Despite tax breaks, nonprofit hospitals not matching charity care of for-profit counterparts

Despite receiving sizable tax exemptions to help offset uncompensated care, nonprofit hospitals provided lower levels of charity care than for-profit hospitals, according to a study published April 5 in Health Affairs. 

For the study, researchers analyzed Medicare cost reports from 2018 to understand hospitals' charity care spending. The report included data from 1,024 government, 2,709 nonprofit and 930 for-profit hospitals. 

Researchers found that for every $100 in total spending, nonprofit hospitals provided $2.30 in charity care; for-profit hospitals provided $3.80; and government-run hospitals provided $4.10, according to the report. 

Further, in 46 percent of hospital service areas containing all three types of hospitals, government and nonprofit hospitals had a lower aggregate charity-care-to-expense ratio than for-profit hospitals

The study findings prompted the authors to raise questions about whether nonprofit hospitals are meeting their mission to provide charity care in exchange for their tax exemptions.  

The authors outlined several recommendations to help boost hospital charity care spending, including creating a system to publicly rank hospitals by the amount of charity care provided, requiring nonprofit and government hospitals to meet thresholds for charity care or revisiting tax-exempt rules for some hospitals. 

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