Dive Brief:
- Half of hospitals spend just 1.4% or less of their operating expenses on charity care, though the level of charity care varies significantly facility by facility, according to a new analysis by the Kaiser Family Foundation.
- Researchers reviewed hospital cost report data from 2020 and found that some hospitals provided little to no charity care. At 8% of hospitals, it made up 0.1% or less of operating expenses. Others provided more, with 9% of hospitals spending at least 7% of their overall operating expenses on charity care.
- That variation likely reflects differences in hospitals’ missions and business practices, need for charity care among patients and federal, state and local policies and regulations, KFF said. Charity care as a percent of operating expenses were 2.6% on average.
Dive Insight:
Hospital charity care programs, which provide free or discounted medical care to patients who can’t afford it, can be a lifeline for uninsured and underinsured patients as the cost of care continues to rise in the U.S., Roughly four in 10 adults in the U.S. are struggling with medical debt, much due to costs associated with emergency care and hospitalizations. In 2022, roughly one in seven adults reported delaying hospital services in the past year because of cost.
State and federal policymakers have looked to beef up hospital regulation amid concerns that charity care programs aren’t as generous or efficacious as they could be. A New York Times investigation of Washington-based health system Providence earlier this year, for example, found the provider spent less than 1% of its expenses on charity care in 2021, and was saddling patients with debt who should have been eligible for financial assistance.
Among other regulations, federal law requires that nonprofit hospitals provide charity care as a condition of receiving tax-exempt status, but hospitals have a large degree of latitude in deciding how much charity care to provide. One April study estimated that the value of that tax exemption often far outweighs nonprofit hospitals’ cost of charity care and community benefits.
In addition, research suggests that for-profit hospitals devote a similar or larger share of their operating expenses to charity care as nonprofit hospitals. That could be because for-profit facilities can use a tax deduction for those expenses, or because some nonprofit hospitals might not expect regulatory oversight of their charity care practices, KFF researchers said.
The watchdog Government Accountability Office has raised concerns about whether requirements that hospitals provide satisfactory community benefits are being adequately enforced, as federal regulations don’t set minimum standards for hospitals when it comes to charity care eligibility or amount.
