For hospital corporation, free clinic support ‘in perpetuity’ comes to an end after 20 years. (They’re keeping the building, too.)
by Steve and Janet Watkins
PIE AND CHAI MAGAZINE
Editor’s Note: This story was published in Pie and Chai magazine earlier this week and is reprinted here with permission.
Mary Washington Healthcare CEO Mike McDermott says the Moss Free Clinic is misleading the Fredericksburg community by suggesting the hospital corporation has pulled the financial rug out from under the indigent care facility, which has treated poor, uninsured patients for the past 30 years.
Moss, a 501c3 nonprofit that operates independently of the hospital corporation, recently announced a 60-day freeze on taking new patients because it is desperate for money and in danger of closing as early as this summer. The Moss clinic’s director, board, and supporters have expressed extreme frustration with MWHC’s withdrawal of significant financial support, and concerns about what will become of its patients if the clinic shuts down.
But in a recent hour-long interview, McDermott defended the hospital corporation’s actions, including its decision to stop providing in-kind services to Moss, a move that will cost the clinic $200,000 a year—money it doesn’t have. MWHC pulled the plug last year on IT, payroll, and accounting services that it had provided free to Moss in the past, forcing the clinic to start paying a third-party vendor.
“We told them, ‘You can’t be on our network anymore,’” McDermott said. “There are too many business risks.”
As an example, he said, MWHC issued paychecks to Moss employees, but with uncertain verification of the actual number of hours worked.
“I don’t know if they badged in,” he said. “Picture yourself running a business. There are real risks.”
Of even greater significance, McDermott said, is that MWHC began warning the Moss board as early as 2018 that the clinic was running dangerously low on funds from a $10 million capital campaign conducted for the Moss clinic by the hospital foundation in 2004. The clinic had been drawing down as much as $800,000 a year from that fund, with the rest of its funding coming from Medicaid reimbursements, individual donations, and government and charitable grants.
Despite the warnings that the money was running out, McDermott said the Moss board failed to take the necessary fund-raising steps to ward off financial disaster—and also rejected the hospital’s takeover offer, which would have kept the clinic afloat but under the hospital’s administration, and without the clinic’s full slate of services.
The capital campaign funds are now totally depleted, leaving Moss facing an annual shortfall of at least a half million dollars.
In describing communication between the hospital corporation and the clinic, McDermott used the analogy of someone warning a pilot over and over that their airplane is crashing. The pilot refuses to listen, McDermott said, or take corrective action, until it’s too late to pull out of the nosedive.
“And now the plane’s hitting the ground,” he said, “and [they’re saying] that’s our fault.”
Not surprisingly, Moss Clinic Executive Director Karen Dulaney sees things very differently.
“As with most of the world, our (and MHWC’s) attention was diverted to all things COVID for most of 2020 and 2021,” Dulaney said in an email response. “And, even prior to that, for the period of late 2018 and most of 2019, the Clinic was focused on becoming a Medicaid provider due to Medicaid expansion. I think there was some thought that Medicaid reimbursement would at least partially replace funding from the dwindling campaign. Plus, I don’t think the board expected that MWHC would discontinue support (financial and in-kind) or eliminate services like dental and pharmacy” which were part of the hospital corporation’s takeover proposal.
As for McDermott’s payroll verification concern, Dulaney said this was the first she’s heard of it. “We used THEIR payroll system which required our folks to log in and out every day,” she wrote.
Dulaney and other Moss supporters had good reason to believe that MWHC would continue to support the clinic’s operations. For years, hospital executives touted the Moss clinic as a premier example of the hospital corporation’s community-minded largesse, with the previous MWHC CEO saying Moss would have the money to exist “in perpetuity.” But times have clearly changed.
McDermott was emphatic in the interview that the time for any compromise or further discussion between the hospital corporation and the Moss Clinic has now passed. He said negotiations between the two are at a permanent “impasse,” and if the clinic is forced to close it has only itself to blame.
Among other criticisms of clinic operations, McDermott said Moss, which operates with 32 paid staff and 300 medical volunteers, has used “fuzzy math” to determine the average cost of its patient visits. Dulaney said it’s around $250, the amount of annual spending divided by the number of patient visits. McDermott, without citing specifics, said the actual figure has been closer to $500.
“We can’t run any of our operations, for anybody, at $500 per visit,” he said.
Moss provides poor and uninsured patients with a one-stop shop for medical, pharmacy, dental, and mental health care. It’s not clear what dollar amount rightly values the clinic’s services to patients who, with limited resources, would likely struggle to navigate the conventional, dispersed health care system on their own.
The clinic needs $2.5 million a year to operate at its current level of service. McDermott was adamant that they won’t be getting the help they need from MWHC going forward.
“If their plan is for us to just give them a bunch of money, I don’t think that’s a good plan,” he said. “Why would we do that? From our perspective, they aren’t very good stewards of the resources they have.”
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It wasn’t that long ago—just ten years—that McDermott’s predecessor, Fred Rankin, described a very different relationship between MWHC and the free clinic. In a 2013 interview for a University of Mary Washington oral history project, Rankin spoke with pride about MWHC’s commitment and support for Moss and the “symbiotic relationship” between the hospital corporation and the free clinic.
That symbiosis, Rankin said, started with lengthy discussions by the hospital board to determine the hospital’s “mission” regarding indigent care in the Fredericksburg community. Attention soon turned to the Lloyd F. Moss Free Clinic, which had been serving indigent patients since 1993 with a volunteer medical staff operating out of various donated spaces.
“We identified [the hospital’s community service mission as] taking care of the health needs of the homeless,” Rankin said in his recorded interview, “and we thought the best way to be able to do that was to find a permanent home and make sure that the Moss Free Clinic had a permanent home, which we did. Out of that and after we donated land, came the next capital campaign to raise money for the Moss Free Clinic.”
Rankin continued: “[W]e went through two capital campaigns in this community that benefited the community and not bricks and mortar at Mary Washington Healthcare. That is highly unusual in health care fundraising and I’m also very proud of that. When you look at what this community has today because of the vision of the board and its total and complete commitment to this community, we have a community service fund that helps other organizations leverage health care services.”
And, he added: “We also have an endowment fund for a free clinic so that we can guarantee in perpetuity that no matter what happens to Mary Washington Hospital or no matter what happens to the economics of health care, there is an endowment fund. There is a $10 million endowment fund that sits in the foundation that first of all funded the building of the building and second of all is an operating endowment fund to help defray the expenses of the running of the Moss clinic.”
Whatever the hospital corporation’s original intentions were, little of what Rankin promised the community concerning the Moss Free Clinic holds true today.
The endowment fund, of course—invested and managed by the hospital foundation—turned out not to have been guaranteed “in perpetuity” after all. The capital campaign fund is now empty, the final check made out to the clinic back in the fall, leaving the Moss Clinic scrambling.
And it’s Mary Washington Healthcare, not Moss, that owns the $4.3 million “bricks and mortar” clinic building located on the MWHC campus, even though it was constructed with funds explicitly raised to build and support the indigent care facility.
From the beginning, the Moss Clinic’s lease for the building was renewable every five years at $1 a year, but this past October, MWHC changed the terms. Now the lease is only for one year, and though the “base rent” is still $1, additional rent of $10,650 a month is being charged for use of the first floor of the clinic building and to cover other costs such as insurance and site maintenance that the hospital corporation provided free to the clinic in the past.
The current lease expires in a year and it’s anybody’s guess what will happen after that.
Though McDermott wouldn’t confirm it and said MWHC has no immediate plans for the building, many Moss supporters are convinced the hospital corporation ultimately would like the free clinic gone from the building on Sam Perry Boulevard so MWHC can have full use of the space.
One significant advantage: Hospitals are allowed to bill at a higher Medicare reimbursement rate for facilities within 250 yards of the main campus.
According to Dulaney, Moss has already vacated office space they were using on the second floor of the Clinic building. Clinic Medical Director Patrick Neustatter said it was his understanding that MWHC was intending to use the space for an orthopedic clinic, though he didn’t cite the source of that information.
McDermott, when asked about the purported plan, wouldn’t answer.
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In a recent letter to the Fredericksburg-area community about MWHC’s commitment to “providing care to those most in need,” Mike McDermott wrote that the hospital corporation’s foundation donated $1.4 million to free and charitable medical clinics in the region in 2023. The letter was signed by 28 members of the MWHC board.
McDermott acknowledged in the recent interview, however, that $1.1 million of that total went to the Moss Free Clinic, most of it the final transfer of the now-depleted capital campaign funds specifically raised and earmarked for Moss back in 2004.
That means the hospital foundation’s largesse last year—its charitable donations for clinics providing indigent care—was only $300,000, a much smaller amount than the $1.4 million claimed.
According to McDermott, the $300,000 was divided among several other area clinics, two of which (in Locust Grove and Colonial Beach) are only open a few hours a week, one of which is a Federally Qualified Health Center with a six-month waiting list, one of which provides temporary respite care for people who are unhoused, and one, a Christian clinic in Spotsylvania, that principally serves patients with private insurance and Medicare.
With no plans to provide any further support for the Moss Clinic going forward, McDermott said MWHC is focused on investing in its $10 million, three-year Internal Medicine Residency Program, which started last year to recruit and train new doctors. He said the hospital corporation expects 70 percent of them to stay and practice in the area after their residency. He said once the Residency Clinic is fully staffed—in the third year of operation—physicians there will be able to address many of the medical needs of the indigent clients now served by Moss.
There is currently a three-month wait for appointments at the Residency Clinic, where patients can be billed a facility use charge on top of the standard fee for doctors’ appointments.
McDermott said there hasn’t been as much need for indigent health services in the area since Medicaid expansion in 2019 doubled the number of Virginia residents covered under the federal program. While Medicaid expansion four years ago did provide coverage to nearly a million more eligible Virginians—individuals making less than $20,210 a year, or a family of three with an adult making under $34,307—nearly 250,000 of those added since 2019 have since been dis-enrolled as part of a mandated eligibility review some are calling the “Great Medicaid Purge.”
That review, which has already kicked 20 million financially struggling individuals and families off Medicaid nationwide, is ongoing. Some were denied continuing coverage because they aged out of the program or because their income level had increased. Most, however—nearly 70 percent, according to the health policy research center KFF—have lost their coverage due to paperwork errors.
The National Association of Free and Charitable Clinics reports that 80 percent of their 1,400 member clinics have seen increases in patients and visits since the rollback began.
And a third of Americans—more than 100 million people, a quarter of them children—are what are now being referred to as “medically disenfranchised,” meaning they lack access to primary care providers, including federally-funded health clinics. That’s according to a new report from the National Association of Community Health Centers and the American Academy of Family Physicians. About half of those who are medically disenfranchised are people of color, and the majority live below the poverty line.
Though the Moss Clinic instituted a 60-day freeze on new patients on April 1, providers there still see between 30 and 50 patients a day, according to Dulaney. Many of those patients are only able to get to the facility by Fredericksburg city bus—something that’s not an option at most of the other clinics in the area. The severity of patients’ needs is a factor in the cost of care at Moss, where 75 percent of patients have at least one chronic illness, and 30 percent suffer from diabetes.
An important feature of the Moss Free Clinic is what Dulaney calls “the holistic nature of Moss’s offerings,” a comprehensive approach to indigent care that allows patients with limited time and resources access not only to regular medical services, but to desperately needed dental, specialty treatment, mental health, diagnostic testing, and pharmacy services as well.
McDermott, who will earn $2.4 million as MWHC CEO this year, said indigent patients will be able to get medical care through MWHC and its residency clinic, but if Moss closes, they will have to seek providers elsewhere for the dental, mental health, and other services.
With the loss of funding and withdrawal of support from Mary Washington Healthcare, it’s hard to see how the Moss Free Clinic will continue offering its current level of care, even if the clinic is somehow able to survive.
All that’s certain for now is that Moss has run out of funds from an endowment that was supposed to exist “in perpetuity,” and the hospital corporation’s vision is to no longer support the clinic, but instead to continue to grow as the predominant medical provider in the region—and somehow absorb indigent health care into its new and expanding residency program.
McDermott said he believes his approach reflects good financial stewardship for MWHC and will provide more equitable care for all. Dulaney and the Moss board fear the community’s most vulnerable patients will suffer—and ultimately land in the ER, costing the hospital even more—if the free clinic has to close.
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Steve and Janet Watkins are the co-founders of Pie & Chai. They are parents, grandparents, longtime Fredericksburg residents, and journalists at heart. Steve is the author of 15 books, two coming out in 2024. Janet is a writer and former nonprofit director.
