Mesa tax would help hospitals with rising costs

Expenses for uninsured increasing

It’s not the kind of sign that’s welcome in a city staking much of its economic future on health care.

In stark red letters, the words “hospital closed” mark what was, until several weeks ago, Arizona Regional Medical Center in Mesa.

The hospital on the fringe of Mesa’s downtown folded in April, hemorrhaging red ink because too many of its patients could not pay their bills.

Now, the City Council is on the verge of approving a funding mechanism to help Mesa’s other hospitals recover some of those costs.

It’s called an “access to care” tax. But it’s a tax in name only, and only hospitals will pay.

After Monday’s expected council approval, Mesa’s hospitals will pay the city $461.91 for every patient they discharge through Dec. 31. Mesa will turn the money over to the Arizona Health Care Cost Containment System, and that will make the participating hospitals eligible for federal reimbursement equal to twice the amount of the tax they paid.

The money will be applied toward the multimillion-dollar gap between what Mesa’s hospitals shell out for patient care and what they receive.

It’s a short-term and limited answer to the complex issues facing the nation’s health-care system and a reflection of Arizona’s own problems in that area.

Phoenix became the first Arizona city to approve the program late last year, and it received federal approval to implement it several weeks ago.

Jason Bezozo, government relations director for Banner Health, explained the issue to the Mesa City Council in a recent study session.

The problem traces back to 2011, when the state Legislature, coping with an epic reces- sion, reduced the number of childless adults eligible for AHCCCS, Bezozo said. Since then, the 230,000 eligible childless adults have been winnowed to fewer than 80,000.

“As people have fallen off the program, typically when they need health-care services they show up at the hospital emergency department because there is no other place to go,” Bezozo said.

One result: Before the AHCCCS cuts, expenses for care that were not reimbursed represented about 3.5 percent of Arizona hospitals’ total revenue; that has increased to about 7 percent.

“We’ve seen a doubling of uncompensated care at our hospitals,” Bezozo said.

In Mesa alone, the bills are staggering.

The city’s hospitals wrote off about $40 million in such costs in 2009, Bezozo said. That rose to $80.7 million in 2012 and is projected to increase to $100 million this year. Those numbers don’t include what Bezozo called “underpayments” from Medicare and Medicaid — reimbursements that don’t cover a hospital’s expenses.

That led Mayor Scott Smith, who has closely followed the problems at Arizona Regional, to ask Bezozo rhetorically, “Why do hospitals let people in who won’t pay?”

The answer, Bezozo said, lies within federal law, which “re- quires hospitals to treat and stabilize all patients who come into our emergency department. We can’t turn them away regardless of their citizenship or their ability to pay.”

Further, he said, not-forprofit hospitals “want to do that for the community, and I think the community expects us to be there 24/7 to help patients.”

While most hospitals expect some charity cases, he said the burden has become too onerous in recent years.

The Legislature authorized the “access to care” tax when it trimmed eligibility for AHCCCS in 2011, but Mesa’s implementation came too late for Arizona Regional Medical Center.

Smith said during the council discussion that debates over health care too often follow ideological lines.

“They talk about what could be an impact of the cutback in health care and the onslaught of reduced payments and things like that,” he said. Mentioning the closed hospital a few blocks from City Hall, he said, “I hope people realize we have an example. This isn’t just a theoretical thing for us any more.”

The hospital was created in 2008 in a building occupied for 43 years by Mesa General Hospital.

Mesa General closed when its parent company, Iasis Healthcare, opened a large, new hospital in east Mesa in 2007. The closure hit west Mesa especially hard because the neighborhood had also lost Banner MesaMedicalCenter—formerly Mesa Lutheran Hospital — that year.

Arizona Regional struggled during its five years of existence, Smith told

because a “very large proportion of their clientele is either uninsured or AHCCCSMedicaid insured.”

Reimbursements from those government programs, Smith said, don’t always cover a hospital’s full costs.

“The financial portion of our health-care system is messed up,” Smith said. “We have a huge segment of our society who are unwilling or incapable of paying.”

The hospital also suffered a grievous blow last year when Dr. Robert Siegel, who orchestrated its rebirth in 2008, died in a plane crash at age 63.

Smith said Siegel had been working on strategies to help the hospital survive, but there is no guarantee the closure would not have happened in any event.

The closest hospital to the neighborhood served by Arizona Regional is Banner Desert Medical Center at U.S. 60 and Dobson Road, five miles away.

Smith, who has made health care a key pillar in Mesa’s economic-development strategy, said the city is talking with parties who maybeinterested in reopening the old hospital.