- Nonprofit hospitals make a tacit promise for their tax-exempt status: provide charity care to its poorer patients and their families. But a new study in JAMA by researchers at Johns Hopkins University concludes that financially better-off facilities provide proportionately less charity care than their poorer performing counterparts. Hospitals in states that expanded Medicaid eligibility under the Affordable Care Act also tend to provide less charity care.
- While hospitals are able to formulate their own charity care policies, the study's authors concluded that "non-profit hospitals with substantial financial strength should consider more generous financial assistance eligibility criteria to reduce the financial risk exposure of disadvantaged uninsured and underinsured patients."
- The study shines a fairly harsh light on charity care practices among various hospitals. Senate Finance Committee Chairman Charles Grassley, R-Iowa, has questioned whether the less generous hospitals should retain their tax-exempt status.
The sweeping study of charity care practices at more than 2,500 nonprofit hospitals nationwide suggested hospitals spend about a third of their net income on charity care for uninsured or underinsured patients ($13.7 billion expended on charity care in 2017 compared to $47.9 billion in net income).
However, the JAMA study, based on the 2017 Medicare cost data, found a troubling stratification of which hospitals are more likely to dole out charity care.
Hospitals in the top quartile of financial performance have less generous charity care policies than those with middling bottom lines. A lot less, as a matter of fact. According to the study, hospitals in the top quartile provide $11.50 in charity care for the uninsured for every $100 in overall net income. They provided $5.10 in charity care for every $100 for underinsured patients.
But hospitals in the third quartile provided $72.30 in charity care for every uninsured patient and $40.90 for every underinsured patient. Based on aggregated data, the entirety of black ink belonged to the hospitals in the top quartile of performance.
Moreover, hospitals in states that expanded Medicaid under the ACA were vastly less likely to provide charity care. They spent $12 on charity care for the uninsured for every $100 of net income, versus $37.80 among hospitals in states that did not expand Medicaid.
Whether this study changes the equation on how charity care is distributed by hospitals remains to be seen. The American Hospital Association has long argued that the community benefits non-profit hospitals provide far outstrip the tax revenue local, state and federal governments forego.