Cash before Care

by Sid Kirchheimer

After Dave Williams learned in April that the mass in his neck was malignant, his doctor referred him to a local cancer center. At his appointment, he was stunned at what he heard. “They said, ‘We’re looking at $30,000 worth of treatment, and we need $20,000 upfront,’ ” says Williams, 62, of Beeville, Texas. “I said, ‘I don’t have that kind of money.’ ”

For the retired landscape designer, the hospital’s demand was an especially heavy blow, since he had recently paid off $273,000 in out-of-pocket costs for his ex-wife’s care for ovarian cancer (his employer-sponsored health plan refused to cover her because she had cancer when he enrolled). “I became poor trying to save her, but she died,” says Williams, who now lives in a trailer on a friend’s property.

In his case, he applied for “charity care” at other hospitals but was rejected because he has saved about $10,000 in a 401(k). “They all asked for a lot of money, upfront, before they would do anything to help me,” says Williams, who is still exploring his options.

His story is all too familiar to Anna McCourt, supervisor of the American Cancer Society’s National Cancer Information Center, which helps patients 24 hours a day. “We’ve seen this for quite some time, but it’s now happening more and more. Requests from hospitals for tens of thousands of dollars upfront are not uncommon,” she says, “and there are occasions where patients have been asked for hundreds of thousands before they can access the care they need.”

Those most likely to be hit with upfront fees are the underinsured and the recently uninsured. And having employer-provided insurance is no guarantee that you won’t need to pay before check-in, a startling change from the traditional practice of billing after treatment. Today, the typical patient with private insurance is responsible for 23 percent of his or her medical bills—more than twice the out-of-pocket costs in 1980.

Moreover, copayments and deductibles are rising at a time when health plans are imposing new caps on the total number and cost of certain therapies, says Nancy Davenport-Ennis, CEO of the nonprofit Patient Advocate Foundation in Newport News, Va., which assists people with conditions that are expensive to treat. So if you need 30 radiation treatments, but your insurance will cover only 12, you pay for the other 18, Davenport-Ennis says. “And increasingly, you’ll be required to pay for them beforehand.”

Hospitals say these pay-before-stay policies are necessary to help offset unpaid debt. Uncompensated care cost U.S. hospitals $31.2 billion in 2006—up from $19 billion in 1998, according to the American Hospital Association, which represents the nation’s nearly 5,000 community facilities.

“There are patients who can’t pay,” says AHA official James Bentley. “But there are also patients who have some portion of their bill that they simply don’t pay. What hospitals have done is try, with fairness and decency, to collect from people who can pay.”

Bentley says he has no “hard data” on how many hospitals ask for upfront payments—usually from patients with long-term, costly conditions such as cancer and heart disease that may be life-threatening but aren’t classified as “medical emergencies.” (Hospitals are required by law to treat medical emergencies before asking for payment.)

Bentley also points out that half of all hospitals lose money on patient care and see only a “narrow window of profit” from other income sources—such as grants and community donations—leaving one in four U.S. hospitals operating in the red. According to the AHA, for every dollar provided in patient care, hospitals receive only 92 cents in Medicare reimbursements and 87 cents from Medicaid, the federal-state health program for low-income people.

Even so, according to a Wall Street Journal analysis of data from the American Hospital Directory, the 50 largest not-for-profit institutions enjoyed a combined net income of $4.27 billion in 2006, an eightfold increase since 2001.

Meanwhile, the nation’s 2,919 nonprofit community hospitals receive some $50 billion in annual tax exemptions and other subsidies. Of those facilities, one in seven that responded to a 2006 Internal Revenue Service survey required patients to pay or make an arrangement for payment prior to being admitted.

“It’s shocking that some hospitals badger sick people for ‘down payments’ when they arrive for treatment or even withhold treatment until they produce a check,” says Sen. Chuck Grassley, R-Iowa, who has requested a Government Accountability Office report on how nonprofit hospitals fulfill their charitable mission and pay executives, some of whom receive annual salaries of more than $1 million. “This is like applying the principles of home or car sales to health care,” he says.

Dave Williams would agree. As the mass on his neck continues to grow, he says he’s planning a road trip to Mexico with a friend “to see what can be done down there. I have to do something.”


Sid Kirchheimer is a Philadelphia-based journalist writing about health and consumer issues.

DISCLAIMER: The information and opinions expressed on this blog are not an endorsement or recommendation for any medical treatment, product or course of action by One For The Aging. For medical, legal or other advice, please consult appropriate professionals of your choice.




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