Texas health group cashes in on state’s rural hospital crisis

AUSTIN, Texas — The Hashmi group’s hospitals don’t accept commercial insurance, charge unusually high rates and have run afoul of state inspectors.

But the rural community of Bowie, Texas, felt like it got a lifeline when the Dallas for-profit offered to buy its shuttered hospital.

The North Texas town of 5,000 — which was hit hard by a drop-off in oil and gas production and rejected a property tax increase to keep the former Bowie Memorial Hospital afloat — had few options. Without a hospital, residents would have to drive nearly 30 miles for emergencies and the town would lose high-paying medical jobs.

“From my point of view, you have a place to go when you have a heart attack or a major accident,” said former Bowie Mayor Larry Slack. “It’s better than having nothing.”

Like other rural hospitals, tiny Bowie Memorial had struggled financially to serve a population that is largely uninsured or relies on government-provided coverage, which reimburses providers at lower rates than commercial plans. Eighteen rural Texas hospitals have closed since 2013. Still more have shed maternity wards and other services.

Hasan Hashmi and his sons Faraz and Suleman think they may have found a formula to make the economics of rural hospitals work.

“It’s an out-of-network model,” said Faraz Hashmi.

The group has no interest in contracting with commercial insurance providers. It charges far more than what any insurer will pay, sending eye-popping bills to patients who can’t afford the out-of-network prices. The family’s hospitals also lack contracts with the managed care organizations that cover 92 percent of Medicaid and CHIP patients in the state.

The Hashmis say their hospitals accept Medicare as well as Medicaid, although there are reports that large bills are nevertheless sent to some low-income and disabled beneficiaries.

The hospitals are guaranteed a steady stream of patients from ambulances that take critical cases to the closest facility. And they offer profitable elective procedures like bariatric surgery even while lacking dedicated maternity wards.

“We like to go into a community where there is a need, where if a facility doesn’t exist, people wouldn’t have access to health care,” Hashmi said. “Our model is meant to make the project financially successful so it becomes profitable. … It doesn’t help anyone if you open up the hospital and close it a month later because you can’t pay the bills.”

The Hashmi family owns a number of health-related businesses like ACO Medical, Action MD and Citywide Sleep Services, according to state documents. Their first hospital was incorporated as a limited liability company in 2010. Three hospital campuses now operate around the state.

The state health commission has turned up problems — including medical staff working with out-of-date licenses and missing infection protocols — at two of them. And while the Hashmi group’s hospital billing practices have drawn the attention of national health policy researchers, state lawmakers and the media, there’s little anyone can do to force the company to bring down its charges.

An analysis published in the journal Health Affairs found that Hashmi’s Texas General Hospital in Grand Prairie was 11th on a list of the nation’s 50 most expensive hospitals, billing patients for 10.8 times the ratio of charges to Medicare-allowable costs, according to 2012 data. (The national average was 3.4.)

The 2015 paper generated a fair amount of media attention. “We thought, ‘Now we have a public shaming, now the increase will stop,’” said co-author Ge Bai, an assistant accounting professor at Johns Hopkins University. Instead, she said, “many hospitals keep increasing costs.”

Indeed, Bai later found that Texas General’s charge-to-cost ratio went up another 40 percent in the following three years — to 15.4, based on 2015 data.

When the Hashmi group reopened the Grand Prairie facility in 2012, the Arlington suburb had been without a hospital for more than a decade. Residents were excited about renovations to the empty building and new jobs coming to town, said City Manager Tom Hart. That changed over time, as they got stuck with large hospital bills, he said.

The city runs its own health insurance plan for employees, and Hart said it now covers visits to the local hospital only for emergencies. Even so, its high costs have forced a rise in premiums.

“It makes me sick to raise rates to our employees,” said Hart. “I just wish they would become part of a network.”

Terry Phillips took her husband, who had chronic heart problems, to Texas General Hospital in April 2014 because he was having trouble breathing. A front desk staffer said her insurance would be accepted — but didn’t clarify that the hospital was not in its network.

“My husband was turning blue in the face,” she said in an interview.

The ER doctor diagnosed him with water retention and put him in the intensive care unit because the rest of the hospital’s beds were filled with flu patients. He was released after four days and told to come back for a sleep study to diagnose possible sleep apnea.

Shortly after the visits, Phillips received one bill for the outpatient sleep study totaling nearly $32,000 and another for $191,000 for the ICU. Her insurance covered about $9,200 in out-of-network charges, according to a copy of the bills she shared with POLITICO.

Bills from health care providers often bear little resemblance to reality — or to what insurers pay — and hospitals often negotiate charges for uninsured patients who cannot afford them. But Phillips said Texas General would not discuss her huge out-of-network balance. The bills eventually stopped coming, she said, after a local TV station included her husband’s case in a story about the hospital’s pricing practices. She never paid her balance.

“If they got it down to a reasonable number, I wouldn’t mind paying,” she said.(Faraz Hashmi did not respond to follow-up questions after an initial interview.)

A state lawmaker had vowed to investigate the hospital’s billing practices, but found the state couldn’t force a provider to negotiate an in-network contract with an insurer or regulate what a hospital charges.

Issues involving the Hashmi group’s hospitals go beyond billing. State inspectors recorded a number of violations at Texas General Hospital in Grand Prairie as well as another Texas General campus in Grand Saline in rural East Texas, according to state health commission documents shared with POLITICO.

A 2015 inspection at Grand Prairie found that nurses lacked licenses, the hospital failed to review patient deaths, multiple surgeries went awry and doctors were improperly treating patients before lab results confirmed a diagnosis. The statehealth commission said that no recent enforcement actions were noted, indicating that the issues had been resolved.

At the Grand Saline facility, a 2016 inspection found numerous staffing and licensing problems and a lack of infection-control protocols. The facility was ordered to pay a $4,250 fine and placed on probation until June 30, 2018.

Meanwhile, health insurance companies have had little success in negotiating in-network rates at Hashmi group hospitals. In 2015 the group sued UnitedHealthcare for underpaying for services. The health insurer countered that Texas General was engaged in “fraudulent and abusive billing practices” and that its owner’s “greed has become a blight on the system,” according to court documents.

The parties settled the dispute before it got to trial and the case was dismissed earlier this year.

Publicly owned Bowie Memorial had managed to stay financially afloat for decadesusing a traditional reimbursement model but got increasingly squeezed as reimbursement rates for government insurance programs failed to keep up with costs and more and more of the hospital’s patients were insured by Medicaid or Medicare — 85 percent of them at the end, not counting patients with no insurance at all.

Just days before Bowie Memorial closed its doors in November 2015, the city held a referendum to support the hospital with a tax of 17 cents per $100 of property value — the only way, board members said, that it could survive. The ballot measure failed narrowly; the Hashmi Group purchased the 49-bed hospital in early 2016 for $1.5 million.

Bowie Fire Chief Doug Page said he’s grateful to have a hospital back in the community. Before it reopened last April under the name Central Hospital of Bowie, he said that his department’s ambulances had to drive 30 to 45 minutes each way to transport patients to other hospitals. If another emergency occurred while the ambulances were on the road, the department, which transports 1,700 patients a year, would have to call ambulances from other counties to help.

“Our community voted not to have a hospital,” said Page. “From my perspective, we’re lucky to have anything.”

Source: Texas health group cashes in on state’s rural hospital crisis – POLITICO