“In economics, a monopoly exists when a specific individual or an enterprise has sufficient control over a particular product or service to determine significantly the terms on which other individuals shall have access to it.”  - Wikipedia

Lancaster General Health has such a position in the Lancaster County market place, and through acquisitions and mergers is continuously expanding its control.   For example, just recently it acquired the Heart Group and has opened three Urgent Care clinics.

In other markets, insurance companies are able to negotiate competitive rates since they have a choice of two or three hospitals.  However, here in Lancaster, most need to contract with LGH in order to sell policies.

The higher prices they must pay are a major reason for LGH’s extraordinary profitability, continuously among the highest in the state.   In a typical year, LGH earns well over a $100 million dollars.

Consequently, those seeking health insurance in Lancaster County are charged more by the companies to compensate the insurer for the higher cost of providing care at LGH.  So the difference between what the cost of health care insurance would have been in a normal competitive situation and what we pay is comparable to a tax…   a tax imposed by and benefiting LGH.

Since LGH is a Public Charity, this would not necessarily be a bad thing were the excess earnings were distributed in a manner that would best serve the community.  But the community has no say whatsoever concerning how LGH spends its profits.  There is only one public meeting a year which is not widely publicized.  A LGH grants were only 1.5% of profits in 2007 and 6% in 2008.

Furthermore, the trustees are self perpetuating, with one board nominating and electing the next.

Compounding the situation is the propaganda and distortions that emanate through LGH’s public relations department and the stone wall erected by  LGH between itself  and the media…all media!

It is time for the county, city, school district and the local media to begin to hold LGH to account.  Instead of devoting the hospital’s resources to empire building and lavish compensations and perks, LGH should be directing a significant portion of its earnings towards benefiting the community at large, especially in matters of public health and education.

A place for LGH to start would be to approve the Urban League’s request for funds to operate a first rate syringe exchange in Lancaster.   In addition to reducing the spread of social diseases, syringe exchanges test clients for HIV / AIDS, provide counseling, and help those seriously addicted to obtain treatment.   They are as important in protecting our loved ones as are the police and fire fighters.

Another worthy cause would be to help support the libraries throughout the county.  They are underfunded, and yet serve several thousand visitors each day.

LGH is a ‘Public Charity.’    Yet the trustees and administrators treat it as their fiefdom.   By introducing transparency and a sense of responsibility towards the greater community, LGH can reach the same high level in Public Charity responsibility as it has achieved in health care.

Second in a series concerning LGH’s 2008 Federal 990 Report

In analyzing public charity Lancaster General Hospital’s 2008 Federal 990 report, entitled “Return of Organization Exempt From Income Tax,” NewsLanc notes the top ten LGH executives on average received a 60% increase in “Base Compensation.” When NewsLanc discards data concerning an executive who may have been part time in 2007, the percentage increase is 50%.

These increases by a ‘Public Charity’ took place during the severest year of recession since the Great Depression, a time according to national statistics when, there was virtually no increase in average wages.

LGH’s President Thomas Beeman’s “Total Compensation” package amounted to $1,347,309 for the year.  His “Base Compensation” increased from $530,298 to $605,676, an increase in “Base Compensation” of 14%.

Executive Vice President Jan Bergen’s “Total Compensation” package amounted to $681, 607 for the year.  Her “Base Compensation” increased from $256,333 to $351,046, an increase in “Base Compensation” of 37%.

Executive Vice President Marion McGowan’s “Total Compensation” package amounted to $726,027 for the year.  His “Base Compensation” increased from $205,043 to $423,990, an increase in “Base Compensation” of 107%.

Meanwhile, Lancaster General Hospital’s profit, defined on the form as “Revenue less expenses” dropped 30% from $113,326,709 in 2007 to $78,844,643.  Despite the decline, it is still one of the highest profits of any hospital in the state.

On the positive side, “Grants” increased from $1,183,464 or one percent of earnings in 2007 to $6,655,525 or 8%.

This still left LGH with $113,326,709 for 2007 and $78,844,643 for 2008 after grants and other expenses.

These huge profits in large part result from LGH’s market dominance and ability to charge insurance companies higher net rates.    In turn, the insurance companies charge county residents higher premiums than would be otherwise.

Since the media and public are banned from all Board of Trustee meetings except for the show case “Annual Meeting”, the self perpetuating trustees are shielded from transparency and public accountability.

(Editor’s note:   LGH’s Communication Department and president were provided this article a week ago and invited to suggest corrections or make comments.   There were none.)

The series next will address LGH’s recent purchase of the Heart Group.

LGH:  Your story “LGH 990 Report: A modest improvement, a huge misdirection” contains multiple errors. The most glaring one involves the cost of care we provide Medical Assistance.

Last year, the actual cost of providing healthcare to Medical Assistance (or Medicaid) patients was $49 million higher than what the government paid us for that care. The “Medical Assistance Unpaid Cost of Care” is based on the actual cost to provide that care. It is not based on charges.

We are not, as you say, “treating the difference between the seldom charged highest price and what they are actually paid as a “community benefit.” Again: That $49 million figure is based on the actual cost to provide care.

NEWSLANC: Thank you for finally responding to the question we posed a week before publication.  We will make appropriate revisions.   However the thrusts of our assertions remain the same..

The $49 million you claim as “community benefits” are the normal services and expenses borne by hospitals as part of their mandate.

Furthermore, they are ‘ordinary expenses’, so they do not come out of LGH’s $78 million in profits.

Moreover,  LGH provides a lower level of unpaid aid than most hospitals according to state reports.

The NewsLanc 2008 study based on State Health Department records established:

“Uncompensated Care (bad debt + charity) for LGH is 1.5% of Net Patient Revenue.   For the Region, 2.8%.   For the State, 2.3%.   The less bad debt, the greater profitability.”

“LGH’s Charitable Care in 2007 amounted to 0.5% of Net Patient Revenue. The State was 0.9% (Regional data was unavailable.) Note that LGH only provides about half as much charitable care as do hospitals throughout the state. The less Charitable Care, the greater profitability.”

LGH: Furthermore, all items we list as “community benefit” are based on categories, definitions and reporting guidelines outlined in “Guidelines and Standard Definitions for the Community” published by the Catholic Health Association of the United States and VHA Inc. Thank you

NEWSLANC: The terms were used to give the impression of an abundance of charity on the part of LGH which is contrary to fact, despite an improvement from the prior year.   We call that spin, obfuscation and propaganda.

Our contention is that LGH is earning exceptionally large profits as a result of its local market dominance. Since LGH is a ‘public charity’, the earnings which indirectly come from the public, a reasonable amount should be used for the public health, the social safety network, and education.  Instead, LGH’s contribution to worthy causes are relatively small.  Furthermore, its self perpetuating board of trustees does not permit the public to attend any meetings except one annually and shields from public its use of its vast earnings as it enhances its market dominence.

Below is the NewsLanc report from 2008 which was never challenged by LGH or others at the time or since:

Report #1: Reasons for LGH’s exceptional profits

Posted on July 30th, 2008

NewsLanc borrowed the services of Douglas McVay, Director of Research with an affiliated non-profit organization, to determine what circumstances have enabled Lancaster General Hospital (LGH) to earn the second highest profits in the State, amounting to $136 million in fiscal year 2007. Findings are not meant to detract from the efficiency and competence of LGH and the high quality service they provide.

McVay has examined and correlated information provided from Federal and State sources, LGH itself, and other publications deemed reliable. The research indicates special circumstances that are unique to our region plus LGH’s strong market position contribute substantially to LGH’s remarkable profitability.

Though LGH’s representative was cooperative at the outset, he became less forthcoming and then ceased to respond to inquiries as McVay’s inquiries became more knowledgeable and pertinent.

Therefore, the following factors for profitability are not a definitive list, but only those supported by current data on hand.

1) Proportion of LGH’s revenues from Medicare is 30%. For the region of which LGH is a part, 34%. For the state, 37%. Medicare pays a set fee which is considerably lower than private insurers and may not always cover the full costs of services. By law, Medicare rates are the lowest which hospitals are allowed to charge. The fewer Medicare patients, the greater profitability.

2) Proportion of LGH’s revenue from Medicaid is: 5%. For the region, 7%. For the State, 11%. Reports suggest that reimbursement for Medicaid is similar to Medicare. The fewer Medicaid patients, the greater profitability.

3) Uncompensated Care (bad debt + charity) for LGH is 1.5% of Net Patient Revenue. For the Region, 2.8%. For the State, 2.3%. The less bad debt, the greater profitability.

4) LGH’s Charitable Care in 2007 amounted to 0.5% of Net Patient Revenue. The State was 0.9% (Regional data was unavailable.) Note that LGH only provides about half as much charitable care as do hospitals throughout the state. The less Charitable Care, the greater profitability.

5) Percentage of “Charges” collected for LGH is: 50%; for the Region, 46%; for the State, 27%. Although available information is limited in this area, a comparison of LGH charges for ten medical procedures with a sample of hospitals from across the state indicated that LGH charges were about average. (Note: The “Charge” is a virtually mythical figure from which there are various discounts depending upon who is the payer.) The higher the proportion of Charges collected, the greater the profitability.

6) LGH’s program provides Amish and other cash payers with a standard 25% discount. According to the Wall Street Journal, Heart of Lancaster “agreed to discounts of up to 40% off its top rates” for the Amish. Lancaster County’s population is approximately 5% Amish. The less the discount to the Amish and cash paying patients, the greater the profitability.

(First in a new series concerning Lancaster General Health 2009 federal “Return of Organization Exempt From Income Tax.”)

Editor’s note.  The below has been slightly revised to take into consideration information requested from Lancaster General Hospital a week before publication but only provided in a letter after publication.

Accompanying the copy of Lancaster General Hospital’s Federal  990 Report for 2009 came a  news release entitled “Lancaster General Health Community Benefit Financial Summary, Fiscal Year 2009” that purports that “Total Community Benefit Support” amounted to “$73,645,000.”

However, according to its Federal 990 Report, “Description of Grants and Other Assistance to Individuals in the United States” amounted to $6,655,525, a respectable and welcome increase from the paltry $1,183,464 of 2008,and an increase in contributions from one percent of profits to about 8.5%.

(Profits in 2008 were $113,326,709 and in 2009 were $78,844,643, still among the highest in the state.  Not bad for a Public Charity during a recession year!)

So how does LGH justify exaggerating its “Community Benefits” eleven times?

They are claiming that $49,731,000 in “unpaid cost of care”, normal expenses borne by all hospitals as part of their mandate,  as a “benefit to the community.”

This is comparable to the airline industry treating free meals and baggage service  as “benefits to the community.” Or hoteliers, department stores and super markets claiming they are contributing “benefits to the community” every time they reduce a price or conduct a sale!

Another example is LGH’s treating $7,022,000 for “Un & Under insured Unpaid Cost of Care” also as “community benefit”.    Put simply, bad debt is treated as charity!    If this is proper, we should thank the owners of millions of non-performing home mortgages for their great philanthropy!

We ask ourselves “Why does LGH engage in such deception?” The answer may be they count on the reluctance of the local media to challenge such egregious propaganda, although a careful reading of the recent Sunday News article provides some hints.

Moreover, LGH has become so spoiled by the docility of the Lancaster community that they take affront and refuse to respond to media inquiries.  This isn’t just NewsLanc’s experience.

Next week:   Lavish pay increases for executives despite the Great Recession.

By and large, the Sunday News front page article “Billion-dollar baby” about  Lancaster General Health was very gratifying.  It included much of the same information that NewsLanc has been reporting over the past couple of years.  It also included attempts by LGH’s executives to put the best spin they could on information that suggests that LGH is more interested in rewarding its executives and personnel and  irrational growth than fulfilling its responsibilities  as a Public Charity to the community.

We encourage that careful reading of Gil Smart’s report.   Until LGH makes public its past due 2008 / 2009 federal return, we will not be able to make a definitive evaluation of LGH’s representations.  However, there are a few that  minimally require further explanation  and likely condemnation:

“Just two years ago, Lancaster General Hospital recorded record profits of $138 million. Last year’s profit of $78.8 million represented a 42 percent fall from that summit.” Maybe yes, maybe no.   According to a recent Intelligencer Journal New Era article, LGH added  over ten million to its employee pension fund to make up for losses due to the stock market plunge.   If those tens of million (the exact amount was not specified) are added to the $78 million in profit, LGH may have only suffered only a 10% rather than a 30% drop from the 2007 /2008 fiscal year’s  earnings.   This while most ‘for profit’ firms were struggling to even remain profitable!

“’We have taken a disproportionate amount of responsibility for the medically underserved in this community,” said LGH Executive Vice President Jan Bergen. Medical assistance patients account for 15 percent of patient days, but just 4 percent of revenues. ‘We get paid substantially less than cost,’ said Bergen” .  This is disingenuous.   All hospitals absorb some of the costs of Medicaid, but LGH’share is among the lowest as a percentage of gross revenue  throughout the state.  The paucity of such aid contributes to LGH’s extraordinary profit margin, more than double the state wide average.  Furthermore, those expenses are before, not after, the $78 million in profits.

“The system employs 3,906 full-time workers and 3,215 part-time workers, said hospital spokesman John Lines. And one reason Lancaster General Hospital’s profit fell last year is that expenditures on salaries, other compensation and employee benefits soared 23 percent, to $385 million.” Wow!  No wonder profits were down when this so called Public Charity is providing a 23% increase in a single year  in “expenditures on salaries, other compensation and employee benefits….” Talk about excesses on Wall Street!

And for sheer silliness, the article ends with a quote from Beeman as follows: “”It’s as if [hospitals] are at the head of the Colorado River,” Beeman said. “We’re all in rafts, some of us have oars and some of us don’t.  Some of us just aren’t going to make it.” With his $1.3 annual compensation, he sure is!

NewsLanc is not critical of the levels of compensation of executives at Lancaster General Health (LGH).  The hospital operates in what seems to be an exemplary manner and is a source of much pride to our community.  The executives appear to be doing their jobs well and are entitled to compensation comparable to executives in similar positions elsewhere.  That being said:

Much of LGH’s profitability is due to LGH’s market dominance and resulting ability to obtain higher payments directly from insurance companies and indirectly from the insured—the Lancaster County public.  NewsLanc’s issue is the failure of this ‘Public Charity’, one of the most profitable hospitals in the state, to spare more than a measly 1% of its “excess” (profits) with the community .

In stark contrasts to non-profit LGH’s “grants” of only a meager one million out of profits of $113 million,  for fiscal year July 2007 through June 2008, President/CEO Tom Beeman alone earned $1,280,262. In other words, Beeman received $96,798 more than the total grant program!

Executive Vice President /Chief Operating Officer Marion McGowan was paid $793,629.  Executive Vice President Jan Bergen received $614,320. Both are paid more than half the amount of the grant program.  Many other executives receive earnings ranging from the low to mid- six figures.

One cannot tell from LGH’s Income Tax Filing to what use LGH is putting its windfall profits.   What is clear is that some of this money would be better spent funding a syringe exchange and providing a daily clinic for the treatment of over 5,000 heroin addicts, thus helping them to return to productive citizens and curtailing the rate of the spread of various social diseases , especially HIV/AIDS , through sexual contact.

Furthermore, $20 million instead of one million should be allocated for community betterment in education, to shelter the families of homeless children, provide dental treatment for the poor, and other social safety-net services.   Over $80 million would still be available for facility enlargement, modernization, and expansion.

Medical professionals are bright people and they clearly know more about treating sickness than the rest of us.  However, that does not make them omniscient stewards of how the public’s wealth should be spent.  Instead of hiding behind an iron curtain of propaganda and silence, it is time for LGH to seek transparency in its dealings and to candidly communicate with and, above all, engage in a dialogue with the public.

A veil of secrecy surrounds the dealings of Lancaster General Health. However, NewsLanc was able to access LGH’s 2007 well-concealed tax return, which included a list of all of its ‘charitable’ donations.

According to a NewsLanc article regarding LGH’s vast “Excess” (profits) in 2007 ($113,326,709), one of the highest in the state, only one percent ($1,183,464) went to charitable donations, one of the lowest rates in the state.

The stated mission of LGH, a ‘Public Charity’, is “To advance the health and well-being of the communities we serve…”

There were approximately 155 separate donations, which included some strange items.

Most notable is that $117,000, 10% of the total, went to the private Franklin & Marshall College.  John Fry, F&M’s president, is a member of LGH’s board.

The Congressional Black Caucus received $13,500. Why would a political contribution be treated as charity?

There is a thousand dollars for the private Lancaster Country Day School, but only $560 to the McCaskey Alumni Association and nothing else for the School District of Lancaster. (There is also $250 for the Penn Manor High School post prom.)

The Lancaster Alliance receives $23,583. (Its prime effort over the past couple of years is to bring back a streetcar system to downtown.)

There was $6,564 for Willow Valley Resort.

Particularly notable for its absence is the lack of any contribution to public libraries, especially the downtown Lancaster Public Library.

Recently LGH has refused to provide funding to continue a syringe exchange in Lancaster, despite syringe sale recently being deregulated. Also, it only provides a clinic for the treatment of heroin addiction one afternoon a week, treating a only handful out of Lancaster’s 5,000 to 10,000 addicts—at least a thousand of which seek help. Both are core public health functions.

NewsLanc is eager for LGH to meet its legal obligation to post its 2008 tax return. In fact, we have requested a copy from LGH, but, as has so often been the case of the local media, have received no response. LGH is only interested in ‘puff pieces’, not journalism.

On page 1 of it’s 2007 Form 990, Return of Organization Exempt from Income Taxes, Lancaster General Hospital reported Excess for the year” as $113,326,709.  This was the excess of “Total Revenues” over “Total Expenses.”

LGH reported on page 2 of the same Form 990 that 2007 “Expenses” included a total of $1,183,464 in “Grants paid from donor advised funds.” This represents a mere one percent of its “excess” or, for a regular corporation, what would be called ‘profits’.

In an exchange of letters in March, NewsLanc publisher wrote LGH president Tom Beeman:  “LGH, a non-profit ‘public charity’ is one of the least charitable hospitals in the state. We know not what it is doing with its vast earnings, but we do know they are not being directed adequately towards local public health and education.”

Beeman’s response was “This statement is categorically false. Our contributions to our community in charity care, free healthcare services, financial assistance and cash donations to government and school districts exceed other hospitals in our region.”

Note Beeman switches the subject from grants to “local public health and education” to include extraneous items, and from a comparison with hospitals throughout the state to a comparison with regional institutions, some of which are struggling to survive due to LGH’s market dominance.

LGH’s paltry contribution of one percent confirms state statistics indicating that LGH is one of the lowest contributors to charitable causes. So who is being “categorically false?”

NewsLanc brought the above information to to the attention of John Lines, Director of Communications for LGH, over a week ago and asked for a comment.   Neither Lines nor Beeman have responded.

Although there are some very community minded organizations out there, it is sad to note the practice over recent years of CEO’s of several of Lancaster’s largest, most prideful institutions of being disingenuous in their actions and statements.

LGH is a “Public Charity.”   Much of it profits is due to market dominance, which means the insurance companies have to pay them more and the Lancaster public pays more for insurance.  LGH’s profits belong to the public.  Other vital public institutions for the purpose of public health and education deserve more than the barest crumbs from LGH’s table.

March 24, 2010

To: Thomas E. Beeman, President, Lancaster General Health

From: Robert E. Field, Publisher, NewsLanc

Dear Tom:

Below please find excerpts from your letter to me of March 16^th along with our related questions and comments.

NewsLanc awaits response to the following requests:

“Kindly provide us with a list of the county-wide organizations to which LGH has  provided financial support to during 2007,  2008 and 2009, including the amounts LGH has donated. (Just listing names without the amounts serves little if any purpose, since an important issue has to do with how much LGH contributes compared to how much LGH earns.) If you do not have information from all of these years readily available, please send us what you have. If possible, follow up with the balance.”

“We are seeking LGH’s balance sheet and statement of cash flow for the past three reported years.”

Cordially,

Robert

1) “You wrote: Because LGH can charge more to insurance companies, insurers in turn charge more to Lancastrian for coverage. So LGH’s huge profits are coming from our pockets. 

We can’t answer for what insurers charge their customers. What we can say however is our charges are comparable to other Lancaster County hospitals, and in many cases are lower than our two for-profit hospitals…. According to the Pennsylvania Health Care Cost Containment Council’s Hospital Performance Report 2008, Lancaster General Hospital’s charges were lower than Lancaster Regional Medical Center in 18 out of 27 procedures.”

NEWSLANC: The state report to which you refer lists the average prices which hospitals place on their services for treating a few dozen more or less typical procedures. Are you aware that the report cautions that the figures are not necessarily what patients actually pay?

Isn’t what patients actually pay determined by their insurance coverage, which is worked out between the healthcare provider—in this case LGH—and the insurance companies? While LGH is indeed not responsible for what the insurance companies charge, LGH does work with the insurance companies in determining that bottom line figure?

Doesn’t LGH’s relative market dominance enable it to negotiate higher rates for reimbursements than would otherwise be the case?

Unlike in cities where there are two or more hospitals of relatively equal size from which to choose, would insurance companies or individuals be likely to purchase insurance protection that did not provide coverage at LGH?

Don’t the insurance companies in turn pass on their expenses in pricing their policies?

2) Furthermore, we have no desire to “crowd out” Ephrata Community Hospital. Lancaster General Health and Ephrata Community Hospital continue to look for ways to partner in ensuring healthcare services are available in one of the fastest growing regions of our community.

NEWSLANC: Kindly provide us with evidence that the management or board of trustees of Ephrata Community Hospital has expressed an interest in being a “partner” of LGH in the location that LGH seeks to develop within three miles of the Ephrata hospital.

Our article of September 16, 2009 headed “Ephrata Hospital already has plans to handle population growth” reports “According to Ephrata Community Hospital (ECH) spokeswoman Joanne Eshelman, ‘We regularly evaluate our facility needs and have a plan in place to further develop our main hospital campus to meet the needs of this community’.”

3) You wrote: LGH, a non-profit ‘public charity’ is one of the least charitable hospitals in the state!   We know not what it is doing with its vast earnings, but we do know they are not being directed adequately towards local public health and education.

This statement is categorically false. Our contributions to our community in charity care, free healthcare services, financial assistance and cash donations to government and school districts exceed other hospitals in our region

NEWSLANC: By “region” are you referring to “Region 5” which encompasses York, Lebanon and Lancaster Counties?

Are you denying: LGH has a much lower ratio of charity care within its uncompensated care total than the state average ($50 million unreimbursed plus $7 million charity = $57 million, of which charity was 12%); LGH’s percentage of its total revenue that went to uncompensated care is one of the lowest in the state and second lowest in this region (1.55% of revenue in FY2008, only barely above Heart of Lancaster at 1.52%); State statistics show LGH’s level of charity about half of the average of hospitals statewide;  LGH has one of the highest positive operating margins and highest total margins of any hospital organization in the state of PA, in addition to some of the highest net patient revenue figures?

4) Everything Lancaster General Health earns is reinvested back into our system, unlike for-profit hospital chains that pay dividends to investors, or use profits to acquire hospitals in far-away states. Our dollars are reinvested locally into our facilities, people and in new technology to ensure high-quality healthcare is available now and in the future. For example, hospitals of our size and scope require approximately $50 million annually to replace capital equipment throughout our health system, and federal mandates to establish an electronic medical record at LG Health will require us to spend more than $130 million over the next three years.

NEWSLANC: We note that your argument for non-profit hospitals is similar to the case “liberals” make  for covering the entire population under single payer health insurance, such as an expanded MediCare.

Isn’t the $50 million expended for capital improvements annually amortized over the years, and thus roughly represented as an equal amount of “expenses” on your operating statement each year? NewsLanc has not raised a question of the efficiency of LGH operations. Rather NewsLanc questions why LGH does not spend more of its $110 million in “surplus” or “profits” for public health and educational purposes. We await your response to our core concern.

5) Certainly, if we did not place a priority in getting the uninsured enrolled in Medicaid, our charity care number would be much higher.  Enrolling patients in Medicaid is to the patient’s advantage, as it assures them access to medications, physician visits, and other critical services they may require outside of hospital settings.

NEWSLANC: Are you suggesting the other hospitals throughout the state are not seeking compensation for those who qualify for Medicaid but are not enrolled?

6) A great way to start learning would be to download our many Community Benefit Reports at http://bit.ly/cKKcJw

NEWSLANC: The URL site does not provide dollar amounts of aid to local organizations or the hospital’s own public health efforts. We requested that information last weekend and have not yet received a response. 

7) We use national, state and local health data, such as mortality and morbidity data, risk factor surveys, Healthy People 2020 goals, and many others, to objectively identify our community’s actual health priorities. Those priorities are: Increasing healthy weight management , Reducing tobacco use , Improving access to primary care for the growing number of medically underserved throughout Lancaster County.

NEWSLANC: Rick Kastner, Executive Director of the Lancaster County Drug and Alcohol Commission, estimates there are 5,000 to 10,000 heroin addicts in the county.

How do you justify LGH’s stated refusal to donate money to maintain a syringe exchange, even now that the sale of syringes has recently been deregulated? Doesn’t prevention of the spread of HIV/AIDS and other diseases reduce the need for LGH services, especially since the type of treatment that you represent is under compensated through Medicaid? Don’t syringe exchanges refer patients for treatment, thus helping to reduce the number of addicts and restore them as productive citizens and caring family members?

How do you justify LGH maintaining a clinic for medical treatment of heroin addicts only one afternoon a week with only one physician present?

Would not those treated qualify for Medicare or Medicaid?   

8 ) You wrote: There is total lack of transparency, with media and public being banned from all LGH trustee and committee meetings except for the annual public meeting, and the one goes unnoted and unreported by the Lancaster press. (It was last November, but not a word was printed about it before or after.)

This is also untrue. Our financial performance, clinical outcomes, charges, and infection rates are publicly reported on a regular basis by several independent agencies and via our website. We publicly issue two Community Benefit Reports and send monthly Community Benefit Updates via email to more than 9,000 people to communicate our efforts in improving the health and well-being of Lancaster County. Furthermore, we are regularly featured by the local print and electronic media, which write both positive and negative stories. As for the LGH Trustee meeting, it was advertised in Lancaster Newspapers and members of the public attended.

Aren’t many of these reports required by law?

More importantly, what relevance does information released by LGH have to do with a public dialog engendered by open board and committee meetings? How can LGH be critiqued if it only holds one meeting a year (out of hundreds) open to the media and general public?

Are you suggesting that “monthly Community Benefit Updates”, which some would refer to as public relations propaganda, are adequate to take the place of public discourse?

9) You wrote: Finally, management at LGH is totally self perpetuating, with current trustees choosing future ones. There is no public input.

Management isn’t governance. At LG Health, management serves at the pleasure of our community-based Board of Trustees. Our Board of Trustees is “the public.” The board is comprised of volunteer civic and business leaders from our community. They help guide the creation of our health system’s vision and strategy, which is carried out by our leadership team and our more than 7,400 employees.

The Board of Trustees gains perspective and additional public input through several ad hoc committees, which include dozens of community members from throughout the county. As is the case with other public charities, our Board of Trustees regularly selects members of the community to serve on the board.

Are not members of the Board of Trustees and “ad hoc committees” selected by LGH rather than appointed by government officials, local social service organizations, or elected by the public? How is this not “self perpetuating?”

3/16/2010 (Editor’s note: Please see “NewsLanc’s response.“)

Robert,

I am troubled by Sunday’s post on your website noting that, with John Fry’s eventual departure for Drexel University, you now have “only one more target in mind: Lancaster General Health.” … I’d like to correct the errors found in Sunday’s post:

You wrote: Because LGH can charge more to insurance companies, insurers in turn charge more to Lancastrians for coverage. So LGH’s huge profits are coming from our pockets.

We can’t answer for what insurers charge their customers. What we can say however is our charges are comparable to other Lancaster County hospitals, and in many cases are lower than our two for-profit hospitals. According to the Pennsylvania Health Care Cost Containment Council’s Hospital Performance Report 2008, Lancaster General Hospital’s charges were lower than Lancaster Regional Medical Center in 18 out of 27 procedures. Unlike our county’s two for-profit hospitals with shareholders living across the country, members of our Board of Trustees live and own businesses in Lancaster County. They constantly challenge us to provide safe and effective healthcare at a competitive cost – to anyone, regardless of their ability to pay – because their companies and families feel the impact.

You wrote: Its second highest profits in the state are mainly the result of market dominance, something they are trying to perfect by crowding out its remaining viable competitor, Ephrata General Hospital.

Everything Lancaster General Health earns is reinvested back into our system, unlike for-profit hospital chains that pay dividends to investors, or use profits to acquire hospitals in far-away states. Our dollars are reinvested locally into our facilities, people and in new technology to ensure high-quality healthcare is available now and in the future. For example, hospitals of our size and scope require approximately $50 million annually to replace capital equipment throughout our health system, and federal mandates to establish an electronic medical record at LG Health will require us to spend more than $130 million over the next three years.

Furthermore, we have no desire to “crowd out” Ephrata Community Hospital. Lancaster General Health and Ephrata Community Hospital continue to look for ways to partner in ensuring healthcare services are available in one of the fastest growing regions of our community.

You wrote: LGH, a non-profit ‘public charity’ is one of the least charitable hospitals in the state! We know not what it is doing with its vast earnings, but we do know they are not being directed adequately towards local public health and education.

This statement is categorically false. Our contributions to our community in charity care, free healthcare services, financial assistance and cash donations to government and school districts exceed other hospitals in our region. In fact earlier this year, Lancaster General Hospital was named a finalist of the prestigious Foster G. McGaw Prize for Excellence in Community Service, one of the most esteemed community service honors in healthcare, recognizing healthcare organizations like ours that are role models for improving the health and well-being of their communities.

It’s important to note that there is a difference between “charity care” and “uncompensated care.” Last fiscal year, we provided more than $7 million in charity care for patients with little or no health insurance.  In addition, we spent nearly $50 million to cover the unpaid cost of services and state programs provided to financially disadvantaged patients (uncompensated care). This amount is based on the cost to provide care, not our charges.

We actively encourage and assist uninsured patients in enrolling in our state’s Medicaid program, which unfortunately only pays a small fraction of our costs to provide them care. When a patient is enrolled in Medicaid, the difference between cost and payment is no longer considered “charity care.” Certainly, if we did not place a priority in getting the uninsured enrolled in Medicaid, our charity care number would be much higher.  Enrolling patients in Medicaid is to the patient’s advantage, as it assures them access to medications, physician visits, and other critical services they may require outside of hospital settings.

There is not enough room here to detail the substantial financial and professional resources we annually dedicate with dozens of area partners toward addressing our community’s true health priorities. A great way to start learning would be to download our many Community Benefit Reports at http://bit.ly/cKKcJw

We use national, state and local health data, such as mortality and morbidity data, risk factor surveys, Healthy People 2020 goals, and many others, to objectively identify our community’s actual health priorities. Those priorities are:

• Increasing healthy weight management
• Reducing tobacco use
• Improving access to primary care for the growing number of medically underserved throughout Lancaster County

Under the guidance of our Mission & Community Benefit Committee of the Lancaster General Board of Trustees, we create and maintain programs, foster partnerships and align services to address those priorities. We constantly measure our progress. The Committee, which includes volunteer members of our community, assists our Trustees in fulfilling its oversight responsibility related to our mission and efforts at improving community health.

You wrote: There is total lack of transparency, with media and public being banned from all LGH trustee and committee meetings except for the annual public meeting, and the one goes unnoted and unreported by the Lancaster press. (It was last November, but not a word was printed about it before or after.)

This is also untrue. Our financial performance, clinical outcomes, charges, and infection rates are publicly reported on a regular basis by several independent agencies and via our website. We publicly issue two Community Benefit Reports and send monthly Community Benefit Updates via email to more than 9,000 people to communicate our efforts in improving the health and well-being of Lancaster County. Furthermore, we are regularly featured by the local print and electronic media, which write both positive and negative stories. As for the LGH Trustee meeting, it was advertised in Lancaster Newspapers and members of the public attended.

You wrote: Finally, management at LGH is totally self perpetuating, with current trustees choosing future ones. There is no public input.

Management isn’t governance. At LG Health, management serves at the pleasure of our community-based Board of Trustees. Our Board of Trustees is “the public.” The board is comprised of volunteer civic and business leaders from our community. They help guide the creation of our health system’s vision and strategy, which is carried out by our leadership team and our more than 7,400 employees.

The Board of Trustees gains perspective and additional public input through several ad hoc committees, which include dozens of community members from throughout the county. As is the case with other public charities, our Board of Trustees regularly selects members of the community to serve on the board.

Thomas E. Beeman, PhD, FACHE

President and Chief Executive Officer

Lancaster General Health