When reviewing just about any hospital bill today, it’s difficult to imagine that hospitals were founded to provide care for the poor. “Hospitals in the United States emerged from institutions, notably almshouses, that provided care and custody for the ailing poor,” says America’s Essential Hospitals, an association of hospitals and health systems dedicated to providing high-quality care for all, including the vulnerable. “Rooted in this tradition of charity, the public hospital traces its ancestry to the development of cities and community efforts to shelter and care for the chronically ill, deprived, and disabled.” Continue reading
Bad debt? Or charity care? Sean Hamill of the Pittsburgh Post-Gazette recently wrote an interesting story about how hospitals increasingly are re-categorizing the health care bills of low-income patients in a fashion that may be helping the hospital more than the patient.
Some angles in this story are especially timely as the 2017 Affordable Care Act enrollment season is about to begin. Continue reading
Beth Kutscher, a Modern Healthcare reporter who recently become the publication’s California bureau chief, has covered health care finance for several years, with a particular focus on for-profit health care.
During her 2015 AHCJ Reporting Fellowship on Health Care Performance, she looked at the impact Medicaid expansion had on hospital finances. And she spent some time reporting on how not-for-profit hospitals have to give back to their communities to justify their tax exempt status.
That’s often through providing charity care or training physicians – but some hospitals are addressing different community needs. One San Francisco hospital, for instance, supports a program that escorts kids after school through a gang-ridden neighborhood, enhancing both their physical safety and their stress levels.
Find out more about how Kutscher explored this topic, and what she learned from it, in her How I Did It essay.
Oklahoma Watch, a nonprofit investigative journalism team, recently published a two-part series on hospitals based on financial data obtained for every hospital in the state. As reporter Clifton Adcock writes in an article for AHCJ, the series revealed that between half and three-fourths of small general hospitals in Oklahoma were losing money, and that hospitals had spent only small fractions of their net patient revenues on charity care.
Hospitals get “disproportionate-share” (DSH) payments from the federal government to help cover costs for treating the indigent. Because Oklahoma was not expanding Medicaid under the Affordable Care Act, hospital groups said they expected to take a big financial hit from the law’s cuts to DSH payments. Oklahoma Watch wanted to see how much they relied on such payments. Continue reading
Writing in the Contra Costa Times, Sandy Kleffman reports that while nonprofit hospitals in the East Bay are given millions in tax breaks, “The responsibility of caring for the indigent falls largely on the region’s public hospitals.”
Kleffman’s findings are based on her analysis of publicly available California Office of Statewide Health Planning and Development reports, documents which she learned to access and process at a September webinar led by AHCJ board president and ProPublica senior reporter Charles Ornstein.
Her analysis revealed a substantial imbalance in the numbers, especially between public hospitals and nonprofits. For example, Contra Costa’s county hospital provided more than three quarters of the total amount of charity care given in the country in 2010, while the six nonprofits together accounted for just under 23 percent.
For their part, representatives of nonprofit hospitals protested that the numbers do not take into account the other community benefits they provide, nor are they adjusted to compensate for the differences in demographics across each institution’s patient pool.
For more on what went into Kleffman’s report, see her sidebar on “How we made comparisons.”
A New York Times article written by Bruce Japsen, an independent journalist writing for the Chicago News Co-Op, digs into Illinois’ recent challenges to the tax exemptions granted to a trio of prominent hospitals by virtue of their nonprofit status. The challenge, inspired in part by the state supreme court’s willingness to uphold the revocation of the nonprofit status of an Catholic hospital in Urbana last year, could expand to more than a dozen other institutions as the state scrambles to cover a looming revenue shortfall.
In its case, the state alleges that the hospitals aren’t providing a high enough proportion of charity care to fulfill the mission of a nonprofit.
All three of the hospitals the state is focusing on provided free and discounted medical care that ranged from 0.96 percent to 1.85 percent of patient-care revenue, according to the revenue department. The state also said that each one had been operating as a “for profit” business when the state’s Constitution says that “only charities are entitled to a tax exemption.”
The hospitals, for their part, point to the other benefits they provide the community, such as neonatal intensive care and burn units, that don’t always bolster their bottom lines. Advocates answer that paying taxes provides a community benefit as well, one that can readily be measured in dollars and cents. And Japsen found that paying those taxes doesn’t even seem to preclude the provision of charity care, especially at the parsimonious levels provided by the hospitals currently targeted by the state.
“The relative amounts of charity care provided by not-for-profit tax-exempts are not materially different from the amount provided by for-profit hospitals,” said Jim Unland, a longtime analyst of Illinois’ health care industry and president of the Health Capital Group, a consulting firm in Chicago. “This raises the issue of whether the tax-exempts are getting prejudicially favorable treatment.”
The three hospitals whose tax exemptions have been stripped by the state department of revenue plan to challenge the action in court, and state hospital organizations are gearing up for a lobbying push they hope will put their tax status on firmer ground.