Are Non-Profits Short On Charity Care?
The perception that not-for-profit hospitals provide more in community benefits than for-profit institutions may be inaccurate, according to a new study by UC San Francisco researchers.
UCSF examined the financials of 264 hospitals in California, 200 of which were not-for-profits. The Golden State was particularly handy for the study because it is the only state that requires both not-for-profit and for-profit hospitals to submit charity care and uncompensated care data to regulators.
The study concluded that not-for-profit institutions spent about 1.9% of operating revenue on charity care, compared to 1.4% by for-profits. Most hospitals spent about 0.9 percent of their revenues on charity care. The figures ranged from zero to 11%.
But when bad debt is factored in, both for-profit and not-for-profit hospitals devote about 4.4 percent of their total operating costs to uncompensated and charity care.
“The data show that some not-for-profit hospitals are not pulling their weight when it comes to uncompensated care,” said Renee Hsia, M.D., a UCSF professor and the study’s senior author. “The hospitals that are spending the highest proportion of their budgets on charity care may be at a competitive disadvantage. Hospitals spending more on charity have less disposable dollars to afford better facilities, leading to a situation where the ‘nice’ hospital finishes last.”
Meanwhile, Hsia predicted that charity
care would decline as more Californians and residents of other states are enrolled in health exchanges and Medicaid programs, while Medicaid shortfalls would rise.
She suggested that other states follows California’s example of increasing Medicaid payments in order to help preserve some level of charity care.
“Not-for-profit hospitals save more than $24 billion a year in federal, state and local taxes,” she said.“There are general guidelines that dictate that these hospitals must provide a benefit to the community, but there is no minimum requirement. Individual hospitals set their own policies. A patient that qualifies for charity care at one hospital might have their charges counted as bad debt at another hospital.”
