Some 16 of the largest nonprofit hospital systems in the U.S. generate $3 billion in revenue and 12 of them allocate just 2% to charity care, according to data in a report researched and released by the U.S. Senate’s Health, Education, Labor, and Pensions (HELP) Committee.
Authors of the report alleged that of those 12, six dedicate less than 1% of total revenue to charity care. The committee, chaired by Sen. Bernie Sanders (I-Vermont) alleged that in 2021, the most recent year for which data is available for all 16 of the hospital chains, those companies’ CEOs averaged more than $8 million in compensation and collectively made more than $140 million.
American Hospital Association President Rick Pollack disputed the claims in a blog post titled “New Tunnel-Visioned Report Gets It Wrong on Community Benefit.” Pollack wrote that the report “is totally off base and does not fully account for the wide range of community benefits that hospitals provide. This tunnel-visioned ‘research’ neglects to consider that under the law community benefit is defined by much more than charity care and includes patient financial aid, health education programs and housing assistance, just to name a few.”
The report’s authors claimed that nonprofit hospitals provided less charity care even as these hospitals saw a steady increase in their revenues and operating profits. One study cited in the report found 86% of nonprofit hospitals spent less on charity care than they received in tax benefits between 2011 and 2018. Another recent study they cited found that nonprofit hospitals increased their average operating profit by more than 36%, from about $43 million to almost $59 million, between 2012 and 2019.
During that same period, the hospitals almost doubled the cash balances they held in reserve, from an average of about $133 million to more than $224 million. During that the same time period, average charity care spending dropped from just $6.7 million to $6.4 million, the authors alleged.
Pollack took issue with much of the data. “The AHA analyzes the IRS filings tax-exempt hospitals make every year that calculates the value of community benefits. According to a new report, tax-exempt hospitals provided $129 billion in total benefits to their communities in 2020, despite a global pandemic. This is about $20 billion more than the prior year and 15.5% of total hospital expenses.”
This AHA new data “builds on a report by the international accounting firm EY demonstrating that the return to taxpayers for hospitals’ federal tax exemption is $9-to-$1 (2019); that is, for every one dollar of tax exemption, taxpayers receive $9 of community benefits. That is a remarkable return by any standard,” according to Pollack.
Sanders called on congressional colleagues to establish clear, enforceable standards for nonprofit hospital financial assistance programs. “Oregon already requires nonprofit hospitals to provide subsidized care to patients earning up to 400% of the federal poverty level and requires that patients earning below 200% of this amount receive free care,” Sanders said via a statement.
The statement continued: “Congress should also require hospitals to determine whether a patient is eligible for such assistance and provide it, regardless of whether the patient proactively requests information on financial assistance programs or charity care. In addition, lawmakers should impose further restrictions on non-profit hospitals engaging in the kinds of extraordinary debt collection processes discussed in this report.”
