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With charity towards all

October 2, 2010
by Terry L. Stawar, Ed.D.
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For the first time in over 10 years I have heard people say that they can't afford our services. While emergency services are still provided without charge and a sliding fee scale is still in effect, over the last two years we have made a major policy shift. The sliding scale is truncated and we now require upfront payment. Our charity care percentage as a per cent of total revenue has dropped from 34% to under 15%. Our bad debt percentage has likewise decreased.

Of course, this change impacts mostly those people who do not have Medicaid or Medicare, good insurance, or independent means-- our classic first party pays. The collection rate for this group was never much better than 10%-20%. Of course, we look stronger on our audit and even have generated more cash, but what about our mission? What do you say to the school counselor who asks, “What are people, who can’t pay $20 dollars an appointment, supposed to do?” I don't have a good answer.

Over the years reactions to clients who can't or won't pay their fees has varied. Some organizations develop a few token free “scholarship slots” and ration their “charity care”. Some practitioners have encouraged their clients to use credit cards for payment. This dubious practice shifts the bad debt problem to the credit card company and perhaps increases the financial stress on clients. In the past I have heard both professional and support staff blame clients for simply not making treatment a priority in their lives compared to things like smoking two packs of cigarettes a day, maintaining an expensive cell phone, or subscribing to a premium cable TV movie channel.

Changes in our Medicaid rate structure and service continuum have devastated our profitability and we cannot afford the over six million dollars in uncompensated care that we routinely provided in the past. Formerly we would ask for payment, but allowed clients to run up large balances, which we eventually wrote off and then we started all over again.

We were late in making these changes compared to many other centers. My wife, who works for a free church-affiliated counseling center, tried to refer one of her middle class clients to a CMHC located several counties away, a while back. This client, who had moved to a new town, called back and said that the upfront fees were so hefty that her family just couldn't come up with the money needed to pay for services. She told my wife that unless you had Medicaid, it was almost impossible to afford the charges.

Perhaps in a few years the Affordable Care Act will extend Medicaid benefits to many of these people. But the question remains, “What are they to do in the meantime?


Terry Stawar

President/CEO (LifeSpring, Inc.)

Terry Stawar



Terry L. Stawar, EdD, is President and CEO of LifeSpring Health Systems, a community behavioral...

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