Large for-profit hospitals spend more on charitable services as a percent of total expenses than their nonprofit counterparts, according to a study from researchers with the Harvard T.H. Chan School of Public Health in Boston.
Charity care is the unbilled and uncollected expenses that hospitals write off for patients who can’t pay for services. To evaluate charity care spending across similar for-profit and nonprofit hospitals, researchers paired for-profit hospitals with nonprofit hospitals that are similar in size, location and teaching status. The authors compared how much the hospitals spent on charity care relative to total expenses. Hospital data came from CMS’ 2018 Medicare cost reports, the most recent full year of publicly available data, and median household income data came from the Dartmouth Atlas.
Overall, average total charity care was $4.3 million for for-profit hospitals and $7.1 million for nonprofit hospitals, with the mean for charity care as percent of total expenses being 2.6 percent for for-profit hospitals and 2.9 percent for nonprofit hospitals.
When segmented by size, researchers found large for-profit hospitals — those with 350-plus beds — spent more on charity care as a percent of total expenses (3.7 percent) compared to big nonprofit hospitals (2.6 percent). The story was different for small hospitals with less than 100 beds. Small nonprofit hospitals spent more on charitable services as a percent of total expenses (3.1 percent) compared to their for-profit peers (1.8 percent).
“Charity care is only one community benefit that nonprofit hospitals perform. Still, our analysis demonstrates that nonprofit hospitals may not be providing the level of charity care warranted by their tax exemption status, and in some cases may be spending relatively less than their for-profit counterparts,” the researchers concluded.
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