Hospitals Talk Charity, but Give Precious Little

Corporate Responsibility Disparities Financial Justice
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            Little Rock      Let’s be honest, this work is hard, and sometimes you don’t know whether to jump up and down and shout with joy or scream in frustration and pain.  That’s a little bit of the mixed feelings I had reading an article on the front page of the Wall Street Journal about the miserly way that tax-exempt, nonprofit hospitals handle charity care.

Don’t misunderstand me, the article was great.  They looked at the 990s for nonprofit hospitals across the country, and they zinged them pretty good, finding that “in aggregate 2.3% of their patient revenue” was written off as charity care.  They also compared it to publicly traded hospitals, like the giant HCA chain, and the fact that the for-profits wrote off 3.4%.  This comparison was one of the big themes of the piece, and they quoted John Hopkins professor Gerard Anderson’s estimate that the tax benefit of the nonprofits’ exemption was worth $60 billion.  The Journal also noted that…

in states that haven’t expanded Medicaid – where the need for charity care may be greater – nonprofits’ rates were lower in aggregate than the for-profit hospitals’.  In Medicaid expansion states, nonprofits had similar charity-care rates to their for-profit rivals, in aggregate, with the difference amount to less than a 10th of a percentage point – 1.49% of patient revenue for the nonprofits versus 1.56% for the for-profits.

The Journal didn’t mince words about the fact that the federal standards were at best loosey-goosey, allowing the hospitals themselves to decide the criteria for who might qualify for charity care with their own idiosyncratic systems.

So, right on, ok?  We’re happy to see this, so that’s something to cheer.  What makes us want to shout though is the fact that we issued a report, albeit for only three states, Arkansas, Louisiana, and Texas, last year.  We shared it widely, including sending copies to the Journal. We saw this as a scandal that could have added, by our estimates, more than a billion dollars in charity care in just these three states, but, frankly, our report, was greeted with something between silence and indifference.  We’re organizers, so we get it.  These big nonprofit hospitals are huge deals in their local communities.  They are significant advertisers.  They are highly respected for the quality of their healthcare in many cases.  Maybe it takes national media to hold them accountable more than our research and organizations? That’s real, even though it galls, and the reason it galls me is not pride, but the fact that people, who deserved charity care and a lot more of it, didn’t get it, and instead didn’t go to the hospital when they needed to do so or are still strapped with medical debt.  They hurt people and got away with it.  Their excuses when contacted by the Journal were lame and dissembling, including the worst of the canards that they called some things charity when they were writing off the difference between federal reimbursement and their additional profit taking.

We highlighted the scandal at New Orleans-based Ochsner, where the CEO makes more than they dedicate to charity care, and the Journal did as well.  They felt like redemption, since we had so often felt like we were talking to ourselves in Louisiana about this increasing monopoly and its abuse of its tax-exempt status.

Not to quibble, but for all of the strength of the article, nowhere do they mention that in the passage of the Affordable Care Act, the Grassley amendment required the IRS to make sure that nonprofit hospitals were actually stepping up to the plate on the issue of increased charity care.  As our report indicated, and theirs underlined in spades, that’s not happening.  The Grassley amendment authorized the IRS to remove their tax exemptions.  That’s even rarer than charity care.

Hopefully, this will be a wakeup call for the Biden administration to finally create real standards with accountable enforcement so that nonprofit hospitals are leading the way, rather than dragging their wagons on charity care and harming lower income families in the process.