Spectrum 111 million spent on community benefits

October 6, 2008
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Spectrum Health says it was shortchanged by Medicare and Medicaid to the tune of $84 million in the 2008 fiscal year, compared to zero in 1997.

That amount is part of the $111 million Grand Rapids’ largest health system last week reported it spent on community benefits for the fiscal year that ended in June.

“What’s most stunning is back at the time of the merger, those losses were zero. Now we have this ongoing and growing tax on business in West Michigan,” said Spectrum Health CFO Mike Freed, referring to hospital charges that increase and health insurance premiums that rise to cover the losses.

“We’re also a huge insurer of Medicaid through Priority Health,” he added. “We are not only making the investments to take care of people in the hospital, we try to reduce that cost as much as possible by getting them access to better health care.”

The hospital system owns about 94 percent of Grand Rapids-based health insurer Priority Health, which has a Medicaid HMO that serves 51,176 in eight West Michigan counties.

Spectrum Health spent $27 million for community outreach and health improvement programs. That includes $6 million for the Healthier Communities program, which Spectrum agreed to provide as part of a litigation settlement at the time of the merger that created the health system in 1997. Healthier Communities served 182,000 people in fiscal 2008 with programs designed to remove barriers to care, collaborate with nonprofits, raise awareness of community health issues and develop healthier lifestyles.

“As a not-for-profit organization, we support services that are needed in the region, such as our air ambulance service, Aero Med, as well as community outreach programs and clinics,” President & CEO Richard C. Breon said.

In 1997, Spectrum Health spent $15.5 million on community benefits and did not experience shortfalls in government programs. Today Medicaid pays 74 cents for each dollar of care for the needy, and Medicare pays 94 cents for each dollar of care provided to the elderly, the hospital system reported.

Spectrum Health has seven hospitals and 140 locations for various services.

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