RN-Backed Bill on Hospital ‘Observation’ Standards Also Set

First hearings on two RN-sponsored California bills, to hold California non-profit hospitals accountable on how much charity care and community benefit services they provide in return for their tax-exempt status and to address the hospital abuse of “observation” status, are scheduled for their first public airing this week by the Senate Health Committee.

Both bills will be on the docket of the Senate Health Committee Wednesday in a hearing that begins at 1:30 p.m. in Room 4203 of the State Capitol.

Holding Hospitals Accountable on Charity Care and Community Benefit

SB 346, the Community Benefit and Charity Care at Nonprofit Hospitals Act is authored by State Senator Bob Wieckowski and sponsored by the California Nurses Association/National Nurses United, Greenlining Institute, and the California Rural Legal Assistance Foundation.

Key goals of the bill are to assure that non-profit hospitals provide uniform levels of charity care and community benefit programs, increase reporting to enhance public transparency, and require increased community representation on the hospital giants’ community benefits planning boards.

A 2012 CNA research study documented that California non-profit hospitals collect $1.8 billion in tax benefits beyond what they provide in charity care. Among major chains, St. Joseph Health System, Providence Health System, Adventist Health, and Scripps Health all provided less than half of their net income (profits) in charity care. Kaiser Permanente, Sutter Health, Memorial Care, and Cottage Health all provided less than a quarter of their profits in charity care.

But the California Hospital Association, which is the fourth biggest spender in lobbying in Sacramento, has vehemently opposed prior legislative efforts to rein in what CNA views as a widespread abuse by non-profit hospital giants. And, with the defeat of prior bills, some hospitals are even cutting back what they spend on charity care and community benefit services.

Sutter, for example, in March reported that it spent only $91 million in charity care, down from $166 million in 2013, and cut its spending on community benefits from $901 million in 2013 to only $767 million last year – all while recording $3.5 billion in profit the past five years.

St. Joseph also provides examples of what CNA believes are indications of the need for greater transparency and corporate accountability by non-profit hospital giants. Among big Catholic hospital systems in California, St. Joseph, ranks last in provision of charity care as a percentage of operating expenses among large Catholic hospital systems, according to the Office of Statewide Health Planning and Development.    

Safety Protections for Patients in ‘Observation’ Status

Senate Bill 483, authored by Sen. Jim Beal, addresses one of the least reported problems in U.S. hospitals – the placement of patients in “observation” status, where they can be held for hours or days with less public oversight and fewer protections.

The bill is also sponsored by CNA. The nurses contend that hospitals increasingly use “observation” status – which can mean holding a patient in a hospital bed or even on a gurney in a hallway for long periods of time – to avoid admitting patients in need of more specialized hospital care.

Observation status is treated as outpatient, not inpatient care, meaning that a patient, even in a hospital bed, does not qualify for the same regulatory requirements and oversight.

Moreover, patients held under “observation” for the entire duration of their hospital stay who are then discharged to a nursing home or other long term care facility do not qualify for the same Medicare reimbursement, and can face mammoth out-of-pocket costs. Medicare requires patients to be admitted as inpatients for three days before coverage for long-term care will kick in. Time spent in observation does not count, as observation services are outpatient services.

SB 483 would limit the amount of time a patient may be placed in observation status, require observation services to meet the same staffing standards of other hospital areas, and require hospitals to inform patients that they are being held in “observation” status and how that may affect reimbursement for their medical services.