Tag Archives: nonprofit hospitals

Nonprofit Hospitals Are “Confused” About Charity and Profits

New Orleans       Over the last several years, ACORN International and the Labor Neighbor Research & Training Center have been collecting and analyzing the IRS 990 forms filed by tax exempt, nonprofit hospitals in Arkansas, Louisiana, and Texas.  This is a project driven by our “volunteer army,” so it has risen and fallen as our soldiers have entered or deserted the battlefield.  We have been immeasurably assisted though by student interns from Tulane University in New Orleans and the University of Ottawa in Ontario, Canada.  We collected most of the 990s three years to four years ago and are now collecting the most recent filings in order to compare the numbers and finish the report.

What are we looking for, you might correctly wonder?  We’re looking at the level of charity care, which is the essence of extremely valuable federal tax exemption enjoyed by these institutions.  Believe it or not, it’s not easy to find, and once found, is often abysmally small compared to what you would expect for institutions receiving the benefit.

A recent piece by Dr. Danielle Ofri in the New York Times noted that,

“An analysis by Politico found that since the full Affordable Care Act coverage expansion … revenue in the top seven nonprofit hospitals (as ranked by the U. S. News & World Report) increased by 15 percent, while charity care – the most tangible aspect of community benefit – decreased by 35 percent.”

This is a confounding observation which tracks the work we have been doing as well.  On one hand the “community benefit” is the test the IRS uses to determine whether a healthcare institution continues to be deserving of the tax benefit.  On the other hand, it flies in the face of the requirement in the Affordable Care Act that the IRS monitor and check charity care to assure that it increases under the ACA at penalty of pulling the tax exemption for non-compliant institutions.

Dr. Ofri  joins us in noting that some of these hospitals are also trying to claim a community benefit essentially by cooking the books.  In some cases, they are trying to write off the difference between their inflated sticker price for procedures with the more realistic, and lower, rate that Medicaid allows for a reimbursement by calling a “loss.”   Believe it or not!

When we began our work the average level of charity care around the country was roughly 4%.  Seems low, doesn’t it?  Nonetheless, we took that number as a comparative benchmark.  The giant Hermann Memorial in Houston was hardly half of that number.  The rapidly expanding billion dollar, Ochsner Hospital network based in New Orleans was hardly 1%.

We’re worried that the numbers are going down rather than up for charity care.  Iowa’s Republican Senator Church Grassley had insisted on this amendment to the Affordable Care Act.  Next year he will have served forty years in the Senate.  If charity care is going down, rather than up, we have to wonder if he’s still really on the job.

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Hospitals Doing Harm to Patients Paychecks


The Methodist Le Bonheur Healthcare system in Memphis, which includes Methodist University Hospital, has sued thousands of patients, including many of its own low-wage employees.
Andrea Morales for MLK50

New Orleans       With the passage of the Affordable Care Act, hospitals were on notice.  Costs were out of control and people were going to be looking.  Prices were going to be made public so some patients could compare.  Hospitals were going to be able to be ranked by health outcomes.  Accountability was coming!

This was especially true for nonprofits, thanks to a late amendment by Senator Charles Grassley, Republican from Iowa, their charitable contributions were going to be tracked to see if they aligned with their tax-exempt requirements.  The IRS was going to be doing the checking and the enforcement.  The penalty for not providing charitable care could be loss of the tax benefits, which would be a fatal diagnosis for most nonprofit hospitals. Reports indicate that the exemption is worth $9 billion.  They were given a number of years to get their act together, but the years since the passage of the Act meant that time has now come and gone.

What is the accounting now?  How is it working out?  We found that trying to parse the IRS 990s to determine the real level of charitable care was often whack-a-mole, where researchers with ACORN International and Labor Neighbor Research & Training Center were often trying to find the real charitable expenditures hidden in obfuscation.  Many nonprofit hospitals tried to claim the difference between their “sticker prices” for care and the Medicaid reimbursement rate as “charity.”

A recent report on Virginia hospitals in JAMA, the Journal of the American Medical Association, the doctors’ union and trade association, according to the Becker Hospital Review found that,

“…36 percent of hospitals in Virginia garnished patient wages to collect payment for medical bills in 2017. Most of the hospitals that garnished wages (71 percent) were nonprofit. Researchers note their findings “suggest hospitals with greater financial need (nonprofit, lower annual gross revenue) may be pursuing debt collection to the final stage of garnishment.” Those that garnished wages recorded average annual gross revenue of $806 million and garnished an average of $722,342 in wages, or $2,783 per patient.”

Virginia hospitals are not outliers.  The Wall Street Journal quickly reported that hospitals in Arizona followed the same playbook.  The hospital system connected to the University of Kentucky tried to use the Kentucky state revenue system to help collect their bills.  John Hopkins in Maryland was a big litigator.  All of this is after a raft of stories several years ago and reports by Pro Publica and others of nonprofits for whom debt collection was more central to their business plan than good patient care.

All of this is in the face of prohibitions in the Act that were supposed to curtail such practices, if not eliminate them entirely.  As the Journal reminded, the Act requires that,

“…hospitals must post and provide information on their financial-assistance policies and send notices that they are planning to sue. They also must limit the amount charged to the uninsured and wait four months before using stepped-up collection efforts such as filing a lawsuit.”

Ignoring the law, human decency, and the proscription that they “do no harm,” such practices define impunity.

If the IRS can’t do its enforcement job, then states, prosecutors, and the Justice Department need to step up, while the rest of us need to hit the streets before more patients are sentenced to poverty for the bad fortune of experiencing bad health.

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