DMC oversight board probes claim it gutted charity care

The board that has oversight of the Detroit Medical Center is investigating claims by the Michigan Nurses Association that spending on charity care by the five-hospital DMC declined 98 percent from $22 million in 2013 to roughly $470,000 in 2016.

The DMC accused the nurses group of focusing on charitable care but failing to note another form of the hospital system’s uncompensated care for indigents. A group monitoring the charitable care also questioned whether low-income Detroiters are being denied health care services.

The nurses’ association, which represents 350 nurses at DMC Huron Valley-Sinai Hospital, says its study released Wednesday shows the reduction in charity care violates promises made to the Detroit community when the health system was sold to the for-profit, Tennessee-based Vanguard hospital chain in January 2011 and then acquired by Dallas-based Tenet Healthcare in October 2013.

In a deal approved by former Michigan Attorney General Mike Cox, Vanguard vowed to maintain DMC charity care at its then-current level for 10 years. All covenants of the agreement passed to Tenet with its purchase of Vanguard.

“We are very disappointed that the Michigan Nurses Association has chosen to cherry pick numbers in their report that leave out essential information about how all hospitals across the state report uncompensated and charity care,” DMC CEO Dr. Tony Tedeschi told The Detroit News in an email.

“These attempts by the MNA are intended to distract us from what is most important and that is our commitment to provide quality patient care to our community. We continue to work in good faith with the MNA and the Huron Valley-Sinai Hospital nurses to negotiate a contract that is fair.

“...As you know, our hospital turns no patient away due to lack of insurance coverage because serving all in need is part of our mission. And, while the DMC, including Huron Valley-Sinai Hospital, is now part of a larger, investor-owned health system, we continue to stand up for all who are in need just as we did when we operated as a not-for-profit.”

Legacy DMC Board President Joe Walsh said the association’s claims are being investigated by the board, which has overseen the DMC’s conversion to a for-profit health system and is responsible for ensuring Tenet honors the purchase agreement. But he strongly questioned the report’s findings.

“One should be skeptical about their conclusions,” Walsh said Wednesday. “We’ve got our attorney looking into this. This is a very serious matter.”

The original purchase agreement called for oversight from the Michigan Attorney General’s office. Attorney General Bill Schuette’s office “is aware of the (nurses’ association) report,” said spokeswoman Andrea Bitely, who had no other comment.

Hospital spending on charity care was expected to decline nationwide as Americans were added to the health insurance rolls as the federal Affordable Care Act took hold in 2013. When Michigan decided in 2013 to expand Medicaid under the federal health law, more than 680,000 residents ended up getting health insurance coverage.

But the reduction has been greater at the DMC than at other Metro Detroit health systems, according to the Nurses Association’s analysis of data from the federal Centers for Medicare and Medicaid Services. CMS was unable to immediately provide the data to The Detroit News.

“By policy, CMS does not comment on current or potential investigations,” agency spokeswoman Elizabeth Schinderle said in a Wednesday email.

At the eight-hospital Beaumont Health system, spending on charity care fell 67 percent from $79.9 million in 2013, to $26.6 million in 2016, according to the nurses’ group. Henry Ford Health System, which has four acute care hospitals in Metro Detroit, experienced a 65 percent reduction from $55.7 million to $19.3 million over the three-year period, the group said.

“All hospitals are spending less on charity care because more people are insured under the ACA, but DMC/Tenet is the only one to find a 98 percent reduction,” Nurses Association spokeswoman Sara Wallenfang said at a Wednesday press conference.

But the DMC said it “still leads the way in providing uncompensated and charity care.” It provided $99.9 million in uncompensated care and $8.6 million in charity care in 2017, according to the Detroit health system.

Between 2013 and 2017, the DMC said it provided $698.3 million in uncompensated care and $112.3 million in charity care to those who could not afford to pay for their health care services.

Walsh said it makes sense that the DMC would have the greatest decline in charity care because its provides more indigent care than any other Detroit health system.

“I don’t think they’re turning anybody away,” he said. “The numbers work, but the logic that they’re being denied medical care doesn’t work.”

A July 2017 study by the Center for Healthcare Research & Transformation at the University of Michigan found that Michigan hospitals experienced a sharp decline in uncompensated care after the state expanded Medicaid in April 2014. The study looked at financial information from 104 Michigan hospitals.

Researchers found that uncompensated care — a hospital’s charity care spending and bad debt — dropped from $903 million in 2013 to $677 million in 2014. The decline continued into 2015 as uncompensated care fell to $394 million, a decrease of 56 percent from 2013 levels.

The effect of the Medicaid expansion was larger for the charity care portion of uncompensated care compared with the bad debt portion, according to the UM study. Charity care expenses for hospitals decreased 70 percent from 2013 to 2015.

The purchase agreement between Vanguard and the DMC — dated Dec. 31, 2010, and approved by Cox — specified that charity care had to continue for a decade. It could be done through the DMC’s 2004 Uncompensated Care Program or Vanguard’s 2010 charity care policy, whichever was more benevolent.

The 2011 purchase by a for-profit hospital chain was opposed by Detroit advocates and citizen groups that worried the the city’s largest safety-net hospitals would be sold off or stop serving low-income residents.

“It had been run as a not-for-profit with a strong commitment to charity care,” said Marjorie Mitchell, executive director of Michigan Universal Health Care Access Network in Detroit. “We were really concerned about whether or not (a for-profit hospital chain) would continue their charity care.

“We were glad to see that commitment made. Unfortunately it hasn’t been kept up.”

According to the nurses, 7.4 percent of Detroit’s 673,000 residents, or about 50,000 people, don’t have health insurance.

Charles Thomas, a Detroit resident and board member of Michigan United, a statewide advocacy group, said residents still have trouble accessing health care in the city.

“The ACA does not provide universal health care,” Thomas said. “They don’t have health insurance, but they still need health care.”

KBouffard@detroitnews.com