Ailing system

In a moment of financial panic, Philip Marlatt pulled off his patient identification bracelet and walked out of Holy Family Hospital’s bustling emergency room.

“I don’t have insurance, and I knew it would be too expensive,” he said.

A 31-year-old married Spokane man with an $11.50-an-hour landscaping job, Marlatt has been diagnosed with Type II diabetes. But it isn’t the potentially debilitating disease that has him worried; it’s the prospect of paying for his treatment.

Marlatt’s predicament is an example of the crisis gripping regional hospitals.

So far this year, the cost of treating people unable to pay has reached more than $30 million at the region’s five hospitals. By the end of this year, hospital executives fear uncollected bills could top $70 million, fanning their financial troubles.

To cope with the surge in bad debts and charity cases, Sacred Heart Medical Center plans layoffs in August.

CEO Skip Davis said job cuts will be fewer than 200 after managers scour every cost-saving measure available.

“Affecting people’s livelihoods and families is the toughest thing to do,” he said. “I feel a very strong moral commitment.” Laying off people without first cutting supply costs and beating the bushes for overlooked revenue is “a betrayal from my perspective.”

Sacred Heart’s sister hospital, Holy Family, also will be looking at cutting costs, although layoffs at that hospital are uncertain.

And last week, Deaconess Medical Center and Valley Hospital and Medical Center announced plans to lay off the equivalent of 150 full-time workers.

The moves are a blow to one of Spokane’s largest economic engines.

Patrick Jones, an Eastern Washington University economist, said one-fifth of Spokane’s economic activity is due to health care. In short, what’s bad for the hospitals is bad for Spokane.

Davis said the problems afflicting Spokane’s hospitals are not unique.

“This is a national problem,” he said.

With an estimated 44 million Americans without health insurance, the issue has gained attention in this year’s presidential campaign.

Yet Davis and Garman Lutz, who heads Deaconess and Valley, said solutions are elusive with soaring federal budget deficits due to war spending and the rebuilding of Iraq.

In Spokane County, the number of uninsured people is 37,000, or about 8.5 percent of the population. When they get sick or hurt, they go to hospitals that are required by federal law to treat anyone needing help.

It’s worse in North Idaho, where about 28 percent of residents are uninsured.

Marlatt admitted he gambled and lost.

His employer, Senske Lawn and Tree Care Inc., offers a health insurance plan through Premera Blue Cross. In fact, Marlatt was enrolled until January, when he decided that a premium of more than $350 a month was too much to pay.

Seven months later, Marlatt said he regrets the choice.

He didn’t know he was sick until about two weeks ago, when he couldn’t quench his thirst. Each night, he repeatedly had to hustle from his bed to the bathroom.

“We knew something wasn’t right,” said Heather Marlatt, who encouraged her husband to see a doctor.

Last Wednesday, they had an appointment at a Community Health Association of Spokane clinic. The news wasn’t good: A quick test revealed that Marlatt’s blood sugar level was a frightening 520, more than six times higher than a normal reading of 80. He’s beginning to regret his eating habits: popping Reese’s peanut butter cups into his mouth one after the other and washing them down with plenty of Pepsi.

The clinic immediately sent Marlatt to Holy Family’s emergency room.

After he checked in, Marlatt had second thoughts, slipped off his ID bracelet and attempted to leave until Heather grabbed him and ordered him back inside.

“I said, ‘I don’t care if it’s a million dollars, I don’t want you to die,’ ” she said.

The Marlatts intend to pay their bill, which they believe will be about $2,000 for the ER visit and tests. But it may take them more than two years. They don’t know how they will pay for Philip’s ongoing care.

Joan Foster, a registered nurse and social worker at Holy Family, helps people who struggle with hospital bills.

“We’re seeing more and more who just simply can’t afford care,” she said. “People first have to feed and clothe themselves and pay for their house. And if there’s children, oh dear …”

Each hospital appoints case managers for uninsured patients to ascertain whether the hospital should write the treatment off as charity care or work out a payment plan and send a bill, as Holy Family did with the Marlatts.

Foster said the situation has worsened since the state drastically reduced its medically indigent program last summer. The program had helped hospitals with some of the cost of treating uninsured patients.

Health-care advocates and hospital executives have been warning for years about a “perfect storm” conspiring to wreck the U.S. health-care system.

Spokane’s crisis stems from four national trends, said Curtis Taylor, senior vice president and general manager for Marsh, the region’s largest insurance broker. He cites a report from Mercer, a consulting company and subsidiary of Marsh:

“ Low Medicare and Medicaid reimbursements don’t cover hospitals’ costs.

“ There are more uninsured people and others who can’t pay their health bills.

“ Employers are shifting more health insurance costs to workers who sometimes can’t afford these out-of-pocket costs.

“ Rising cost of medical malpractice insurance for doctors and hospitals.

“Spokane’s no different,” Taylor said.

During the past five years in the Inland Northwest, the average monthly insurance premium for an employee increased from $190 to $300; the average family premium increased from $530 to $850; and the average annual deductible increased from $200 to $400, Taylor said.

In addition, the average age of the primary insured policyholder went from 37 to 41, Taylor said. The average age of a private insurance policyholder on the West Side of the state is now 39 and the national average is age 38.

“We have an aging population,” Taylor said. “Over time, our health care cost is going to be more.”

In addition to the cost-shifting of insurance premiums from employers onto workers, the federal government has spent a decade shifting the cost of social services onto the states, said Alan Weil, a researcher with the Urban Institute in Washington, D.C.

Recently, state governments have not been able to keep up with Medicaid costs, which rise with more people out of work and will climb higher as the aging population requires more long-term care. (Medicaid pays a large portion of the nation’s nursing home bills.)

“Although state fiscal conditions are improving and medical inflation, although very high, shows some evidence of slowing, this is not going to get better very quickly,” Weil said. “It may get worse before it gets better.”

Weil calls for a larger federal role. At minimum, the federal government should pay a larger portion of Medicaid costs, he said.

Hospital executives say the cost-cutting and layoffs won’t affect the quality of patient care.

But hospital workers aren’t so sure.

“The way they’re cutting, I feel I’m not able to do a good job,” said a Deaconess respiratory therapist who asked to remain anonymous to protect her job. “I have too many patients and not enough of the proper equipment. We used to have seven therapists, and now we’re working with four during the day. I’m just scared.”

Since layoffs that began in mid-July, the respiratory therapist, and others who worked days, are being asked to work the night shift. Her husband works evenings, and they’re worried about finding suitable nighttime care for their young child. The family’s health insurance coverage is through her job, so the respiratory therapist feels she needs to stay at Deaconess.

She described the mood at her hospital as “very grim.”

“People are really down. They’re depressed. We feel stuck,” she said. “We’re hanging on for our health insurance.”