Hospitals footing more bills
The emergency room at UC Davis Medical Center is bustling, its waiting room more crowded than ever and its doctors and nurses caring for an increasing stream of patients who can't possibly pay for services.
These days, more patients are arriving without jobs or health insurance.
As a result, the university medical center is forced to absorb the financial burden of caring for many of the capital's medically indigent, uninsured and financially strapped - a burden that eventually is passed on to paying customers.
"We saw it coming, but the train was bigger than we thought," said William McGowan, the chief financial officer for the UC Davis Health System.
"We didn't think the recession would be this long or this deep."
From July 1, 2008, to June 30, the university health system was left footing the bill for $165.7 million in charity services - up from $96.9 million the year before.
Bad debts climbed to $54.9 million for the just-completed fiscal year, up from $38.3 million the previous year.
Across California, hospitals have seen a surge in the amount of care they provide for free - known in the health care industry as charity care.
Last year, hospitals across California wrote off nearly $1.2 billion in bad debts and provided $973.4 million in charity care - an 89 percent increase from four years earlier.
The growing number of patients who can't pay has had a "devastating effect" on hospitals, said Jan Emerson, spokeswoman for the California Hospitals Association.
"It's a significant burden on us, and it's getting bigger as the days go by."
Nonprofits' role debated
Nonprofit hospitals such as UC Davis Medical Center are required by the Internal Revenue Service to benefit the community in exchange for billions of dollars in tax breaks.
Hospitals typically comply by providing health screenings, smoking cessation programs and free medical care to those who cannot pay.
As Congress plunges into the health care debate, the role that nonprofit hospitals play in caring for the poor and medically underserved is part of the broad and contentious discussion in Washington to revamp the country's health care system.
The Obama administration has made health care a top priority, arguing that systemic changes are needed to bring down costs and widen access to health care to the country's 46 million uninsured. Nearly 7 million Californians do not have medical coverage.
If Washington succeeds in passing comprehensive health care legislation, there may be no need for charity care, according to Reatha Clark, a health industries partner for PricewaterhouseCoopers.
If there is universal health coverage, she said, "who would be left for charity care?" Universal health care is certainly one of the goals for overhauling the country's health care system, but the question is still open about how truly universal the current proposals would be, said Marian Mulkey, a senior program officer with the California Healthcare Foundation.
Few of those watching the health care debate unfold believe that a universal insurance company would truly provide coverage to every person in the United States.
Some people may decline to participate. Also, coverage is unlikely to be extended to undocumented immigrants, who account for about 10 percent of uncompensated care, according to the state hospital association.
Critics: Hospitals fall short
Not everyone involved in the health care debate is sympathetic to the hospitals' plight. Some critics say hospitals aren't doing enough to provide free care.
Key federal legislators want to reduce the tax breaks nonprofit hospitals enjoy and set minimum amounts they must spend on free community care. The critics include Sen. Chuck Grassley, the ranking Republican on the Senate Finance Committee.
A state hospital group official took issue with this criticism. Hospitals have done more than their share to help those in need, particularly in times of financial distress, said Scott Seamons, regional vice president for the Hospital Council of Northern and Central California.