Nonprofit hospitals benefit from billions in tax breaks in exchange for providing critical care to their communities, but experts question whether communities are reaping enough benefits.
An analysis of the most recent annual reports that hospitals file with the federal government shows that nonprofit hospitals wrote off, in aggregate, 2.3 percent of their patient revenue on financial aid for patients' medical bills. For-profit hospitals wrote off 3.4 percent, according to a July 25 report from The Wall Street Journal.
Nonprofits with well under 1 percent of patient revenue going toward charity care were high-profile institutions, including the biggest hospitals in California's Stanford Medicine and Louisiana's Ochsner health systems. Additionally, Alvera Health, a major nonprofit hospital system in South Dakota provided roughly half of 1 percent of patient revenue for charity care across all 18 hospitals.
Federal law requires nonprofit hospitals to provide community benefits. The clearest form is free or discounted care for economically disadvantaged patients who otherwise couldn’t afford care, according to many health-policy experts. Hospitals have traditionally described the cost of erasing or writing off bills as spending on “charity care.”
The value of nonprofit hospitals’ subsidy from avoiding taxes is more than $60 billion a year, according to estimates by Johns Hopkins University Professor Gerard Anderson.