Decay of ethical leadership is clear as Providence gouges the vulnerable

Providence has fallen far since the Sisters of Providence incorporated in 1859 with the Washington territorial government for “the relief of needy and suffering humanity, in the care of orphans, invalids, the sick and poor. …”

The decay of ethical leadership is endemic in the corporate world. It is all the more troublesome in health care systems, particularly those that are faith-based. Government regulators must continue to be vigilant, but what’s really needed is a more enlightened generation of business leaders who understand that cutting corners, cheating customers and flouting rules only lead to organizational rot and an eventual comeuppance.

Earlier this month, the state Attorney General’s Office announced an agreement with Renton-based Providence to resolve a lawsuit that alleged the health care giant trained its staff to aggressively ask for payment from patients with low incomes who were likely eligible for financial assistance or billed them without determining if they qualified. In thousands of cases, Providence knowingly sent low-income patients — including Medicaid enrollees — to debt collectors.

Providence must forgive more than $137 million in medical debt and refund more than $20 million to patients the company billed for services despite knowing they likely qualified for free or reduced-cost health care. The refunds and debt relief will help nearly 100,000 people.

In a statement, Providence said it “recognizes the tough challenges many members of our community face that result in them not completing the financial assistance application process and we are also making improvements to our processes to encourage more individuals to apply for such assistance, which we are happy to offer.”

The phrase “we are happy to offer” seems incongruent with information gleaned in the legal action. One of Providence’s own employees warned leadership that the health system’s practices were “sending the poor to bad debt.”

The gouging of patients with low incomes is all the more galling considering Providence CEO Rod Hochman is the state’s highest-paid health care executive, according to the Puget Sound Business Journal. Hochman received a total compensation package of $9.5 million in 2021, per the most recent data available for the system. In years prior, his pay reached nearly $11 million.

Providence is one of the largest health care providers in the country, with a total of 51 hospitals, 34,000 physicians, and 1,000 clinics.

In 2012, Providence swallowed Swedish Health Services. Hochman was Swedish president and CEO at the time.

This is not the first time Providence has gotten into hot water for reneging on charity care.

In 2016, a merger between Irvine, Calif.-based St. Joseph Health Systems and Providence created Providence St. Joseph Health.

Between July 2016 and June 2017 neither of the two St. Joseph Health-Humboldt County hospitals met charity care obligations mandated by then-California Attorney General Kamala Harris, according to the Eureka Times-Standard. Instead, the hospitals contributed to nonprofit organizations that provided health care services, said a St. Joseph’s community benefit director.

Tax benefits from federal, state, and local governments support charity care at nonprofit hospitals.

The Providence mission states: “As expressions of God’s healing love, witnessed through the ministry of Jesus, we are steadfast in serving all, especially those who are poor and vulnerable.”

Medical ethics aside, such a mission statement makes the flouting of financial obligations to the poor and vulnerable all the more unconscionable. Providence must change its corporate culture, but it is far from the only mega-business in need of soul searching.