Nonprofit Empire Health Foundation filed a lawsuit in U.S. District Court in Spokane, Wash., earlier this week that accuses Community Health Systems (CHS) of not providing enough indigent care at two Spokane hospitals: Deaconess Medical Center and Valley Hospital and Medical Center.
The lawsuit claims CHS agreed to “provide charity care and essential health benefits as required under Washington’s Charity Care Act” when it purchased the hospitals in 2008. The lawsuit alleges that CHS, which is one of the largest for-profit health systems in the U.S., did not provide the required $110 million in uncompensated and discounted care between September 2008 and December 2015.
Empire Health Foundation was formed with the proceeds of CHS’ purchase of Deaconess Medical Center and Valley Hospital and Medical Center in 2008. The foundation creates “measurable, sustainable health improvements in Eastern Washington, with a particular focus on access to healthcare by Eastern Washington’s lowest incomes individuals.”
The lawsuit claims CHS was “part of a planned effort to drive indigent patients away from the hospitals, and, if they nonetheless sought services from the hospitals, to overcharge them."
The lawsuit alleges the hospitals haven’t reached the regional average for charity care of more than $55 million from September 2008 to December 2015, which CHS reportedly agreed to reach as part of the sale. The two hospitals fell short of the regional average by $110 million, according to the lawsuit.
Nonprofit health systems usually have to reach charity or uncompensated care requirements as part of their health needs assessment, which allows them to keep their status. For-profit systems like CHS usually don't need to worry about reaching specific levels of charity or uncompensated care. However, Washington is one of the few states that requires all hospitals, regardless of status, to provide charity care.
The Washington hospitals are just two of more than two dozens hospitals that CHS is looking to sell after the chain reported a net loss of $1.7 billion in 2016.