Wealthy Health Chain Closing 2 Hospitals

Hospital waiting area. (Public Domain)

Another health care chain is closing hospitals in Wisconsin and Republican legislators are considering using taxpayer dollars to help assure emergency care continues. But their opposition to accepting federal dollars to expand Medicaid helped cause the problem, Democrats charge.

At stake are two hospitals that have been key providers of health care in western Wisconsin for 135 years. The Illinois-based Hospital Sisters Health System (HSHS) has announced it will close the HSHS Sacred Heart Hospital in Eau Claire, founded in 1889, and HSHS St. Joseph’s Hospital in Chippewa Falls, founded in 1885, by April or sooner. The closures could have a devastating impact on health care in western Wisconsin, state officials fear.

These were hospitals long associated with the Catholic Church and founded by the Hospital Sisters of the Third Order of St. Francis, a religious community dedicated to the service of the sick and needy. But somewhere along the line the charitable organization has turned into a big money operation run by millionaire executives who seek to maximize revenue.

HSHS is relatively small compared to the big players in health care like Ascension Wisconsin, with just 15 hospitals in Illinois and Wisconsin. Yet its most recent federal 990 tax form, for the 2021-2022 year, shows it had amassed more than $221 million in investments, including $148 million in publicly traded securities, $64 million in program-related investments and $9 million in savings and temporary investments.

But that’s not all its money. It also runs the Hospital Sisters of St. Francis Foundation, which solicits charitable donations to help its hospitals stay “strong in our commitment to bring life-giving and life-saving health care to people in need.” In the 2021-22 fiscal year it raised $14.9 million in contributions, gifts and grants. That helped further beef up its huge pile of investments, which totaled more than $105 million in publicly traded securities, its tax form shows. All told the two organizations have amassed $326 million in savings and investments.

And it can afford to offer lavish compensation to its top executives. Six collected more than a million dollars in the most recent year reported, including $2.6 million for a former president and CEO, $1.56 million for a former division CEO, $1.5 million for a vice-president and chief physician, $1.25 million for the CEO of Med Group, $1.18 million for the Chief Financial Officer and 1.18 million for the president and CEO of its Wisconsin hospitals.

You can also add to that list of millionaires the system’s new top dog, President and CEO Damond Boatwright, who took over in July that year and earned $778,000 for about a half year of work.

Yet in announcing the closure of the two hospitals, HSHS blamed “long-running operational and financial stresses,” CBS News reported.

Wisconsin Hospital Association President Eric Borgerding has warned that hospitals in this state face a squeeze on costs, as Steve Walters reported for Urban Milwaukee “Each day our hospitals provide care to over 1.5 million individuals enrolled in the state Medicaid program, despite receiving roughly 65-cents for $1 it costs to treat a patient. Consequently, they endure an annual loss of $1.6 billion,” Borgerding said.

WHA reports show that HSHS Sacred Heart Hospital in Eau Claire got 50% of its patient income from Medicare, and 15% from Medicaid, in 2022, while HSHS St. Joseph’s Hospital in Chippewa Falls got 44% from Medicare and 21% from Medicaid.

But that hasn’t stopped the HSHS system from enjoying big profits year after year. Its annual federal tax forms show it had a net income of at least $13 million in 2022, $50 million in 2021, $36 million in 2020, $16 million in 2019, $27 million in 2018 and $35 million in 2017. While the two hospitals closing may not be profitable (neither HSHS nor the state association offered any annual budget figures for them), the system has a whole seems to be very well funded.

Nor are the two hospitals providing much uncompensated care. The recent, 2022 report on this by the WHA shows just 1.7% of Sacred Heart’s gross patient revenue went for charity care or bad debt, while the figure for St. Joseph’s was 1.8%. This was slightly higher than the state average of 1.6% and well below the state’s top hospital at 12.7%.

As for Medicaid payments, if those are a problem for the two hospitals, the solution would be to accept federal expansion of Medicaid, as 40 states (including many heavily Republican states) have done, Democrats have argued. “Not having it helped cause what happened, Gov. Tony Evers has said. “If we had Medicaid expansion, they would be able to pay more to the hospitals for services to people that are part of that program.”

But Republican legislators continue to resist this, which has also cost taxpayers billions: Wisconsin would have seen an additional $2.8 billion in savings between 2013 and 2019 had it accepted full Medicaid expansion, according to the Legislative Fiscal Bureau, and continued savings in the years since then.

Instead GOP legislators are pushing a plan that offers a tiny bandaid: $15 million for grants to fund health systems that commit to providing hospital emergency department services in the Eau Claire and Chippewa Falls areas, as WPR reported.

The plan suggests Republicans have no conception of the massive scale of health care organizations in Wisconsin, which generated $74.3 billion in revenue in 2021. That $15 million amounts to one-fifth of 1% of what’s spent for health care at Wisconsin’s hospitals.

Wisconsin’s Democratic U.S. Senator Tammy Baldwin had a more sensible idea, releasing a statement calling on HSHS to delay closures to the two hospitals until it has time to “consider, in good faith, offers to purchase your facilities and equipment to support the continuation of health care services in the region for the patient populations served by Sacred Heart and St. Joseph’s Hospitals.”

That would seem to be the least the well-paid executives of HSHS could do.