Lawsuits may hike health costs in LV

Michelle Swafford

Monday, Aug. 23, 2004 | 10:36 a.m.

Recent lawsuits filed on behalf of the uninsured against two of Nevada's largest hospital operators could mean increased costs for both corporate and individual buyers of health care, Wall Street analysts say.

Nashville, Tenn.-based HCA Inc. and King of Prussia, Pa.-based Universal Health Services Inc. and their local hospitals were sued Aug. 5 in Clark County District Court on allegations that they gouge uninsured patients by charging them more than insured patients for the same procedures, and use overly aggressive collection tactics.

Archie Lamb, an Alabama attorney for the uninsured patients in the lawsuits, also sued Naples, Fla.-based Health Management Associates Inc. and is seeking class-action status for all three cases. Las Vegas Valley hospitals named in the lawsuits include HCA-owned Sunrise and MountainView hospitals and Universal-owned hospitals Valley, Desert Springs, Summerlin and Spring Valley hospitals.

"If a bunch of money ends up in the lawyer's pockets, it's not going to help and it's going to raise the price of health care for everybody," said Nancy Weaver, analyst for Stephens Inc. "There are very complicated regulations when it comes to what they can charge and for there to be lawsuits for what the government allows them to charge is fairly hysterical."

While the lawsuits could drive up health care costs, Weaver sees them "more as a nuisance than as a fundamental, major problem with my industry."

She said for-profit hospitals are ahead of the overall health care industry when it comes to establishing policies and discounts for uninsured patients.

Sheryl Skolnick, analyst with Fulcrum Global Partners, said if the hospital operators have to pay damages as a result of the lawsuits, someone will end up covering those costs. And she's not sure if the lawsuits will help the uninsured.

"Hospital companies will go back to managed care and say our cost of doing business is greater," Skolnick said. "If (hospitals) control a lot of market share, (they'll) probably be able to get some more money. You can't get it from Medicaid or Medicare so you have to get it from somebody."

HCA has "become a kinder, gentler HCA" and has established discounts to assist uninsured patients, but patients are not coming into the hospitals to fill out the paperwork, Skolnick said.

"They have these bills at list prices hanging out there and it's eventually going to go to the collection agency," she said. "I sense a sense of frustration on the part of the company. They've rolled out these discounts and then nobody comes and signs up for it."

HCA launched a discount program last year and agreed to not put liens on homes valued at less than $300,000. The current discount program provides free medical care to patients who have incomes up to 200 percent of the federal poverty level. A family of four could earn up to $37,700 and qualify based on the 2004 federal poverty guidelines.

This fall, HCA will offer a new discount policy for uninsured patients that will offer charges comparable to managed care or Medicare charges.

Universal's Chief Financial Officer Steve Filton told investors in July during the company's second-quarter earnings call that the company is working on a uniform discount for uninsured patients who meet certain income requirements. He said each hospital market varies and the uniform discount would likely be based on a percentage of Medicare's reimbursement rate.

Skolnick said she is not surprised by the lawsuits and this is not the first time the health care industry has faced such allegations.

"There is something sort of offensive in terms of threatening to take away someone's home when they don't have resources," she said.

Santa Barbara, Calif.-based Tenet Healthcare Corp. was sued in California in 2003 on allegations that it overcharged uninsured patients and refused to offer payment plans.

Tenet agreed to settle the lawsuits that were coordinated by K.B. Forbes, executive director of the national advocacy group Consejo de Latinos Unidos. Tenet owned North Vista Hospital, at the time called Lake Mead Hospital, in North Las Vegas during the lawsuit period. Forbes provided the plaintiffs for the Tenet lawsuits and is helping Lamb find plaintiffs for the HCA and Universal Health lawsuits.

Following the settlement, Tenet announced prices that are comparable to managed care companies' rates and free counseling to all uninsured patients. Tenet also said it would not seek legal action against uninsured patients who are unemployed or lack other significant income and would not place liens on homes as a collection method.

Las Vegas Valley insurance companies say they are unsure whether their medical expenses would rise because of the lawsuits, but say it's possible.

Todd Meek, president and chief executive of Las Vegas-based NevadaCare, said cost shifting already happens regularly because insurers are charged different prices based on their buying power.

"Maybe this will shed light to the public," he said. "It's kind of pulling the covers back a little bit to say there are different prices charged in health care. It will hopefully create a healthy debate."

Cheryl Randolph, spokeswoman for Cypress, Calif.-based PacifiCare Health Systems Inc., said "lawsuits regardless of their merit have a direct impact on health care costs. Whether it's a lawsuit related to a hospital, physician or health plan, costs incurred by litigation increase health care costs within the delivery system and in turn are passed on to employers and consumers."

Bill Welch, president and chief executive of the Nevada Hospital Association, said the lawsuits set a precedent for other types of what he called "frivolous suits" and will result in cost shifting to patients either through higher hospital charges or insurance premiums.

He said hospitals are the only health care providers that are required by federal law to treat every patient who enters the emergency room, regardless of their ability to pay.

"There's a certain cost of health care and that cost is spread amongst your payers the best you can," Welch said. "Health care is a business. It's a profession you choose to go into. There's got to be a little bit of profitability."

Welch said lawsuits could lead for-profit hospitals to scale back their operations, which could put more pressure on Clark County-owned University Medical Center.

"At some point those (hospitals) that are private are going to have to decide if this is the business they want to be in anymore if every time you turn around you're going to be sued," Welch said. "It could change the trend and attitudes about whether or not investors want to get into this industry."

Rep. Jon Porter, R-Nev., said the lawsuits shed light on a bigger issue, which is that there are 44 million Americans who don't have insurance for different reasons.

"If the hospitals have wronged a patient I trust that the courts will crack down on any abuses," he said. "What we're doing from a congressional perspective is providing alternatives. We can help these families find insurance and there will be far fewer that will be put in a position of (choosing between) buying health care or paying for food."

archive