The for-profit non-profits

NOT-FOR-PROFIT hospitals are actually for-profit hospitals, according to the new documentary Do No Harm. Rebecca Schanberg, who produced and directed this insightful film, tells the story of the two men who blew the whistle on Phoebe Putney Memorial Hospital in Albany, Ga.

Charles Rehberg, a certified public accountant, and John Bagnato, a surgeon, are two ethical, humble and honest guys who stumble across financial information showing that Putney Hospital has $2.6 billion in cash and transferred millions to offshore bank accounts in the Cayman Islands.

Flush with cash, the executives live like kings in one of the poorest parts of Georgia. They fly on corporate jets, take expensive trips and spend enormous sums on parties, booze and golf. CEO Joel Wernick is paid an annual salary of $682,550.

Moreover, because it has non-profit status, the hospital is exempt from paying $22 million in taxes every year. In exchange for tax exemption, Putney is supposed to provide "charity care." But it doesn't; in fact, it does just the opposite.

Rehberg and Bagnato discover that the hospital charges the uninsured more than the insured and aggressively hounds and sues patients who can't pay. As a result, thousands of patients have had their wages garnished, leaving many of them destitute. This is how hospital executives get rich--on the backs of poor, uninsured patients.

To call attention to the financial practices of the hospital, Rehberg writes up a one-page fact sheet called "Phoebe Factoids" that is full of damning statistics. He faxes it to various lawyers, businesses, insurance companies and the media. The Atlanta Journal-Constitution picks up the story, and the hospital is publicly outed for the profit-hungry, heartless corporation that it really is.

And then, just like in a John Grisham novel, things get legal, ugly and scary. Rehberg walks out to the parking lot after work one night, and a vehicle pulls up and blocks his car. Two men jump out, identify themselves as FBI agents, call out his name and say that they have been investigating him. The men--who in reality were no longer with the FBI--say they work for Putney and ask him to get in their car and go to a meeting. If he cooperates, they promise the hospital won't file a lawsuit against him.

Wisely, Rehberg doesn't get in the car. As they leave, he's warned, "If you're not smart enough to do this for yourself, you should for your wife Wanda and your lovely family." A bodyguard is hired to watch over Rehberg's family.

Bagnato receives suspicious e-mails and phone calls from someone who hangs up every time he and his wife pick up, and the lock in his front door falls out.

The scare tactics and intimidation don't work, and Bagnato and Rehberg hire Dickie Scruggs, the famous lawyer, who filed a class-action lawsuit against the tobacco companies and won one of the largest settlements ever.

Putney Hospital lawyers go on the offensive and file a lawsuit for $66 million against Rehberg. Next, the two men are indicted on trumped-up, ludicrous criminal charges of burglary, assault and harassing phone calls. Eventually, the charges are dismissed.

Sen. Charles Grassley (R-Iowa) gets involved and holds hearings in Washington, D.C., on the issue of non-profit hospitals charging the uninsured more money for services than the insured, and not providing adequate amounts of free care in exchange for generous tax breaks. This puts public pressure on Putney to back down, but Grassley stops short of proposing legislation to punish hospitals for these shameful business practices.

DO NO Harm exposes an aspect of the health care crisis that, until recently, few had heard of. Many assumed that non-profit hospitals operated as good Samaritans and delivered lots of free or low-cost care to the uninsured. But 85 percent of hospitals in the U.S. are non-profit, and most go after patients who don't pay their medical bills by suing them, garnishing their wages and putting liens on their homes.

According to the documentary, in Maryland alone from 2003 until 2008, non-profits filed 132,000 lawsuits, won $100 million in judgments and put liens on 8,000 homes. It is little wonder why the majority of people who file for bankruptcy do so because of they are unable to pay their medical bills.

The class-action lawsuit that Bagnato and Rehberg filed forced a few hospitals to provide more free and discounted care to the uninsured. The tax-free status of "non-profit" hospitals that make millions in profits is now being questioned across the country.

For example, the University of Chicago Hospital receives almost $58 million in state and federal tax breaks but only provides about $10 million in charity care. A grassroots coalition in Chicago is fighting to make the hospital provide more free care to the poor and uninsured.

Bagnato and Rehberg's persistence and courage to speak up on behalf of patients being fleeced by rich, non-profit hospital corporations should be an inspiration to all of us fighting for fundamental health care reform. We need more whistle-blowers like them.