Advocacy group: Floyd Medical Center, others driving up cost of health care

By John Bailey for the Rome News-Tribune, July 24, 2009
The financial practices of Georgia not-for-profit hospitals, including Floyd Medical Center, are creating a barrier to affordable health care, a consumer advocacy group concludes. The Hospital Accountability Project by Georgia Watch focuses primarily on the affordability of health care for self-pay, underinsured and uninsured patients…

While FMC provides high levels of indigent and charity care, the report finds, it also says the hospital overcharges patients for services and pays executives salaries rivaling some Fortune 500 companies.

Georgia Watch is a nonprofit consumer group focusing on health care, insurance and financial issues.

Click here to read the complete report.

“All Georgians have the right to affordable, quality care,” said Georgia Watch Executive Director Angela Spier Phelps. “While Floyd has many practices and programs that directly are beneficial to the community, some things, such as high charges, are a disservice and may prevent people from receiving the care they need — particularly during tough economic times.”

Roger Sumner, chairman of Floyd Healthcare Management Inc., said his board and the compensation committee were aided by Towers Perrin, a nationally recognized health care compensation consultant, in setting executive compensation. He said they established a base pay salary “as compared to comparable facilities.”

“One of our goals in compensation approach is that if another organization were to approach our CEO with an offer, we want our existing compensation package to be attractive so that another offer is not so enticing,” Sumner said in a statement sent Thursday to the Rome News-Tribune.

Click here to read a statement in response from Roger Sumner, chairman of Floyd Healthcare Management Inc.

State Rep. Katie Demp­sey, R-Rome, who serves on the Floyd Healthcare Resources Inc. board that oversees FMC’s for-profit ventures, said the report is tied into the increased concerns Americans have for health care issues.

“I’m certain the study plays into the heightened concern for health care right now,” she said.

President Barack Obama spoke to the nation Wed­nesday, calling for sweeping health care legislation. He said he believes it’s possible to fund more than two-thirds of the cost of health care legislation by eliminating waste and redirecting federal funds already being spent.

Executive Pay

The Georgia Watch report notes, “Excluding board members, other executives at Floyd Medical Center enjoyed generous compensation packages that ranged between $200,000 and $500,000, a similar compensation model seen at many of the state’s nonprofit hospitals.”

Kurt Stuenkel, Floyd’s CEO and president, was paid an average compensation of $838,799 annually between 2005 and 2007, which included base pay, incentives and other benefits, according to the report.

IRS records for 2007 indicate Stuenkel received $901,948 in total compensation. Of that, $178,494 was mainly a retirement contribution, according to the report. Some $295,632 of the total compensation included incentive pay, which was delayed incentive for two years, the report states.

Stuenkel is deferring questions about his salary to the compensation committee, which includes members of the Hospital Authority of Floyd County, Floyd Healthcare Management Inc., and Floyd Healthcare Resources Inc., according to FMC spokesman Haley Crider.

Georgia Watch reports for other hospitals

– Grady Memorial Hospital

– Medical Center of Central Georgia

– Memorial University Medical center

– Northside Hospital

– Phoebe Putney Memorial Hospital

Georgia Watch has done similar reports on five other hospitals across the state: Grady Memorial Hospital in Atlanta in June 2007, Phoebe Putney Memorial Hospital in Albany in December 2007, Northside Hospital in Atlanta in April 2008, Memorial University Medical Center in Savannah in July 2008 and Medical Center of Central Georgia in Macon in December 2008.

In its summary of FMC, the Georgia Watch report also stated:

# “The tax-exempt nonprofit hospital offers high levels of indigent and charity care, and many areas of community benefits, including a mobile mammography unit and an indigent pharmacy program;
# Compensation for top-level executives at Floyd Medical rivals that of many for-profit Fortune 500 companies, including its chief executive, who was paid an average compensation of $838,799 annually between 2005 and 2007, including base pay and incentive pay, as well as retirement and other benefits;
# Like most other trauma centers in the state, Floyd Medical continues to lose money as one of nine Level II trauma centers in Georgia, which offers a high level of care to trauma patients;
# Floyd Medical significantly marks-up the prices of many of its services, including a 2,459 percent mark-up in anesthesiology services;
# Floyd Medical grants all self-pay patients up to a 60 percent discount on services, though the discounted price is still significantly higher than the actual cost of the procedure, maintaining a significant barrier to affordable care.”
Executives from each of the hospitals received comparable total compensation packages for Fiscal Year 2007, according to Georgia Watch:

# The Medical Center of Central Georgia’s CEO received $848,841.

# The Memorial University Medical Center’s president received $713,575

# Northside Hospital’s CEO received $1,024,187

# Northeast Georgia Health System’s CEO received $1,215,227

# Grady Hospital’s CEO received a prorated salary beginning in May of $457,192.

The Rome News-Tribune contacted the hospitals to confirm the salary numbers. Only Grady’s spokesperson could confirm the salary by deadline Thursday.

Sam Freeman, who serves on the Floyd Healthcare Management Board, said he has concerns about the accuracy of some of the report. “While it has some accurate information, it has some inaccurate information as well,” he said. “They need to tell the whole story and overall facts. We don’t feel they did that. You can’t break down a complex organization like Floyd in a few paragraphs in a report.”

Holly Lang who helped pull the data together for Georgia Watch, said the information in the report was checked by FMC before it was released. She also said the salary information was provided by Stuenkel and IRS documents. She did, however, confirm that some mistakes were made in the report, including a gross patient revenue figure.

Floyd County Commission Chairman John Mayes, sits on both the Hospital Authority and the management board.

“What he’s being paid is comparable to what they’re paying at hospitals with a comparable number of beds,” he said.

He declined to weigh in on the level of executive compensation.

“I’m always concerned that a lot of people aren’t making enough to live on, but that’s a separate issue from what the CEOs are being paid,” he said.

Increased cost of health care

Mark-up on services was another report focus.

Most notably, the reports states, anesthesiology charges were increased by 2,459 percent over cost at FMC. That means that patient charges totaled $13,623,018, compared to $554,033 in actual costs.

In response to mark-up figures, Haley Crider, public relations director for FMC, told the Rome News-Tribune: “Hospital pricing is a very complicated matter that we would be happy to discuss. However, to accurately and completely communicate this information to you, it will require a lengthy meeting with members of our financial services team.”

Redmond Regional Medical Center “also engages in significant mark-ups,” the Georgia Watch report says.

The study says the hospital had a 1,927-percent mark-up in anesthesiology, 1,373-percent mark-up in electrocardiology, a 1,560-percent mark-up in laboratory fees and a 1,145-percent in radiology and diagnostic fees.

“We have no idea how Georgia Watch arrived at their data, and really cannot speak to its validity,” Lisa Brown, director of marketing at Redmond said. “Redmond Regional Medical Center’s charges for service reflect a mark-up over costs, as does any other business.”’

Redmond also provided considerable uncompensated care and charitable discounts including $10,888,245 in charity care, $11,031,584 in uninsured discounts and $24,009,896 in bad debt, Brown noted.

In fiscal year 2007, FMC’s gross patient revenue was $231 million, Georgia Watch said. However, its report originally listed the figure at $655,991,965, but the group corrected the amount Thursday. Redmond said its gross patient revenues for 2008 was $719,138,769.

Like most other trauma centers in the state, Floyd Medical continues to lose money as one of nine Level II trauma centers in Georgia, the report states.

In addition, FMC grants all self-pay patients as much as a 60-percent discount on services, though the discounted price is still higher than the actual cost of the procedure, creating a significant barrier to affordable care, says Georgia Watch.

Indigent care

Floyd Medical Center treats the majority of uninsured, underinsured and publicly insured patients in Northwest Georgia and Northeast Alabama.

Like many such “safety net” hospitals in the country, the report states, FMC faces formidable challenges as the health care landscape continues to change as more consumers become uninsured, and the need for affordable, accessible care grows.

Approximately 16 percent, or 127,000, of Region One’s non-elderly adult population are uninsured and in the past 12 months, 20 percent of the region’s population was uninsured for at least one month, and 9 percent of the population was uninsured for at least a full year.

In addition, Floyd County has significantly higher poverty rates than the state and national averages, with approximately 15 percent of the county’s residents living below the poverty level.

Twenty-three percent of the region’s population was insured through a public entity, and only 64 percent had private insurance, the report says.

Despite these factors, and continuing losses, the report states FMC continues to provide high levels of health care.

“The tax-exempt nonprofit hospital offers high levels of indigent and charity care, and many areas of community benefits, including a mobile mammography unit and an indigent pharmacy program,” the report stated.

“It is important to recognize the good practices that are working to benefit the community but it is equally important to recognize those practices that aren’t working in the best interest of serving the community and demand something better,” said Phelps.

According to Georgia Watch:

# Seventy-three percent of Floyd Medical Center patients gave the facility a ranking of nine or 10 — with 10 being the highest — versus a state average of 65 percent and a national average of 63 percent.

# Eighty-two percent of patients feel the doctor communicated well, compared to the state average of 81 percent.

# Seventy-nine percent of patients said they would recommend the facility to a friend or family member, as compared to a state average of 68 percent and a national average of 67 percent.

# The hospital provides on-site Spanish translators.

“As a whole, the Georgia Watch report does a good job of highlighting Floyd’s practices in the delivery of accessible and affordable health care to the communities we serve as the region’s safety net hospital,” said Crider. “The report accurately reflects Floyd Medical Center’s unusual financial burden and that we are doing a good job of managing operations and finances despite this tremendous uncompensated care burden, in fact, one of the highest in the state.”

FMC board member Freeman agrees.

“I think we do an excellent job at Floyd Medical Center of serving this community. We serve any and everybody that walks in the door, whether they can pay or not.”

Salaries of FMC executives

Floyd Medical Center released salaries Thursday of its top executives ending in fiscal year 2008. The figures came from the Towers Perrin Reasonableness Opinion Report for the fiscal year ending June 30, 2008. They reflect base salary plus the most recent incentive, said Haley Crider, the hospital’s public relations director.

Kurt Stuenkel, president and CEO, $774,046

Dee Russell, M.D., VP and chief medical officer, $465,900

Warren A. Rigas, VP and chief operating officer, $327,300

Rick Sheerin, VP and chief financial officer, $349,800

Mary Maire, VP and corporate compliance officer, $235,500

Sheila Bennett, VP and chief nursing officer, $216,700

Dan Sweitzer, VP of market development, $206,800

Greg Polley, vice president, $265,400

Wade Monk, general counsel, $350,800s.

Read the report here.