In Return for Not Paying Billions in Taxes, Nonprofit Hospitals are Required to Provide Community Benefits, Like Free/Discounted Care for Poor People. WSJ Analysis Found a Serious Lack of Generosity

From [HERE] Nonprofit hospitals get billions of dollars in tax breaks in exchange for providing support to their communities. A Wall Street Journal analysis shows they are often not particularly generous.

These charitable organizations, which comprise the majority of hospitals in the U.S., wrote off in aggregate 2.3% of their patient revenue on financial aid for patients’ medical bills. Their for-profit competitors, a category including publicly traded giants such as HCA Healthcare Inc., wrote off 3.4%, the Journal found in an analysis of the most-recent annual reports hospitals file with the federal government.

Among nonprofits with the smallest shares of patient revenue going toward charity care—well under 1%—were high-profile institutions including the biggest hospitals of California’s Stanford Medicine and Louisiana’s Ochsner Health systems. At Avera Health, a major hospital system in South Dakota, charity care was roughly half of 1% of patient revenue across all its 18 hospitals.

“The financial assistance programs, the charity care that’s provided, are as important as the actual medical services,” said Ngozi Ezike, president and CEO of Sinai Chicago, which has two general hospitals that serve patients in west and south Chicago. The hospitals rank in the top 10% nationally for what they spend on financial aid as a share of their revenue. “We don’t want limited financial resources to mean limited lifespan,” Dr. Ezike said.

‘Charity care’

In return for not paying taxes, nonprofit hospitals are supposed to provide community benefits. The clearest form is free or discounted care for poor patients who otherwise couldn’t afford it, say many health-policy experts. Hospitals have traditionally described the cost of erasing, or writing off, bills as spending on “charity care.”

Federal law requires nonprofit hospitals to have policies to assist such patients. But federal guidelines allow them broad freedom to write and implement those policies and don’t require hospitals to meet any specific targets for financial-assistance totals.

The value of nonprofit hospitals’ subsidy from avoiding taxes is more than $60 billion a year, according to estimates by Johns Hopkins University professor Gerard Anderson.

Nonprofit hospitals say the national charity-care figures don’t provide a full picture, because some states expanded their Medicaid programs under the Affordable Care Act, reducing the uninsured population and resulting in less need for free care. [MORE]