Study Examines Calif. Hospitals’ Spending on Uncompensated Care
While not-for-profit hospitals in California spend slightly more on charity care than their for-profit counterparts, they spend the same amount on uncompensated care, according to a study published in Health Affairs, the Washington Post's "To Your Health" reports.
Not-for-profit hospitals receive tax breaks in exchange for providing services, such as:
- Community health assessments;
- No-cost care for low-income patients; and
- Public health outreach.
In addition to such charity care, hospitals are responsible for covering the cost of patients who do not pay back their debts for care. Those costs combined with charity care account for overall uncompensated care.
Details of Study
For the study, UC-San Francisco researchers analyzed the spending of 264 hospitals in California (Gebelhoff, "To Your Health," Washington Post, 8/4). Of those:
- 64, or 24%, were for-profit; and
- 200, or 76%, were not-for-profit (Valdovinos, Health Affairs, August 2015).
The study found that charity care accounted for about 1.9% of operating expenses among not-for-profit hospitals in California. In comparison, charity care amounted to 1.4% of operating expenses among for-profit hospitals in the state.
However, both for-profit and not-for-profit hospitals spent an average of 4.4% of their operating expenses on uncompensated care, according to the study ("To Your Health," Washington Post, 8/4).
The researcher wrote that the findings suggest a need for more accountability under the Affordable Care Act, which requires all not-for-profit hospitals to have charity care policies.
They noted that the ACA "lacks specific details, including which patients qualify and what charges should be waived" (Brino, Healthcare Finance, 8/4). They added, "The takeaway is not that we should not be giving tax breaks, but that there should be a little more accountability."
In response to the findings, California Hospital Association spokesperson Jan Emerson-Shea said, "Charity care is important, but it is only a fraction of the total picture of how [not-for-profit] hospitals reinvest back into their local communities."
She added, "In addition to charity care, [not-for-profit] hospitals fund research, education, wellness services and a myriad of other programs that are determined based on the needs of local communities" ("To Your Health," Washington Post, 8/4).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.