Business & Tech

Hospital Debate Focuses on Charitable Care

Sherman Hospital says a new Centegra hospital in Huntley would affect how it helps the poor and uninsured.

The rhetoric from all the hospitals embroiled in ’s and Mercy Health System’s battle to build a hospital is confusing, but there’s a key issue that could affect a final decision: how a new hospital would affect services to the uninsured and the poor.

Centegra filed an application in December with the Illinois Health Facilities and Services Review Board for a Certificate of Need to build a 128-bed hospital on its Huntley campus on Haligus Road. Mercy filed an application days later to build a similar hospital at Route 31 and Three Oaks Road in Crystal Lake.

This week, Mercy has a public hearing in Crystal Lake before representatives with the review board.

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Last month, Centegra presented hours of testimony at a public hearing on its plan that drew opposition from Mercy, Sherman Hospital in Elgin, Advocate Good Shepherd Hospital in Barrington, St. Alexius Medical Center in Hoffman Estates and Provena Saint Joseph Hospital.

What Sherman, in particular, argued is the proposed Centegra-Huntley hospital would have a negative affect on safety net services.

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The safety net impact

The term safety net refers to health care services provided to “persons with barriers to mainstream health care due to lack of insurance, inability to pay, special needs, ethnic or cultural characteristics or geographical isolation,” according to Illinois statute.

A way hospitals, which in this area are all nonprofits, generate revenues to provide safety net services is through populations that have insurance, hospital officials said. 

Hospitals get paid 30 cents per dollar from insured patients for inpatient care but get only 21 cents per dollar for Medicare and Medicaid patients for the same care, said Sherman Hospital CEO Rick Floyd, who recently spoke at a Kane County board meeting.

According to a recent Moody’s Investors report, Medicare makes up about 43 percent of a given hospital’s gross revenues but that source “is highly vulnerable to changes in Medicare reimbursements.”  For example, this year Medicare payment rates to hospitals were decreased from 3.5 percent to 2.1 percent and are expected to decrease next year, the company said.

“There are many residents in Kane County who don’t have access to health care,” Floyd said.

But Huntley and surrounding towns are more “affluent communities that makes it very attractive for health care” because there are more people who are likely to have insurance, Floyd told county board members. So, hospitals would generate more funds to help provide for charitable care.

Sherman and Provena currently provide 18 to 20 percent in public aid charity for inpatient services compared to Centegra’s 9 to 12 percent, Floyd said. Sherman officials said the Elgin hospital provided $3 million in charity care and $41 million in unreimbursed Medicare and Medicaid care.

Finding funds for charitable services

What is being argued is that a new hospital in southern McHenry County would affect neighboring hospitals’ ability to provide services to this population and thus affect the “safety net.”

 “If you have more competition for few paying customers, that may reduce the capability of Provena and Sherman to offer charity cases,” Kane County Public Health Executive Director Paul Kuehnert said. Providing charitable assistance is the “heart of the health care system,” he said.

Centegra, however, maintains the safety net won't be affected by a new hospital.

"A hospital in Huntley would predominantly serve new patients, rather than taking existing patients from Sherman Hospital or Centegra’s hospitals in Woodstock and McHenry,” said Susan Milford, Centegra senior vice president via an e-mail interview.

“This is a unique situation,” Milford said. “We are proposing our new hospital based on population growth, rather than solely the existing population.  The population of the Huntley community itself grew a staggering 166 percent from 2000-2010.  The community continued to grow even during the recession.”

Huntley’s projected growth from Claritas is 12 percent between 2010 and 2015, she said. Similar population growths, about 10 percent, are expected in Lake in the Hills and Algonquin, she said.

“Because a new Huntley hospital would not take many patients away from existing hospitals, it would not impact the safety net services those hospitals provide,” Milford said.

Part of the review board’s CON application includes a Safety Net Impact Statement from hospitals and can be an arguing point for hospitals opposing a CON, said Christine Priester, Sherman Hospital spokeswoman.

A policy issue?

The hot potato issue is landing right on Kuehnert’s lap. Kane County was poised to oppose Centegra’s plan and had a resolution drawn up to send to the review board.

However, board members last week tabled the motion to explore the issue within the county’s Public Health committee. Kuehnert will help lead the discussion at the committee’s April 12 meeting.  The county board and public health committee are faced with supporting two local hospitals while trying to keep the welfare of Sun City Huntley residents in mind.

Kane County’s top health care priority is providing access, Kuehnert said. A concern would be that a new McHenry County hospital would cut into the charitable services and led to decreased access for county residents, he said.

“The (Kane County) board does have to carefully consider,” the issue and “may have to look at it as a policy issue,” Kuehnert said.


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