One hospital system's big lobbying bill.
It's about fiscal responsibility, you see.
Happy Friday! A little programming note: Normally I’ll send a roundup of healthcare news on Fridays, but this week I’m pushing that to tomorrow to bring you this story about a New York hospital chain’s lobbying spending.
This week, the New York Times published an entry in one of my favorite genres of healthcare stories: an investigation by Brian M. Rosenthal into how the major New York hospital chain Northwell Health sues patients over unpaid medical bills, including during the pandemic. As with many of these types of articles, the story ends with the hospital dropping the practice and rescinding legal claims filed this year.
This practice of suing patients for unpaid medical bills is a particularly nasty result of America’s lack of a healthcare system, where patients are ultimately responsible for ensuring the hospital gets paid for treating them (and where hospitals with high numbers of uninsured patients lose money on “uncompensated care”). Hospitals claim, as Northwell did here, that they simply have no other option but to pursue these patients with the full weight of the legal system, because otherwise they just wouldn’t be able to function.
In this case, Northwell complained to the paper that it lost $300 million last year, even with stimulus funds. (They also claimed that they only pursue patients that they believe have the ability to pay. If that’s true, they are very bad at figuring out who can afford to pay.) It’s also important to note here that Northwell is a “nonprofit,” which I put in scare quotes because nonprofits often actually are more aggressive about suing patients, and pay their CEOs millions of dollars a year.
The story says that the chain pursued “more than 2,500 patients” in 2020, with an average bill of $1,700. That means the amount of money we’re talking about here is roughly $4,250,000. Four point two five million dollars. A drop in the bucket compared to the $300 million they lost, you would think—indeed, it’s only a little over one percent of their losses. Even if they recovered every cent of those unpaid bills (excluding interest, because that’s not actually “money” they “spent” and I don’t care about it), they would still have $295 million in losses. So it seems like these unpaid bills, the ones they filed lawsuits to recover, matter very little to the hospital’s balance sheet.
Contrast the impact these bills have on the hospital’s finances to the impact that these lawsuits have on the people they sued, from the Times story:
“My salary was cut in half. I’m now working only two days a week. And now I have to deal with this,” said Carlos Castillo, a hotel worker in New York City who was sued for $4,043 after being hospitalized with a seizure at Long Island Jewish Medical Center, which is part of the Northwell system. Mr. Castillo, 37, said he was worried the hospital would seize his paychecks and leave him unable to pay rent.
Northwell Health’s CEO Michael Dowling (as the Times story notes, a close ally of Governor Andrew Cuomo) is going to be able to pay rent whether or not Carlos Castillo ever paid his bill. All of Northwell’s leadership will. Yet the hospital system still felt it was a good use of its time, and however much it spent on lawyers, to pursue these debts, no matter the consequences for patients.
Anytime we’re talking about hospital bills and medical debt, it’s very important to note that hospital prices are often just made up. One hospital in Wisconsin tried to figure out how much a knee surgery should cost and came up with $10,000; they had been charging $50,000. A C-section might cost you $4000 in Knoxville and $20,000 in San Francisco—or there might be a similar price discrepancy between hospitals in the very same city. The Cleveland Clinic has claimed it has 3,000 different rate plans (for different insurance companies) for 70,000 individual chargeable items, for a total of 210 million unique “prices.” There is no guarantee that the price Carlos Castillo was asked to pay for his seizure treatment has any resemblance to what it cost to treat him. A normal country would call this fraud. Instead, we let hospitals use the legal system to sue poor patients, ruining their lives or even sending them to jail, over completely fake prices. American healthcare: Where the prices are made up and your life doesn’t matter.
Back to Northwell: A Twitter user responded to my tweet about this Times story by wondering how much the hospital chain spends on lobbying. This is a very good point, No_Chill_Hockey, so let’s find out!
We’ll start at the top. According to federal lobbying disclosures, Northwell Health spent $570,000 on lobbying at the federal level in the first three quarters of 2020. (Fourth quarter disclosures aren’t available yet.) They hired two firms: Ickes & Enright, and Peck Madigan Jones. PMJ is a large lobbying shop, with a revenue of $12.6 million in 2020 from clients including Facebook, Uber, and the Greater New York Hospital Association, of which Northwell is a member. Ickes & Enright is run by Harold Ickes, a Clinton administration guy who may be remembered by other people who read a lot of blogs in 2008 as being an awful Hillary Clinton campaign guy. Both are part of the Tiber Creek Group, which also has a specialty healthcare “strategy” firm. If their fourth quarter spending was the same as the first three quarters of 2020, their total was likely $760,000. It seems fair to assume it was, since it was consistent across the first three quarters, so that’s the figure I’ll go with.
These disclosures tell us that Northwell’s 2020 federal lobbying included “issues related to surprise billing.” Rep. Richard Neal, who held up surprise billing legislation at the end of 2019, is reportedly close to the Greater New York Hospital Association, who also pressured Schumer over the bill. Neal’s intransigence kept surprise billing off the table for an entire year, and we ended up with a more favorable bill for the hospitals. This is called “return on investment.”
What about in New York state? This is where it gets a little tricky, but please bear with me.
According to the semi-annual summary filed with New York state, Northwell spent a total of $246,268 in the first half of 2020. The state doesn’t require a summary for the second half of the year to be filed until the end of this month, but we can add up the bimonthly disclosures we do have to get an estimate. But those disclosures don’t tell the whole story. Let’s break this down.
New York state requires lobbyists to file bimonthly reports on what they’ve been paid by their clients, as well as registration agreements that list their compensation structure and rate. The lobbying firms Northwell hired—a total of seven, plus they report a little internal spending on in-house lobbyists—report compensation in slightly different ways. Brown Weinraub, for example, were paid a neat $5,000 a month for lobbying throughout the year, reflected in both the registration agreement posted on the site and their bimonthly filings. But Fried Frank Harris Shriver & Jacobson LLP’s registration agreement only tells us their hourly rates, so we have to look to the bimonthly filings to see how much Northwell actually ended up paying them—$47,932 in September and October of 2020, for example.
Again, we don’t have the semi-annual filing covering the second half of the year, but we can add up the figures in those bimonthly disclosures to get an estimate. My total estimate for Northwell’s lobbying spending in the second half of 2020 is $425,406, but this requires a bit more explanation. If you just added up the figures provided in the bimonthly filings yourself, you would come to a much lower number.
Two of the six firms, Ickes & Enright and Peck Madigan Jones (who were also Northwell’s federal lobbyists), have a dual agreement with Northwell—probably because they’re part of the same family of firms—and report being paid just $500 a month for their lobbying activities. Seems cheap, right? You could get a lobbyist with your stimulus check! But the actual figure they’re paid is $35,000 per month, per their registration agreement.
I believe this is a good primer in something called “shadow lobbying.” Lee Fang wrote an excellent piece about it in 2014, and I wrote about it for the Sunlight Foundation in 2016. Definitely read Fang’s piece if you’re interested in this stuff, but for our purposes, what you need to know is that shadow lobbying refers to advocacy activities that fall outside the scope of disclosure required by law. At the federal level, that can mean actual in-person lobbying, as long as it takes up less than 20 percent of the lobbyists’ time. But then there’s other activities that never have to be reported, no matter how much time they take. PR campaigns, astroturfed Twitter accounts, things like that—all of that happens daily, is very lucrative, and is effective at persuading policymakers. But there’s no requirement for disclosing money spent on these things, even if they’re aimed at persuading legislators to do or not do something. In 2014, Professor James Thurber (my former boss) told Fang that he estimated that the true spending on lobbying in DC was around $9 billion.
For reasons that neither I nor the nice man who answered the phone at the New York State Joint Commission on Public Ethics really understand, the Northwell lobbying contract uploaded by Ickes & Enright/Peck Madigan Jones contains two separate figures. One is the actual amount they’re paying the company—$35,000 a month. The other is the amount “attributable to lobbying”—a budget-friendly $125 per month for New York City and New York State each. This agreement also covers Peck Madigan Jones, which is part of the same group of lobbying firms, so they supposedly get $125 for lobbying each jurisdiction too, for a total of $500. That’s the figure you see reported in the bi-monthly filings.
Look, here it is:
So, if you just read the figures listed on the New York state lobbying disclosure site, you would think Ickes & Enright and Peck Madigan Jones were only getting $500 a month from Northwell. That’s less than half an hour of the Fried Frank Harris-etc-etc lobbyists’ time! But if you click through to the registration agreement, you find that there’s $34,500 more that goes to Something Else. (It’s not explained anywhere how they came up with ‘attributing’ $500 a month to lobbying.) If you were very cynical like me, you might assume that most, if not all, of the rest of that figure is also spent on stuff that is basically lobbying, or at least ‘advocacy.’ It’s for something, at least—connections, strategy, Dunkin’ runs.
I can’t tell from the registration agreement whether this monthly $35,000 has anything to do with the $760,000 that Northwell (likely) spent on federal lobbying with these same firms. If you read all the way to the end of the registration agreement, you’ll find a copy of their first agreement from 2010, which says their fee just covers federal lobbying; then, in 2014, the hospital system authorized the firms to lobby New York state and city. Maybe the $35,000 a month is for federal AND state lobbying, but the federal disclosures reflect $190,000 of compensation per quarter for the two firms, which is much more than $35,000 per month. An email seeking clarity here to Harold Ickes and the main email addresses for Ickes & Enright and Peck Madigan Jones, plus a follow-up phone call, went unreturned. An email to the public relations team at Northwell also went unreturned. :(
I will assume the $35,000 a month outlined in the registration agreement posted on the New York lobbying site is a separate fee from the reported federal lobbying compensation until anyone replies to my damn emails.
So I went ahead and added the extra $34,500 per month that goes to these two lobbying firms onto Northwell’s reported lobbying spending in New York, which you’ll remember was $246,268 for first six months. That brings their total for the first half of the year to $453,268. Together with my estimate of $425,406 for the second half of the year, that’s $878,674 in New York state (which doesn’t include filings for November and December that aren’t available yet).
Add in federal lobbying, and we have at least $1,638,674 in lobbying expenses in 2020. The bottom line: It’s a lot of money padding lobbyists’ pockets for a “nonprofit” hospital.
If the average medical bill that Northwell sued over in 2020 was for $1700, they could have forgiven 963 people’s debts with what they spent on lobbying. Or, to put it another way, that’s 539 chest CT scans, or 411 C-sections (according to Northwell’s price list). More to the point, it is hundreds of lives that could have been spared from fear, stress, doubt, and financial pain—foregone meals, missed birthdays, unpaid rent. In a pandemic, too. If only Northwell had just been a little more sensible with their money. Fiscal responsibility is an important American value, you see.
The Times story ends by noting that the New York state legislature is considering legislation that would curb hospitals’ ability to sue patients, with a quote from state senator Gustavo Rivera: “It’s going to be difficult, there’s no doubt. The hospitals are powerful.”
When hospitals, or any other business, choose to drop absurd-seeming amounts of money on lobbying activity like this, they aren’t doing it because they don’t understand they could spend that money on charity care instead, or because they’re bad with money. They’re doing it because they’re good with money; the cost of lobbying offers a very attractive return on investment. A few thousand bucks a month to a few lobbyists preserves a system that lets them pay their CEO millions of dollars a year—$3.5 million in 2017, in Northwell’s case—and keep raking in money from workers’ paychecks.
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