Nonprofit and for-profit hospitals had similar unreimbursed Medicaid costs as a share of expenses in 2019, despite only nonprofit hospitals receiving a large tax subsidy, a study published Feb. 14 in JAMA Network Open found.
The study analyzed 3,446 private hospitals — 2,617 nonprofit and 829 for-profit hospitals — using 2019 Medicare cost reports. These hospitals were subject to a total of $20.59 billion in unreimbursed Medicaid costs.
In 23 of the 45 states that have both nonprofit and for-profit hospitals, nonprofit hospitals had a lower weighted average unreimbursed Medicaid cost-to-expense ratio than for-profit hospitals. This shows that community benefits provided by nonprofit hospitals do not line up with the tax subsidy they receive.
A majority — or 69 percent — of hospitals in the sample received supplemental payments used to offset unreimbursed Medicaid costs. This includes 1,840 nonprofit hospitals and 535 for-profit hospitals.
"Policymakers should do more to address these issues, including providing greater transparency about the magnitude of the subsidies received by nonprofit hospitals and establishing a more direct nexus between these subsidies and the performance of those facilities in providing community benefit, whether in the form of unreimbursed Medicaid costs, charity care or some other measure," the researchers said.
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