USA Today Examines Recent Scrutiny of Not-for-Profit Hospitals Over Charity Care
USA Today on Tuesday examined the "increasing pressure" on not-for-profit hospitals to defend their tax-exempt status, as the "long-standing" billing and collection practices for uninsured patients come under scrutiny. Although the tax-exempt status is thought to save not-for-profit hospitals billions of dollars, officials for such facilities say they provide a variety of community services that are not offered by for-profits, USA Today reports. According to the American Hospital Association, not-for-profit facilities provide more than $22 billion per year in charity care, but critics say for-profit hospitals provide a similar level of uncompensated care. The Medicare Payment Advisory Commission in 2000 said for-profits and not-for-profits both attribute about 4.6% of costs to charity care.
According to USA Today, the increasing public scrutiny over not-for-profit and public hospitals -- which make up 85% of the nation's roughly 5,000 hospitals -- includes:
- An IRS investigation into the possibly excessive salaries paid to the hospitals' management;
- Congressional investigations that could result in more uniform reporting standards and regulations on the size and make-up of hospital boards:
- State and local tax agency investigations into tax-exempt hospitals; and
- More than 40 lawsuits filed since June against nearly 400 hospitals for their billing and collection methods for uninsured patients (Appleby, USA Today, 8/24).
In testimony before the House Ways and Means Committee in June, Harvard University professor Nancy Kane said, "The quantifiable value of hospital tax exemptions greatly exceeds the average cost of charity care provided."
Rick Wade, senior vice president at AHA, did not comment on whether not-for-profit facilities provide more community benefits than for-profits, but he said, "Every hospital in America that is granted tax-exempt status should be prepared to stand up in public and articulate what they do for their community, proudly" (USA Today, 8/24).