Fund raising offsets hospital's indigent care costs - Mercy Hospital, Hamilton, Ohio

Healthcare Financial Management, Dec, 1990 by Deborah A. Teschke

Fund raising offsets hospital's indigent care costs

Wilma, a 57-year-old widow with no children, is confined to a wheelchair and suffers from heart disease, diabetes, and other serious medical problems. She is poor, on a fixed income, and has no health insurance.

As one of the hundreds of poor patients treated last year at Mercy Hospital in Hamilton, Ohio, Wilma's story is being used by the hospital to raise funds to help offset its indigent care costs.

The 167-bed, not-for-profit community hospital began holding fund raising activities specifically for indigent care five years ago, according to Gary Algie, Mercy's director of community relations and development. Mercy is part of the Sisters of Mercy Healthcare System, which also operates a 150-bed community hospital in nearby Fairfield.

"We provide $600,000 a year in straight charity care write-offs and another $600,000 in indigent care services through outreach programs," Algie said. "[Several years ago we] began to realize that as insurance and government regulators were cutting into the profit margin and float dollars, they weren't concerned with how we were providing care for the poor."

Government regulations, such as Medicare's prospective payment system, coupled with discounts from insurers and other payers, prevented Mercy from using profits made in other areas to help cover indigent care costs, he said. Diagnosis related groups increased the hospital's write-off amount by 80 percent, he added.

Because Mercy is a religious hospital whose mission includes providing indigent care, decreasing services was not a solution to the problem, but adding fund raising as a line item in Algie's budget was.

Mercy conducts several fund raising drives each year on behalf of indigent care. They include a solicitation letter explaining the plight of a poor patient such as Wilma, a themed dinner dance sponsored by the hospital auxiliary, a 7.5 mile walk-a-thon, and a golf tournament.

Activities are chosen for their perception and appeal to community residents. The walk-a-thon promotes camaraderie, is thought of as fun, and is a media event that helps Mercy spread its message, Algie said.

"People don't mind participating because others are putting out the dollars by pledging for miles walked," he explained. "The letter responds to the theory that some people will respond to different types of giving. For example, I have a weakness for kids selling things at the door. But I'm like iron when it comes to mail solicitation. My wife is just the opposite. She responds to anything in the mail."

While the hospital raises about $50,000 a year, Algie says fund raising for indigent care "is like spitting into a hurricane."

The letter soliciation draws $20,000 in donations, and the walk-a-thon brings in about $10,000. "The first year we raised $25,000 and the amount increases each year. But we spend six times what we raise," he said.

Before Mercy began fund raising activities, its industrial, economically depressed community of 80,000 residents was unaware of the amount of charity care the hospital was providing, Algie said. A payroll tax increase plan to help subsidize indigent care costs for the area's five hospitals was defeated twice at the polls. Residents perceived the healthcare providers as "big business" and did not understand the effects of government payment changes on the hospitals, he said.

The fund raising activities have created an awareness value that the tax proposals did not have, Algie said.

"People in this community are good and responsive to our needs. As they become aware of the indigent problem, [the dollars raised] for charity care will increase."

PHOTO : More than 100 people participated in Mercy Hospital's walk-a-thon for indigent care held in October. Walkers raised $9,500 in pledges for the hospital this year.

Deborah A. Teschke is news editor of Healthcare Financial Management. Suggestions for "Provider Perspective" topics should be sent to her at HFMA, Two Westbrook Corporate Center, Suite 700, Westchester, IL 60154.