HCA Healthcare, which owns and operates Mission Hospital in Asheville, reported this month that it made $1.4 billion in profits for the first three months of 2021, more than double the amount for the same period last year.
The new figures follow HCA’s report in February that annual profits rose to a record $3.8 billion in 2020, despite the pandemic, based on what the company called “solid cost management.”
In a proxy statement filed last month with the Securities and Exchange Commission, HCA stated its primary objective is “providing the highest quality health care to our patients, while making a positive impact on the communities in which we operate.” But the document shows that the company rewards top executives far more for taking care of shareholders than it does for taking care of patients.
A year after announcing that its senior leaders would take up to 30 percent pay cuts during the pandemic, HCA reported last month that total compensation for its chief executive, Sam Hazen, rose nearly 12 percent, to $30.4 million in 2020. Total pay for other senior HCA executives also rose significantly during the pandemic.
Nancy Lindell, director of public and media relations for HCA Healthcare North Carolina Division and Mission Hospital, declined to break out the performance of HCA’s western North Carolina division or disclose the financial compensation for local hospital executives.
Profits up, ratings down
On Thursday, the Leapfrog Group downgraded Mission Hospital to a “B” rating in its Spring 2021 Hospital Safety Grade assessment, based on performance measures collected immediately prior to the onset of the COVID-19 pandemic.
The independent, nonprofit Leapfrog Group says its ratings reflect a hospital’s ability to protect patients from preventable errors, accidents, injuries, and infections. Mission received an “A” grade in the Fall 2020 Leapfrog assessment; it is unclear when the Fall 2020 data were collected.
A detailed breakdown of the Leapfrog grading system can be found here.
On Wednesday, the Centers for Medicare & Medicaid Services (CMS) also downgraded Mission Hospital’s overall rating, to four stars compared to five last year, and reported that patients gave Mission a three-star rating.
CMS uses a five-star quality rating system to measure the experiences Medicare beneficiaries have with their health plan and health care system. The latest ratings are based on data collected after HCA took over the Mission system.
CMS says “the overall star rating is based on how well a hospital performs across different areas of quality, such as treating heart attacks and pneumonia, readmission rates, and safety of care.”
“The patient survey rating measures patients’ experiences of their hospital care,” CMS says. “Recently discharged patients were asked about important topics like how well nurses and doctors communicated, how responsive hospital staff were to their needs, and the cleanliness and quietness of the hospital environment.”
Detailed ratings for the CMS grading can be found here.
Proxy statement confirms priorities
According to a formula included in the proxy report filed by HCA, the Nashville-based system calculates executive stock grants and bonuses — which typically exceed base salary — on a formula based 80 percent on financial performance and stockholder gains, and just 20 percent on meeting industry targets for quality of patient care.
The proxy statement also revealed that HCA’s board recommended against a shareholder proposal to increase the 20 percent weighting of quality of care on executive compensation.
The proposal “would not provide meaningful information to stockholders, would not be a good use of the company’s resources, and is unnecessary,” the HCA directors said in the proxy statement.
National Nurses United, the labor union that represents nurses at Mission Hospital and 18 other HCA Healthcare facilities across the country, called HCA “the poster child of a corporate hospital chain that has prioritized profits above the needs of patients, nurses and health care workers.”
Before HCA acquired it in 2019, Mission Health was a nonprofit corporation required to make quality of patient care the top priority.
HCA raised prices for most medical care by 10 percent soon after taking control of Mission, but it also achieved profit targets in part by reducing staffing, cutting other non-labor costs, and other “efficiencies.”
Mission earns accolades for care
Despite this week’s decline in ratings, Lindell, the HCA-Mission spokeswoman, said Mission continues to receive accolades, including recent recognition as a Top 50 Cardiovascular Hospital for the 15th time, and Magnet recognition for professionalism, teamwork and patient care.
The Magnet Recognition Program is operated by the American Nurses Credentialing Center, which allows nurses to recognize nursing excellence in other nurses.
Asked about the significant pay increases for Hazen and other top executives despite pledges that they cut their salaries, Lindell wrote in an email to Asheville Watchdog: “Last spring we announced that many leaders across HCA Healthcare were taking a reduction in salary until the height of the pandemic passed. It was during that period that hospitals across the country had canceled services and closed many areas within hospitals.”
In a letter to HCA employees, Hazen said he would donate 100 percent of his salary in April and May to the HCA Healthcare Hope Fund, which supports colleagues in times of natural disasters, illness, injury, or other hardships, Lindell wrote.
Other HCA senior executives took a 30 percent pay reduction, and top corporate, division, and hospital executives took 10- to 20 percent reductions, Lindell said. “As part of our efforts to protect our colleagues and their families, HCA Healthcare offered pandemic pay to those staff members who worked in areas of our hospitals that were closed due to the pandemic.”
According to its proxy statement, CEO Hazen’s 2020 base salary was reduced $109,010 as a result of HCA’s pledge to cut salaries during the pandemic. But because of stock grants, bonuses, and retirement benefits based in large part on cutting costs and hitting profit targets, his total compensation soared by more than $3.6 million in 2020.
HCA Healthcare last year received $1.6 billion from provider relief fund distributions and approximately $4.4 billion in Medicare accelerated payment as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. It returned all $6 billion to taxpayers.
Physician and nurse departures
The reports of HCA’s record profits come as some Mission employees in the Asheville area complain of what they say is chronic understaffing and lack of adequate resources. As reported by WLOS-TV earlier this year, dozens of physicians have left HCA/Mission since the takeover. While some departing staff cited unhappiness with HCA management, it’s unknown how many of the departures were planned before HCA took over.
HCA-Mission has declined to give numbers for staffing before and after the sale, or to give details on staffing ratios, including the number of patients each nurse is required to assist.
Nashville-based HCA, which operates 186 hospitals in the United States and England, acquired Asheville’s Mission Health System in a $1.5 billion deal that closed Feb. 1, 2019. The background and details of the sale are still hidden from public scrutiny by perpetual nondisclosure agreements approved by North Carolina Attorney General Josh Stein and Mission Health’s board of directors.
With its flagship hospital in Asheville, HCA’s North Carolina division includes seven hospitals and numerous clinics that serve 18 mostly rural counties in western North Carolina. It employs some 12,000 people.
[Editor’s note: This article was modified on May 6 to remove the sentence, “As a public company, HCA is required by law to prioritize making money for shareholders over other goals.” HCA is a Delaware corporation. Delaware General Corporation Law has no statutory statement of the fiduciary duties of boards of directors, but case law confirms that fiduciary duties are the underpinning of the “business judgment rule,” which is a presumption that in making a business decision the directors of a corporation acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company. Some courts have interpreted this to emphasize shareholder value.]
Asheville Watchdog is a nonprofit news team producing stories that matter to Asheville and Buncombe County. Peter H. Lewis is a former senior writer and editor at The New York Times. He can be reached at email@example.com