphia, a Jefferson spokesperson said there are no active balances associated with Costa-Mudrey and, "While the patient did not qualify for presumptive exemption at the time services were rendered, we cannot retroactively determine if she would have qualified for financial assistance. Despite being guided on the process, the patient never completed a financial assistance application."
When patients can't pay, it causes financial strain for many organizations.
"When people can't afford care, they can't pay for it. But there's a question about where the money is supposed to come from," said Jill R. Horwitz, PhD, a UCLA Law Professor with an expertise in nonprofit health policy.
Horwitz says nonprofit hospitals offer much more than just discounted health care for the low-income population. They're more likely to have emergency departments, psychiatric wards and drug rehabs – services she says are known to be vital but not profitable. Horwitz and other experts agree that the entire health care system needs an overhaul, and she believes the fix needs to come from Washington, not community hospitals.
"The ordinary nonprofit hospital in America, in a given year, operates at a negative operating margin. There is no money tree," Horwitz said.
A spokesperson for Jefferson emailed, "Jefferson Health is dedicated to providing exceptional care to every member of our community—regardless of their ability to pay. Through our Financial Assistance Program, we offer support to patients who are uninsured, underinsured, ineligible for government assistance, or otherwise unable to afford medically necessary or emergency healthcare services, based on their individual financial circumstances."
If you're having trouble paying medical bills, start by looking up the hospital's financial assistance policy and see what payment options might be available to patients.
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