Not-for-Profit Hospitals’ Charity Care Under Scrutiny
Not-for-profit hospitals in the East Bay receive millions of dollars more in tax breaks each year than they spend on charity care for low-income, uninsured residents, a disparity that is reflected in a nationwide debate on seeking greater accountability from hospitals with tax-exempt status, the Contra Costa Times reports.
A Times analysis found that not-for-profit hospitals in the East Bay received at least $81 million in tax breaks in 2005 but also provided less than $43 million in charity care. Statewide, the average not-for-profit facility spent 2.2% of its operating expenses on charity care in 2005.
According to the Times, public hospitals have shouldered the burden of providing no-cost or subsidized health care services to the uninsured.
In Alameda County, for example, three public hospitals provided 54% of the charity care in 2005, while the nine not-for-profit hospitals combined contributed the remaining 46%.
The Times found that the average for-profit hospital in California provided higher levels of charity care than the average not-for-profit hospital in three of the last five years (Kleffman, Contra Costa Times, 9/2).
Not-for-profit hospitals contend that they provide other community services that justify their tax-exempt status, including:
- Educational programs;
- No-cost screenings;
- Support for community clinics; and
- Medical research (Kleffman, Contra Costa Times, 9/3).
The Times also found that many not-for-profit East Bay hospitals have not revised their written charity care policies to comply with a state law that took effect this year.
The new law puts limitations on hospitals' collection policies and also prohibits facilities from charging low-income, uninsured patients more than Medicare or Medi-Cal rates, in most cases (Contra Costa Times, 9/2).
A report by the Internal Revenue Service in July found that not-for-profit hospitals nationwide vary widely in how they report and define their community services.
Lois Lerner, director of the IRS' exempt-organizations division, said, "The lack of consistency or uniformity ... often makes it difficult to assess whether a hospital is in compliance with current law" (Contra Costa Times, 9/3).
The IRS has proposed major revisions in reporting requirements that would standardize definitions for community services that not-for-profit hospitals are required to provide.
The changes would make it easier to compare hospitals and also would help ensure greater accountability.
The agency hopes to have the new forms in use by 2009 (Kleffman, Contra Costa Times, 9/4).