Big Hospitals Provide Skimpy Charity Care—Despite Billions in Tax Breaks

Nonprofit medical institutions get federal benefits in exchange for providing support to their communities but often lag behind their for-profit peers

By Anna Wilde Mathews, Tom McGinty and Melanie Evans of The WSJ. Excerpts:

"Nonprofit hospitals get billions of dollars in tax breaks in exchange for providing support to their communities. A Wall Street Journal analysis shows they are often not particularly generous.

These charitable organizations, which comprise the majority of hospitals in the U.S., wrote off in aggregate 2.3% of their patient revenue on financial aid for patients’ medical bills. Their for-profit competitors, a category including publicly traded giants such as HCA Healthcare Inc., wrote off 3.4%, the Journal found in an analysis of the most-recent annual reports hospitals file with the federal government.

Among nonprofits with the smallest shares of patient revenue going toward charity care—well under 1%—were high-profile institutions including the biggest hospitals of California’s Stanford Medicine and Louisiana’s Ochsner Health systems. At Avera Health, a major hospital system in South Dakota, charity care was roughly half of 1% of patient revenue across all its 18 hospitals."

"In return for not paying taxes, nonprofit hospitals are supposed to provide community benefits. The clearest form is free or discounted care for poor patients who otherwise couldn’t afford it"

"Federal law requires nonprofit hospitals to have policies to assist such patients. But federal guidelines allow them broad freedom to write and implement those policies and don’t require hospitals to meet any specific targets for financial-assistance totals.

The value of nonprofit hospitals’ subsidy from avoiding taxes is more than $60 billion a year"

"The Journal used federal filings to examine charity-care spending by state and found 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’."

"Many nonprofit hospitals set restrictive policies that may deny financial aid to patients who can’t afford their care, sending some bills to collection agencies. Some won’t forgive bills even if a patient’s income is barely above the poverty level or require patients to tap retirement savings. Other nonprofits reject needy patients based on nonfinancial factors, such as immigration status, or whether they have insurance, even if limited coverage leaves them with large bills."