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June 16, 2014
Bruce Maiman: California nurses association plays hardball

RP_Kaiser_Permanente_Nurses.JPG(June 16 - By Bruce Maiman, Special to The Bee)

Sometimes the biggest problem with a piece of legislation is who is behind it.

The California Nurses Association and the California Hospital Association are battling over Assembly Bill 503, which proposes tighter regulations on not-for-profit hospitals - namely a uniform standard for charity care and a uniform methodology for reporting how that care is provided.

Currently, each hospital calculates that care differently, arguing that each community has different needs. Since hospitals coordinate with their communities to determine that need, that care will vary widely.

The nurses association says that hospitals use the broad definitions of charity care to cheat the public. It is sponsoring AB 503, which died last year as AB 975; both were co-authored by Assembly Democrats Bob Wieckowski of Fremont and Rob Bonta of Alameda.

The hospital association says that existing law, 1994's SB 697, provides an effective regulatory template. It calls AB 503 "a solution in search of a problem that doesn't exist."

"Apparently they forgot to tell the California State Auditor and the California Legislative Analyst Office," CNA co-president Deborah Burger wrote on the association's blog. Both "have separately observed that a problem, in fact, does exist."

"In 2012," she contends, "the Legislative Analyst noted there is 'no federal, state or local requirement on the amount of charity care that nonprofit California hospitals must provide in order to maintain their nonprofit and tax-exempt status.'"

Burger doesn't identify the source of that quote, cited in a January 2012 LAO review of a proposed initiative that never made the ballot.

I spoke to Felix Su, fiscal and policy analyst for the LAO, quoted Burger's screed at length and asked him point blank: Does the LAO say there is a problem with nonprofit hospitals?

"No, we did not say that," Su said.

"Do you feel the LAO has been misrepresented or mischaracterized?" I asked.

"We did not say there was a problem with charity care in this document," Su replied.

Burger also cited a state audit, "recommending the legislature amend state law" to tighten regulations on not-for-profit hospitals.

The audit did no such thing. It states that nonprofits are following all applicable state and federal laws, just as Grant Parks, a senior auditor, said at an August 2012 Select Committee hearing, titled "Charity Care and Nonprofit Hospitals." Its chairwoman, San Leandro Democrat Ellen Corbett, called the hearing to ask, "Are taxpayers getting a fair deal?"

Fair? Three of the six witnesses Corbett invited to testify represented the nurses association. The others were a think-tank director favorable to the nurses, Parks and Board of Equalization member Betty Yee, whose district overlaps Corbett's. Corbett invited no one from the hospital association. Its vice president, Anne McLeod, got three minutes to defend the industry's record on charity care - at the end, during the public testimony period.

As The Bee's Dan Walters subsequently wrote, Corbett staged the hearing "to give the nurses union an opportunity to score rhetorical points" against not-for-profit hospitals that were resisting union contractual demands. And while Parks described the broad criteria for charity care as "the Wild West," he never recommended that it be fixed. That, he said, was the Legislature's call.

Funny how CNA co-president Malinda Markowitz claimed in a Contra Costa Times op-ed that nonprofits accumulate massive profits at taxpayers' expense yet never complained about the taxes spent on a one-sided legislative hearing. Markowitz also claims some nonprofit hospitals declare marketing and promotional activities as charity care. That's impossible; IRS Form 990 Schedule H instructions expressly prohibit the reporting of community benefit expenditures if they are primarily for marketing, or if they are more beneficial to the organization than to the community.

Markowitz cites a 2012 CNA study concluding that not-for-profit hospitals provide only $1.4billion a year in public benefits. A Berkeley Research Group study this year headed by former Silicon Valley Congressman Tom Campbell found that these hospitals actually provide $5billion in total societal benefit.

Why the discrepancy? While the nurses association counted only totally uncompensated care, Campbell's study relied on IRS filings that include both uncompensated and undercompensated care.

"If a procedure costs a dollar and you get 45cents, you are doing 55 cents of charitable value," Campbell told me.

His study factored in that 55 cents; the nurse's study put in zero. "Is CNA to be faulted for not calling social benefit what you or I might call social benefit?" Campbell asks. "Not if they labeled it correctly, but they didn't do that."

Further, by omitting it, they don't even have to explain why they didn't do that. And you wonder why so many people resent unions. I contacted the nurses association, but it could not satisfactorily address these discrepancies.

Reviewing the statutes for charity care is fine, but I seriously doubt whether people who distort the dialogue as the CNA has deserve a place in that discussion.

Bruce Maiman is a former radio hosts who lives in Rocklin. Contact him at