#1 Review financial assistance and collection policies

Does your hospital allow patients to be sued for medical debt? What about denying nonemergency care for patients with outstanding debt? Knowing your hospital’s financial assistance and collection policies can go a long way toward improving social responsibility.

All nonprofit hospitals are required to have a policy around financial assistance outlining who is eligible for free and discounted care and how they can get it. Most also have a collections policy that shows what “extraordinary collection actions” the hospital is allowed to take if patients don’t pay (like garnishing wages, suing patients, or sending debt to collections).

However, the extent to which hospitals provide free and discounted care varies widely across the country. In most states, there aren’t strict rules about who should be eligible for assistance, so it’s up to hospitals to create their own policy. Hospitals also differ in the collections actions their policy allows them to take, with some allowing for legal action, reporting debt to collection agencies, and denying nonemergency care for patients with debt.

For hospitals looking to boost their financial assistance ranking on the Lown Hospitals Index, there may be room for improvement in their policies. Hospitals should examine their policies with the following questions in mind:

• Are the eligibility requirements broad and generous?
• Are patients being adequately screened for eligibility?
• Is the application short and easy to understand?
• Are there additional asset tests or residency requirements?
• Are aggressive collection actions allowed?

Reviewing these policies can help hospitals understand where they could expand eligibility or streamline the process to get aid to more needy patients.

#2 Invest in the social drivers that affect upstream health 

Clinicians know that most of what determines their patients’ health happens before patients even step foot in the hospital. Things like environment, education, neighborhood safety, housing, and nutrition make up the social drivers of health. Hospitals and healthcare systems can make a huge impact on community health by investing in these factors, even if they’re outside the hospital walls.

Some hospitals have been incredibly innovative in their programming around social drivers of health, including:

• Helping patients pay their utility bills
• Offering free food from food pantries 
• Investing in affordable housing
• Supporting the local economy through local contracting and hiring

On the Lown Index, we measure hospital spending on community investments like these. (See which hospitals are already at the top in your state!)

#3 Become champions for high-value care 

Overuse of medical services with no or little clinical benefit is unfortunately prevalent at U.S. hospitals. A recent report from the Lown Index found that hospitals delivered nearly 230,000 unnecessary coronary stents to Medicare patients from 2019-2021.

There are many things that hospitals can do to protect their patients from exposure to harm and unnecessary cost. For example, when Children’s Hospital of Colorado found out they had a very high rate of CT scan for abdominal pain (which is not recommended by pediatric specialty organizations), they created a plan of action. They implemented a new protocol to get surgeon consultation in the ER before a CT scan is ordered, to decide whether or not patients were at high risk of appendicitis. Within two years, the hospital cut its rate of these CT scans from 45% to 10%.

Hospitals will soon be able to evaluate their CT radiation dose compared to their peers, using CMS’ new metric on radiation quality. For hospitals that are using too high of a dose, they can undertake initiatives to educate clinicians about reducing their dose to avoid exposing patients to unnecessary harm. 

#4 Evaluate new AI tools with an eye toward equity and overuse

Artificial intelligence (AI) tools are taking off in health care, and hospitals are no exception. AI tools have the potential to improve patient outcomes, reduce administrative burden, and even improve health equity. For example, a recent study found that a new AI algorithm has the potential to identify knee pain in Black patients with osteoarthritis more accurate than radiologists. 

However, experts are also sounding the call about the potential for AI tools to exacerbate existing patterns of racial inequity and overuse in health care. For example, a study of AI diagnostic algorithms for chest radiography found that underserved populations (which are less represented in the data used to train the AI) were less likely to be diagnosed using the AI tool. And a Lancet study testing AI breast cancer screening found that AI-supported screening detected nearly double the number of (DCIS) low-grade cases than standard screening. 

Given these concerns, hospitals should take steps to ensure that their implementation of AI tools is socially responsible. Here’s how some hospitals are already doing this:

• NorthShore – Edward-Elmhurst Health and AVIA are working together to develop a generative AI plan for healthcare systems that focuses on the risks and opportunities of AI as well as guidelines to monitor their usage and effects.
• Hospital systems like CommonSpirit and Penn Medicine are collaborating with health systems and other organizations to screen for, identify, and eliminate biases within EHRs. 
• Houston Methodist Hospital created iBRISK, a breast cancer risk assessment tool supported by AI. iBRISK takes into account patients’ demographics and medical history before recommending future diagnostic testing. By targeting screening toward patients with the highest risk, we improve the chance of benefit from screening.

#5 Prioritize equitable pay for employees 

It’s no secret that a happy, healthy staff makes for better patient care. Improving employee satisfaction is easier said than done, but ensuring equitable pay for all employees is a good start. 

Compared to other nonprofits, hospitals are outliers in terms of how much they pay their CEOs. Lown Index data on pay equity found that nonprofit hospital CEOs are paid eight times the rate of hospital workers without advanced medical degrees, on average. Creating incentives for CEO pay based not only on financial performance but patient outcomes, community investment, and other social responsibility metrics, would help align incentives for leadership with those of the community.

Committing to providing a living wage for all hospital workers would be an incredible boost for financial security within the community. The median wage for health care support, service, and direct care jobs was $13.48 an hour in 2019. California took a giant step by raising the minimum wage for healthcare workers to $25 an hour. Because hospitals are often one of the largest employers in a region, raising the minimum wage helps to support local economic development, and could even improve community health. 

We’re envisioning a 2024 full of innovation and collaboration in the hospital space, and these socially responsible hospitals give us hope that this vision will become a reality. We hope you will join us next year as we continue to build the movement for socially responsible healthcare.

The post Five ways hospitals can be more socially responsible in 2024 appeared first on Lown Institute.

Bringing together Dr. Vikas Saini (the Lown Institute), Dr. Katherine Peeler (Boston Children’s Hospital), Dr. Omar Lateef (RUSH University Medical Center), and Dr. Thea James (Boston Medical Center), the discussion focused on the role of hospitals in addressing problems like moral stress and burnout and how a commitment to equity fits into their resolution. Watch the video of the event and read some of the highlights from the discussion.

The dilemmas facing hospitals 

Panelists emphasized the conflicting incentives for health systems between prioritizing equity and keeping the lights on. “The more right you do in health care, the more wrong your operating margin will report at the end of the year,” said Dr. Lateef. 

He shared how RUSH University Medical Center’s strategy during COVID-19 of taking as many patients from safety net hospitals as possible was an energizing force for physicians who saw the difference they were making in their community, but it created financial issues for the hospital. “Because we had lost so much money, we were going to fall below our debt covenant. We couldn’t pay our loans …. We had unprecedented losses through the pandemic,” he said.

Another key challenge for hospitals is making sure that the C-suite and frontline hospital staff are on the same page. “Hospitals often say they have a plan, but physicians who are in the trenches often don’t see this plan,” Dr. Peeler explained. “If hospital’s systems that support equity… aren’t clearly communicated, physicians find themselves in the tough position of not knowing how to actually access the resources in their own hospital to deliver the care their patients deserve,” she said.

And for hospital workers who had been trying to call attention to structural racism for years, it seemed suspect that leaders were vowing to improve equity only after it became popular to do so. “I couldn’t understand that while people don’t recognize inequity when it’s clearly in plain sight all day long, how can all of the sudden people have this commitment to equity?” said Dr. James.

How equity metrics help hospitals “do the right thing”

In order to bolster the contents and actionability of hospitals’ health equity plans, hospitals have to measure what matters and do so in a transparent way. “If we’re going to reframe what it means to be a great hospital, we need new metrics,” said Lown Institute President Dr. Saini. This goal is what drove the creation of the Lown Institute Hospitals Index for Social Responsibility, which evaluates hospitals on equity and value as well as outcomes. 

“Let’s measure things that aren’t currently being measured. Let’s do it in a way that’s transparent, and let’s measure things that would be really hard to game.”

Dr. Vikas Saini

However, it’s not just enough to measure health disparities or community investment – institutions have to be willing to internalize and act upon these results, said Dr. Lateef. That can be tough when the results bring feelings of discomfort and frustration for hospital systems. “We all feel like we’re doing an incredible amount of work and no one wants to hear that they’re not doing enough,” he said.

Equity-related measures in particular can provide a critical opportunity to increase the efficiency and impact of hospitals’ plans in the long-term, but only if hospital leaders take them to heart. “Metrics that look at equity should be discussed in boardrooms and when you’re doing that … you’ll drive change, said Dr. Lateef.

For Dr. James at BMC, to make strides on equity it was important to “look inside our own house,” she said. Their “Health Equity Accelerator” program started with hospital leaders meeting monthly in working groups to identify the biggest health disparities in their own patient population. Using this model, BMC has been able to reframe their approach to medicine by putting the identification and resolution of the root causes of ill-health at the forefront of their operations.

It’s not easy to remove health inequities that are baked into the system, but having health systems, researchers, and policymakers working together is a start. “In the same way that multiple forces led us to this moment over many decades, multiple economic, social, and political forces are going to be necessary to get us out of it and that means multiple solutions, different initiatives, multiple domains – all working together if we’re going to pull ourselves out of this tailspin,” said Dr. Vikas Saini.

The post WATCH: Hospitals reveal key challenges to achieving equity, and how they’re overcoming them appeared first on Lown Institute.

We’ve been getting more and more questions about our Fair Share Spending work that assesses whether hospitals are giving back enough in financial assistance and community health investments to justify their generous tax breaks. Two new reports—one from a United States Senate committee and one from the American Hospitals Association—delve into this space and provide very different views. Here’s what you need to know.

Sanders report calls out hospitals

Nonprofit hospitals receive an estimated $28 billion in total tax breaks each year, but give back far less in meaningful community benefits. A Lown Institute report found that nonprofit hospitals received $14 billion more in tax breaks than they spent on financial assistance and community health programs in 2020, what we call a Fair Share Deficit. About three quarters of hospitals failed to give back to their communities in amounts commensurate with their tax exemption.

In August, four US Senators sent letters to the IRS asking for clarification on how hospitals are complying with the community benefit standard. And this week majority staff of the Senate Health, Education, Labor, and Pensions (HELP) Committee, chaired by Senator Bernie Sanders, released a report showing how some large hospital systems spend little on financial assistance, despite paying their CEOs whopping 8-figure salaries.

The Sanders report highlights examples of nonprofit hospitals engaging in aggressive billing activities such as sending patients’ medical debt to collections and denying care to patients with outstanding medical debt. The report also adds a new analysis of how much the 16 largest nonprofit hospital systems spend on financial assistance (free and discounted care for patients who can’t afford to pay). They find that 12 of these systems spent less than $0.02 for each dollar in revenue on financial assistance, and six gave less than $0.01. 

The report also called attention to “massive salaries” for some system CEOs, like Commonspirit which paid their CEO $35 million in 2021. Lown Institute data shows vast inequities at some hospitals, with some CEOs making up to 60 times what other hospital workers make. This underinvestment in financial assistance causes real harm to patients. When hospitals charge patients for care they can’t afford, patients go into debt and often sacrifice basic needs and avoid additional care. An estimated 100 million Americans are in medical debt, and most owe at least some to hospitals. If hospitals paid off their $14 billion fair share deficit, it would be enough to erase the debt of 18 million Americans, which would be a huge step forward for fairness in the country.

AHA provides opposing view

The American Hospitals Association just published their analysis of hospital community benefit spending, finding that hospitals spent $130 billion in 2020, amounting to 15.5% of hospital expenses. That’s far more than other studies estimate. 

How can the AHA estimate be so different? The answer depends on what’s being counted as a “community benefit.” When you imagine programs to improve community health, you might think of free immunizations, health fairs and educational classes, food pantries and other nutritional assistance, investments in affordable housing, healthcare for the homeless, etc. However, spending on those types of programs made up only 1.8% of hospital expenses in 2020, according to the AHA’s report.

Financial assistance, free or discounted care for eligible patients, is another important category of community benefit spending. But the AHA report doesn’t break out this amount on its own; instead, they lump it in together with Medicaid shortfall and other unreimbursed costs of government programs.

While it’s important that hospitals care for patients with Medicaid, the “shortfall” they report does not go towards tangible community programs or into the pockets of patients. Instead, this is an accounting item related to the discounted prices in Medicaid. Hospitals offer discounts on care to insurers all the time, but these aren’t considered community benefits–why should Medicaid discounts be any different? Most hospitals already make up this shortfall from public insurers by charging private insurers more than their costs of care. The same goes for Medicare shortfall, which the AHA report also includes in their total, despite this not even being considered a “community benefit” by the IRS.

The AHA report also includes bad debt, which is money the hospital expected to get from patients but never received. The AHA argues this spending is a benefit to the community because many patients who don’t pay would have qualified for financial assistance. However, in the real world, policies on financial assistance vary widely and getting access to it can be easy or hard. If a hospital goes to great lengths to make their financial assistance application simple and accessible, and give more in assistance as a result, that should be rewarded. On the other hand, if hospitals make getting assistance hard and hound low-income patients to pay their bills or send their debt to collection agencies, that hardly seems like a “community benefit.”

What can policymakers do?

The Sanders report adds to existing evidence that nonprofit hospitals could do much more to improve community health and earn their tax-exempt status. How can federal policymakers improve transparency and incentives around the community benefit standard? See some of our key recommendations for Congress on this issue.

The post The rising debate about hospital community benefits: Sanders vs AHA appeared first on Lown Institute.

A recent report from the majority staff of the Senate Health, Education, Labor, and Pensions (HELP) Committee, chaired by Senator Bernie Sanders, called out some large nonprofit hospital systems for underspending on financial assistance and engaging in predatory billing activities. What can policymakers do about this issue to protect patients from medical debt and ensure hospitals are giving back their fair share to communities? 

Here are some proposals that could move the needle. 

1. CLEARLY DEFINE COMMUNITY BENEFIT: Currently, hospitals get a lot of leeway in determining what counts as a “community benefit.” Any program that purports to improve community health can count, even if it has nothing to do with what community members have said matters most to their health. Congress should create a clearer definition of community benefit that ties spending directly to the priority health needs identified in the community health needs assessment that hospitals are required to conduct, as states like Massachusetts do already.
2. BETTER REPORTING: The IRS requires hospitals to report their spending on several community benefit categories on their Form 990 Schedule H, but current reporting requirements have holes. For example, hospitals are allowed to report their spending aggregated at the system level, which reduces transparency by masking differences in spending by individual hospitals. Congress could direct the IRS to make facility-level reporting of Schedule H a requirement, as several states already do. They could also enable communities to more easily see if hospitals are spending their fair share by requiring hospitals to report the value of their local property and sales tax breaks.
3. FINANCIAL ASSISTANCE STANDARDS: Currently, hospitals in most states do not have a set standard on who they must make eligible for financial assistance or how much they must spend. Congress could do what California and other states have done, and set specific standards for nonprofit hospitals to ensure that patients under a certain poverty level (depending on the state or local economic conditions) receive care that’s free or discounted. Congress could also create a standard financial assistance application all hospitals must make available and disallow barriers to assistance like asset tests for patients that qualify.
4. CB SPENDING MINIMUMS: Nonprofit hospitals are not required to spend a certain amount on community benefits to maintain their tax-exempt status, giving them little incentive to increase their spending. Congress could encourage hospitals to spend more by providing tax benefits on a sliding scale based on how fully hospitals comply with the community benefit standard compared to their peers, so that hospitals meeting the bare minimum would get a smaller tax break. Or they could follow Oregon’s example and set a community benefit spending floor for all hospitals, based on hospitals’ financial positions and local need, to ensure hospitals give back at least a certain amount.
5. PREDATORY BILLING RESTRICTIONS: Nonprofit hospitals are allowed to take “extraordinary collection actions”–send patients’ medical debt to collections, sue patients for medical debt, garnish their wages, or refuse patients with debt nonemergency care–if they have “made reasonable efforts” to determine whether someone is eligible for financial assistance before doing so. However, there are many cases in which hospitals take these actions against low-income patients who should have received assistance. Congress should disallow these actions entirely for nonprofit hospitals or issue fines to hospitals who are found to have taken these actions against patients who should have qualified for financial assistance. At the very least, they could require hospitals to report on their IRS 990 the number of patients they’ve taken extraordinary collection actions against in the past year.
6. CEO PAY LIMITATIONS: Some nonprofit hospital CEOs make tens of millions each year, despite spending little on community benefits. While capping CEO pay outright—as some have proposed—would be most simple, the political feasibility is low. However, policymakers could place additional requirements on hospitals that pay their CEOs an “excessive” amount, such as halting all extraordinary debt collection actions or requiring a living wage for all employees.

This is just a sample of the many ideas that health policy experts and community health advocates have proposed to make the community benefit standard more meaningful, reduce medical debt, and attend to community health needs. For policymakers worried about small hospitals being able to comply, critical access hospitals could be excluded, or policies could be targeted specifically at large nonprofit hospitals or systems.

Whichever route policymakers decide to take—through transparency, regulation, or all of the above—urgent action on this issue is needed for the physical and financial health of our communities.

The post Six ways Congress could improve the hospital community benefit standard appeared first on Lown Institute.

How have hospital equity officials addressed racism within their institutions and in healthcare, and what challenges have they faced? In Health Affairs, researchers from Brigham and Women’s Hospital, Harvard University, the American Hospitals Association, and the Commonwealth Fund surveyed 340 hospital equity officers from across the country. A smaller subset of 18 officers participated in longer qualitative interviews.

Advancements in equity

The survey results and interviews show where strides have already been taken towards health equity. Here are a few of the key takeaways on the positives:

• Buy-in for health equity work among hospital leadership appears to be high. Eighty-four percent of equity officers reporting that their CEO was very supportive of their efforts, and 64% said that the hospital board was very supportive.
• Data collection on demographic characteristics is widespread. A large majority (88-94%) reported routinely collecting data on patients’ race, ethnicity, language, and social determinants of health.
• Common activities to address racism include collecting information about instances of racism within the hospital (54% of officers reported doing this) and forging community partnerships to improve equity through events like listening sessions (66%).

“I think any executive needs the health equity lens. We should all have it.”

Equity officer interview participant, Health Affairs

Room for improvement

Researchers also identified obstacles to change and room for improvement:

• While support from hospital leadership for equity efforts was high, fewer respondents (52%) said they that clinical leaders were very supportive; some cited pushback from clinicians who saw health equity efforts as an accusation of bias.
• Not all institutions have committed to specific equity goals. Only 68% of survey respondents said that their hospital had specific goals or strategies to reduce inequities in the clinical care by race/ethnicity, and fewer than 50% had strategies for reducing disparities based on sex, gender identity, or sexual orientation.
• The biggest obstacles to change that officers cited were lack of diverse staff (25% reported as a “major obstacle”) and lack of a standardized way to record data on social determinants of health (26%). Some officers noted that the political climate kept them from announcing their equity initiatives publicly for fear of backlash.
• Relatively few respondents (22%) reported that their hospital was reviewing clinical algorithms for potential bias.
• Although almost all respondents said their institution collected data on race and ethnicity, only half said they used this data to stratify performance metrics (more likely in teaching and urban hospitals or systems). Why such a low rate? Officers cited doubt in the validity of this data and lack of systematic collection practices.

“Fuzzy data in, fuzzy results, right? So, we have a lot of fuzzy data.”

Equity officer interview participant, Health Affairs

Where to go next?

Equity officers identified the need for certain tools and guidelines that could help advance equity at their hospital:

• One of the largest barriers to using data has been a lack of standardized practices for collecting data, especially for social determinants of health. Issues of privacy and patient trust are important to consider when asking patients about health-related social needs.
• Equity officers noted the need for more tools and curricula for training hospital staff on DEI issues.

“What are the right clinical settings to collect [social determinants of health] data? How do we collect it in a confidential manner? When should it be collected? How often should it be collected? What do we do with the data once we have it?”

Equity officer interview participant, Health Affairs

Creating DEI positions is not a cure-all for healthcare inequities; it’s just the start. These findings provide a peek into how hospital equity leaders are making change, and how researchers and policymakers can help their work forward.

The post “We should all have an equity lens”: Insights from hospital equity officers appeared first on Lown Institute.

What is the 340B program?

The 340B Drug Pricing Program, part of the 1992 Public Health Service Act, provides outpatient drugs at a high discount to safety net providers. These discounts help keep hospitals afloat financially so they can continue delivering needed services to their communities. Hospitals say that the savings from 340B allow them to do things like “provide free care for uninsured patients, offer free vaccines, provide services in mental health clinics, and implement medication management and community health programs.” Hospitals can do these things with their 340B savings…but there’s no regulation that says they have to.

As the prices of cancer medications and other drugs used in the outpatient setting have skyrocketed, it makes sense that hospitals on thin margins deserve a discount. And it’s not like pharmaceutical companies — whose profits are nearly double that of other large companies make — need even more money. But at the same time, it’s important to ask whether the 340B program is actually serving its intended purpose.

340B and safety nets

If the 340B program worked perfectly, it would primarily help struggling hospitals that serve more low-income patients. However, the definition of “safety net” hospital when it comes to 340B eligibility is murky. Critical access hospitals (very small rural hospitals) and sole community providers, which typically operate on thin margins, are eligible for 340B. But so are “Disproportionate Share Hospitals,” a designation that ironically applies to half of all nonprofit hospitals and is not based on uncompensated care spending. Because eligibility is broad, an estimated 55% of nonprofit hospitals in urban areas receive 340B discounts.

Ideally, 340B would lead to more provision of financial assistance and care for underserved communities. However, research on whether 340B participation increases this kind of care is mixed. A 2021 study compared spending on uncompensated care at hospitals after they entered the 340B program compared to those that did not participate, and found that hospitals that participated did not spend more on uncompensated care compared to those not in 340B. However, a similar study from 2020 found that 340B hospitals did increase their spending on financial assistance specifically, although their overall community benefit spending and provision of low-profit services did not change.

The lack of regulation around how hospitals and systems spend their 340B savings can lead to cases like Bon Secours. According to a 2022 New York Times investigation, Bon Secours health system made a $100 million profit off of 340B discounts from their Richmond hospital, which serves mostly Black patients, but reinvested this money into its hospitals that serve a wealthier, whiter clientele. As a result, Bon Secours Richmond did not have an intensive care unit, maternity ward, or even a consistently-working MRI machine in 2022, despite a high need in the community for more services. Unfortunately, this may not be a unique example, as one study found that disproportionate share hospitals that participated in 340B after 2004 tended to be in higher-income communities, compared to hospitals that joined the 340B program earlier.

The 340B “remedy”

If 340B hospitals passed along the drug discounts they receive to patients, that would be another good use of these funds. However, there’s no requirement for hospitals to do so. In fact, one recent study found that commercially-insured patients spent more on certain cancer drugs at newly-participating 340B hospitals, compared to hospitals that didn’t participate in 340B. For cancer patients with high-deductible plans or other cost sharing, these increased charges can contribute to financial toxicity.

State Medicaid agencies reimburse 340B hospitals at the discounted price at which the drugs were acquired, but Medicare and commercial insurers can’t do the same. When Medicare cut their reimbursement rates in 2018 to match hospitals’ discounted price, hospitals went to court and had the cuts overturned. Now CMS has to pay back these hospitals to the tune of $9 billion, what is being called the “340B remedy.” According to a recent Modern Healthcare analysis, the 340B hospitals that will benefit the most from the proposed remedy provided less in uncompensated care as a share of expenses than other hospitals, while the hospitals spending the most in uncompensated care stand to gain the least from the remedy.

Fixing 340B

You might be thinking that given the issues with 340B, we should get rid of this designation altogether. But that’s a solution that only helps pharma. Let’s not forget, there wouldn’t be such a big problem with 340B if drug prices weren’t so high in the first place. At the same time that pharmaceutical companies are looking to restrict or get rid of 340B, they’re also brazenly suing the US government for trying to negotiate the highest-cost drug prices for Medicare patients.

But there are ways that 340B could be tweaked to optimize the benefit for low-income patients and the hospitals that serve them. In a recent Viewpoint article in JAMA, Dr. Sanjay Kishore at The University of Alabama, Dr. Rahul K. Nayak at the Emory University School of Medicine, and Dr. Aaron S. Kesselheim at Harvard Medical School explore policy solutions to improve oversight and eligibility for the 340B program. Here are a few of their proposals:

• Alter eligibility requirements for hospitals to redefine “safety net” hospitals beyond disproportionate share percentage, to include other criteria such as “measures of uncompensated care and area socioeconomic disadvantage.”
• Offer 340B discounts on a sliding scale based on hospitals with the neediest patients, rather than having 340B eligibility be “all or nothing.”
• Add more reporting requirements and utilize audits to better understand how 340B hospitals are using their discounts and gain more data around whether these discounts are being passed along to patients.

“Instead of heeding calls to cancel the program amid growth, policymakers should consider reforms that better ensure 340B benefits are targeted toward people with the most need. It is the least patients, clinicians, and health care facilities deserve.”

Dr. Sanjay Kishore et al, JAMA Viewpoint

The post What’s the tea on 340B? appeared first on Lown Institute.

What do we get for paying hospital CEOs so much? The Lown Institute Hospitals Index, which evaluates hospital social responsibility, shows that CEOs don’t have to be paid excessively to garner good performance. Among the highest-performing hospitals on the Lown Index, most paid their CEO below average for hospitals of a similar size. On the other hand, some of the most prestigious hospitals with the highest CEO pay still fall short on equity metrics like inclusivity and community benefit spending.

“When we have too much of a compensation gap, when people around the country are saying ‘this seems outrageous,’ it subtracts from the moral energy of staff.”

Read Pearce, Chief Quality Officer, Denver Health at Lown Institute launch event

One union in Los Angeles is trying to address this issue by putting a ceiling on CEO pay for certain hospital executives. The ballot question, proposed by Service Employees International Union-United Healthcare Workers West, would cap Los Angeles hospital CEO pay at the level of the US President’s salary ($450,000).

Using Lown Institute data from fiscal year ending 2020, an analysis in KFF Health News shows how some Los Angeles hospital CEOs would be affected. The following are some of the highest-paid nonprofit hospital CEOs in Los Angeles from that year:

• Thomas Priselac, CEO of Cedars-Sinai Medical Center: $5.7 million
• Scott Reiner, former CEO of Adventist Health system: $2.4 million
• Rodney Hanners, CEO of USC’s Keck Medicine: $1.4 million
• John Raffoul, president of Adventist Health White Memorial: $867k
• Andrew Leeka, former CEO of PIH Health Good Samaritan: $735k

The ballot question has the potential to draw needed attention to the issue of nonprofit CEO salaries. These high salaries are a symptom of a bigger problem — the industrialization of healthcare. As nonprofit hospitals have become big businesses, their boards have taken on a corporate feel, there is more of an emphasis on revenue and growth, and executive pay packages have grown closer those in the for-profit hospital world.

The average nonprofit hospital CEO makes eight times what hospital workers without advanced medical degrees make, but some make as much as 60 times the rate of other workers. Putting the issue of pay equity in the hands of community members (who subsidize nonprofit hospitals with their taxes) is a worthy goal.

However, there are practical issues with the salary cap, as health policy experts pointed out in the KFF Health News article. There will likely be legal challenges from hospitals that have existing payment contracts with executives. There are also ambiguities around how benefits like healthcare factor into the cap. Only CEOs of privately-run hospitals would be subject to the rule, even though there are CEOs making more than $1 million at public hospitals. It’s unclear how the rule applies to hospitals of health systems, or CEOs that run more than one hospital.

There is also no guarantee that the money saved by paying executives less would go toward the salaries of other staff, so wages on the lower end would not necessarily improve –although the union is also pursuing an initiative to raise the minimum wage for healthcare workers to $25/hr, which would create a pay floor to complement the potential CEO pay ceiling.

“A lack of economic resources leads to stress and impacts health down the line. Workers need to be able to support their families, we need to lift them out of poverty.”

Veronica Flores, CEO of Rising Communities, at Lown Institute launch event

In a 2022 article in Health Affairs, we suggested that nonprofit hospital boards should take into account more than just hospital size or revenue when creating compensation packages. For example, CEOs could be rewarded for improving community benefit spending, staff diversity, or disparities in clinical outcomes. If it’s true that “you get what you pay for,” we should be rewarding hospital leaders for prioritizing equity, not just profits.

“As institutions dedicated to the public good and the health of their local communities, nonprofit hospitals should be measured by the value they create—both business value and social value.”

Vikas Saini, Judith Garber, and Shannon Brownlee, Health Affairs

The post How much hospital CEO pay is too much? This city is considering a cap on executive compensation appeared first on Lown Institute.

Critical Access Hospitals

In order to qualify for Medicare’s Critical Access Hospital designation, hospitals must have no more than 25 inpatient beds, be in a rural area at least 35 miles from the nearest hospital or 15 miles by secondary roads, and maintain 24-hour emergency care services 7 days a week. Without these hospitals, patients in these areas would struggle to receive care. The top 4 are amongst only 54 hospitals in the country to earn a spot on the Lown Index Honor Roll by scoring straight A’s.

When comparing Critical Access and acute care hospitals, some differences jump out. Critical Access Hospitals tend to struggle more on clinical outcomes and cost efficiency, but excel on patient satisfaction and pay equity. This may reflect the trends of fewer resources, lower CEO pay, and more personalized care that are common characteristics of small, rural hospitals. Critical Access Hospitals are not ranked on patient safety or avoiding overuse because of their extremely low patient volume.

Top 10 Critical Access Hospitals, Social Responsibility 2023

Learn more about the Index and see how your hospital performed by visiting our website.

The post How do Critical Access Hospitals perform on the Lown Index? appeared first on Lown Institute.

The event kicked off with a discussion about incentives and accountability in healthcare. Earlier this year, panelist and healthcare expert Dr. Don Berwick published “Salve Lucrum: The Existential Threat of Greed in US Health Care” in JAMA, making waves in his unabashed critique of health sector greed. This unchecked greed, he argues, has an immense impact on entire communities.”We have worked very hard to…have a single effort to try and improve the upstream determinants of health, and to be honest with you, we’ve failed miserably at that,” Dr. Berwick told the audience. “We’ve been working at it for a very long time and we have some good examples [of effective changes], but it should be much bigger.” Panelists at this NY Fed Event agreed, emphasizing the dissonance between workers’ dedication and profit-driven policies.

“Our healthcare workforce does noble and often heroic work, but the system has given in to greed and the pursuit of excess profits. I think we can start to change this if we aggressively assert that hospitals have a responsibility to their communities that goes beyond the provision of healthcare.”

– Dr. Patty Gabow, Chair of the Lown Institute

Transparency is a key part of accountability. Dr. Patty Gabow, a panelist and Chair of the Lown Institute, pointed out that large nonprofit hospitals have tremendous taxpayer support. This support comes with the condition that these hospitals give back an equivalent value in community investment and support. Our “Fair Share” spending research at the Lown Institute suggests that this condition is not being met.

The 2023 Fair Share Spending Report revealed a $14.2 billion dollar national fair share deficit, meaning that the value of nonprofit hospital tax exemptions is far more than the value of investments communities receive in return. This gap in value, juxtaposed with the fact that many hospital workers earn below the federal poverty line while some hospital CEOs make millions each year, demonstrates just how off balance the current system is. We need social responsibility, but we have a profit-driven system.

As the panelists note, if hospitals did just two basic things; take care of their own and gave community investments equal in value to their tax breaks, they could pivot from excess profitability to become anchors for communities. “This should be the baseline,” said Tyler Norris, Visiting Scholar at the Federal Reserve Bank of New York.

“We treat vulnerability as some sort of exotic thing we don’t know how to solve for. But we’re not at a loss on how to build healthy, productive communities with children who thrive—many of us live in them. We don’t have an innovation problem, we have a distribution problem.”

Jason Purnell, President of the James S. McDonnell Foundation

For hospitals to become anchors for their communities, they need to collaborate with community members themselves. “We need radical inclusion of people’s voices,” said Dr. Leslie Walker-Harding, Senior Vice President and Chief Academic Officer at Seattle Children’s Hospital, “If you live in a particular community, you are an expert on that community, you know what you need and you know how it can be done.”

Watch the video recording to view the full event and panelist discussion.

The post WATCH: Investing in Health and Well-Being appeared first on Lown Institute.

Academic Medical Centers (AMCs) are affiliated with medical schools and tend to be larger, well-resourced institutions. How do they perform on the Index? Let’s take a look…

Strong on outcomes and value

It’s not a secret that AMCs tend to have better patient outcomes compared to non-teaching hospitals, for both common and rare conditions. On the Lown Index, AMCs rank higher than their non-teaching peers on both clinical outcomes, although they perform about the same on patient safety and worse on patient satisfaction, on average (see table below). Only five AMCs received a “C” grade in clinical outcomes, and none received a “D” grade.

Besides clinical outcomes, AMCs also shine on avoiding overuse and cost efficiency, with more than half of AMCs receiving “A” grades on these metrics. AMCs have the advantages of academic affiliation and resources, allowing them to become hubs for clinical trials and physician training. Research from February suggests this may impact their success, as they’re able to recruit talent, share staff with nearby community hospitals, and coordinate care for patients with various needs.

Equity is the missing piece

However, where some AMCs fall short is equity. AMCs still rank slightly better on average in community benefit and inclusivity compared to non-AMCs, but they don’t do as well on these metrics as they do on most of the outcomes and value ones. Around 50 AMCs get “A” grades on community benefit or inclusivity, compared to about 100 that receive “A” grades on clinical outcomes. 

AMCs have especially poor rankings on pay equity, which may reflect the trend of high CEO pay at these hospitals. Given the great performance across other metrics, perhaps the high CEO pay is warranted. Many other hospitals also highly compensate their CEOs and do not deliver on social responsibility.

AMCs that do it all

It’s not easy to perform well on outcomes, value, and equity, but there are AMCs that have proven they can do it all. Four AMCs made our honor roll, meaning they earned A’s across all three of those metrics. Here are the top ten AMCs.

Top 10 Academic Medical Centers, Social Responsibility

Learn more about the Index and see how your hospital performed by visiting our website.

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