Spectrums Community Benefit Tops 100M

November 22, 2006
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GRAND RAPIDS — The value that Spectrum Health places on its benefit to the community has nearly tripled since 1997, growing to $100.7 million for the 2006 fiscal year.

Shortfalls in funding from Medicare and Medicaid are blamed for $78 million of the amount.

"Community benefit" is an accounting of hospital activities that shows its connection to the public good. It covers such topics as charity care, public education and mission.

Today, Spectrum Health receives 94 cents for every $1 worth of Medicare care provided, and 72 cents for each dollar of Medicaid care, President and Chief Executive Officer Richard Breon stated, creating a shortfall of $78 million. In 1997, the shortfall was $24 million.

"The majority of our community benefit dollars are being spent on making up the shortfall in government funding for Medicaid and Medicare patients," Breon stated. "Health systems throughout West Michigan are struggling with a steadily growing Medicaid population. However, the state continues to reduce the amount it will pay for health care services under this program."

Breon contended that the burden of covering the Medicaid shortfall falls on businesses and employees. "That cost is shifted to them as a 'hidden tax' on the business community. It is critical that health care providers, business leaders and our legislators work together to find a way to equitably fund care for the Medicaid patients and the uninsured."

Spectrum Health included $22.7 million in community outreach and health improvement programs as community benefits. Among those efforts: caring for the underserved; supporting community clinics for children and pregnant women; offering the Renucci Hospitality House that provides a place to stay for patient families; offering health education classes to thousands of people; and clinical research.

The Healthier Communities Department receives $6 million per year and helped 110,000 people. This department's activities are focused on removing barriers to health care, collaborating with other nonprofits, raising awareness of community health issues and helping people to adopt healthier lifestyles.

The $100.7 million value placed on community benefits equals about 5 percent of Spectrum Health's $2.1 billion in revenue in fiscal 2006, said Chief Financial Officer Michael Freed.

"We've gotten in the habit of publishing this because of the commitment we made and the consent decree (allowing Butterworth and Blodgett hospitals to merge into Spectrum Health) back in 1997," Freed said.

In California, hospitals are required to issue annual community benefit statements, according to Healthcare Financial Management Association. However, in most other cases they are voluntary.         

Benefit Values

FY 2001: $36.1 million

FY 2002: $40.6 million

FY 2003: $50.6 million

FY 2004: $72 million

FY 2005: $87.7 million

FY 2006: $100.7 million

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