Tag Archives: nonprofits

Comprehensive series on N.C. hospitals includes national context, effects of reform

The (Raleigh, N.C.) News & Observer and The Charlotte (N.C.) Observer just combined forces to do a terrific five-part series on hospitals called “Prognosis: Profits.”

It’s not just a great expose/explainer/data analysis/narrative that tells readers about the state of the hospital industry in North Carolina and its national context. With lots of examples, data and sidebars that break down some complex policy ideas, it’s also a great primer for anyone who wants an easy to understand but multifaceted Hospitals 101 (without being Hospitals for Dummies). For you multimedia fans out there, it also has a video component.

In a nutshell, the series – a collaboration of investigative and health care writers – found that some of the hospitals make a ton of money and charge more than hospitals elsewhere and that the charity care many of them provide is worth less than the tax-breaks they get ostensibly for providing care to the community. And yes, it gets into many of the complexities of charity care versus community benefit versus cost-shifting versus bad debt. (We’ve written about some of that on this blog.)

They write:

During the Great Recession, their profits have stayed strong, and they’ve raised their prices. Top executives enjoy million-dollar compensation packages as they expand, buy expensive technology and build lavish facilities. Their customers buy the services before they know the cost, and they often don’t understand the bills.

And the hospitals enjoy a perk worth millions each year: They pay no income, property or sales taxes.

The series describes what it’s like to be poor and sick and have a collection agency come after what little you have to pay a big bill for a medical emergency. It describes the million-dollar plus compensation packages of hospital execs. (One got $8.7 million, including a big retirement trust payment.)

The articles blend individual patient stories with policy context and a lot of hospital financial data (which readers can search in an online database that includes total and operating margins for every hospital in the state). The fifth and final installment (as well as some of the fourth) looks at some of the solutions that have been put forth, by state legislators and patient and consumer advocates.
Health Reform core topic

The series avoids one of the pitfalls that drives me crazy in some otherwise good hard-hitting reporting. It describes a problem – deeply and accessibly. But it also goes beyond looking at a snapshot of where things stand today. It connects today’s reality, today’s system, to the many underreported provisions of the Affordable Care Act that may create new tools and forces and legal and financial and cultural shifts that can bring about change – depending on the Supreme Court, the politicians, and on how much the health sector (and patients) embraces versus resists change. (That’s a sidebar in part 3.) Among the relevant elements of the health law it identifies (and the sidebar gives more specifics than I’m including here):

  • Hospitals must develop financial assistance policies and the criteria for receiving the help.
  • An end to the widespread practice of charging the uninsured who qualify for financial assistance more than they charge the insured
  • A ban on nonprofits engaging in “extraordinary collection actions”
  • A requirement that they assess community health needs every three years, and devise a plan to meet them

The series has gotten the attention of federal and state legislators. We’ll see if they stay engaged. And how that matters.

Joanne Kenen (@JoanneKenen) is AHCJ’s health reform topic leader. If you have questions or suggestions for future resources, please send them to joanne@healthjournalism.org.

Health reform comes with new rules for nonprofit hospitals

When I first started covering health care, I thought that a nonprofit hospital was one that didn’t make any money. It took longer than I should probably admit to come to understand that nonprofit/nonprofit status isn’t about making money. It’s mostly about paying taxes.

As this excellent recent story by M.B. Pell in The Atlanta Journal- Constitution shows, nonprofits may or may not have a healthy bottom line. They may or may not pay their top executives a lot of money. They may or may not provide really good care.

What questions do you have about health reform and how to cover it?

Joanne KenenJoanne Kenen is AHCJ’s health reform topic leader. She is writing blog posts, tip sheets, articles and gathering resources to help our members cover the complex implementation of health reform. If you have questions or suggestions for future resources on the topic, please send them to joanne@healthjournalism.org.

What they don’t do is pay taxes. Nonprofits are supposed to be mission-driven. In exchange for serving their community, they get the tax exemption.

One little-known element of the health care reform law – which I highlighted in my first tip sheet on the anniversary of the law’s passage – sets new rules for nonprofits. They are required to assess community needs, and inform patients of charity policies. Some lawmakers, notably Sen. Chuck Grassley, an Iowa Republican, want tougher rules and oversight. The goal is to make sure they are providing enough service to the community to justify the tax break.

States, which make their own determination on who is exempt, may follow suit; in fact, Illinois just denied property tax exemptions to three hospitals.

As a report from the Hastings Center said, “A 2007 Internal Revenue Service report stated that about half of nonprofit hospitals spent 3 percent or less of revenues on charity care. Nowadays, hospitals are bringing in large amounts of money, paying their CEOs record amounts of compensation, and engaging in aggressive debt recovery actions.” Many of the hospitals use “sticker” prices to value their charity care, even though that’s not what the hospital gets from most patients.

In Georgia, the hospitals get millions in tax breaks. Nationally, the latest number I saw was $13 billion for federal taxes, and that doesn’t count state and local tax breaks. Pell explains:

Residents pay more in taxes because these hospitals are exempt. In exchange, taxpayer-subsidized hospitals are expected to provide charitable services – “a community benefit.”

But Georgia, like 35 other states, has no specific requirements hospitals must meet to justify these tax breaks.

And an Atlanta Journal-Constitution analysis of hospital data reveals that some not-for-profit hospitals provide less in community benefits – specifically, charity health care for the poor – than the tax-paying, for-profit hospitals they compete with.

It’s not all black and white; the article notes complexities such as a hospital that doesn’t provide much free care – but does heavily subsidize some local community clinics. And Georgia has instituted a “bed” tax on nonprofits and for profits alike to help generate some more money for Medicaid, which has been strapped during the nation’s economic crisis. Overall, it’s a good read and a roadmap for enterprise reporting in other communities. Pell wrote an article about how he did his reporting for AHCJ that spells out a number of tips for reporters.

That tip sheet has further resources, including advice on deciphering hospital financial records from this presentation from The Philadelphia Inquirer‘s Karl Stark. If you are interested in the topic and are still daunted by the data, see if you can find a reliable local advocacy group who can help you sort them out, or a health care finance professor in your state who may be able to help you out.

If you Google, you will find stories about highly paid executives at nonprofit hospitals – that’s a good part of the story, and one that readers/listeners/viewers can grasp, but it’s not the whole story. Nancy Kane, a professor at Harvard School of Public Health, (who explained a lot of this to me some years ago) wrote on this topic a lot for a while, but when I did a quick check, most of the work I found was several years old. Here are some current resources to help reporters check into the nonprofit hospitals in their areas:


AHCJ tip sheets

Related stories

Report looks at nonprofits’ health reporting

Maralee  Schwartz, a Shorenstein  Center  Fellow at Harvard University, has written a report titled “Getting  It  for  Free:  When  Foundations  Provide  the  News  on  Health.” (35-page PDF)

She points out that using stories produced by nonprofit foundations “raises  questions  that  go  to  the  heart  of  the  journalistic  enterprise  and  its  role  in  American  democracy:  Does  the  very  availability  of  content  about  a  pet  issue  of  a  particular  foundation  mean  that  coverage  will  be  skewed?  Does  nonprofit  journalism  mean  lower  standards?  How  does  a  newspaper  safeguard  integrity  and  independence?”

The report also looks at the economic challenges that editors are facing, including the results of a survey AHCJ and the Kaiser Family Foundation did in March.

Schwartz, formerly a political  reporter and  editor at  The  Washington  Post, takes a close look at Kaiser Health News. Schwartz also writes about efforts in various states to create nonprofit organizations to do health reporting, including the Center for California Health Care Journalism, which first partnered with the Merced Sun Star for a project. Other similar projects include the Kansas Health Institute News Service and Health News Florida.

The report includes interviews with reporters and editors at the nonprofit organizations and at newspapers that have used their work, including AHCJ board member Karl Stark.

Schwartz concludes that “Most  of  the  experts  interviewed  expressed  hope  that  this  trend  can  be  supported.  They  also  agreed  that  objections  about  the  dilution  of  independence  and  journalistic  standards  can  be  addressed  by  developing  odes  of  conduct,  for  lack  of  a  better  phrase,  so  that  both  editors  and  readers  can  have  confidence  in  the  work  produced  by  Kaiser  or  ProPublica,  or  a  variety  of  other  nonprofits.”

Foundations’ role in health reform is changing

Some philanthropic foundations and think tanks in California are frustrated that efforts to finance studies and projects have done little to improve medicine. So some are taking on a crusading role for health care reform in Sacramento, which is the state capitol, and Congress, according to the Los Angeles Times.

Breaking from more traditional practice, several have staffed offices in Sacramento and hired experienced former advisers to lawmakers in hopes of educating legislators. However, as the paper points out, this may be risky, since nonprofits are barred under Internal Revenue Service rules from lobbying or engaging in partisan politics.

Here’s one example: the California Endowment, a foundation based in Los Angeles with more than $3 billion in assets, has hired Daniel Zingale, a senior adviser to Gov. Arnold Schwarzenegger, to encourage policies the endowment favors. Such as? Ensuring that all children have health coverage and making doctors and hospitals focus more on disease prevention and the management of chronic ailments, the Times tells us.

“We really consider ourselves to be supporting positive change and not just making grants,” Dr. Robert Ross, the endowment’s president, tells the paper. As for the California HealthCare Foundation, its Sacramento office employs a former legislative health expert to ensure the foundation’s research topics are relevant to legislative agendas.

“Our view is the legislature is not facing a shortage of recommendations but a shortage of reliable information,” Dr. Mark Smith, president of the foundation, tells the Times.

Sally Pipes, president of the Pacific Research Institute, a conservative think tank based in San Francisco, says foundations risk undermining the credibility of their research by wading into policy deliberations. “I think that’s a bad move for them, because I think they will be really tarred as lobbyists,” Pipes tells the paper. “I don’t think lobbyists have the respect of economists or researchers.”

What do you think? How far should foundations go in pushing for legislative change?