Detroit Free Press Examines Amount Of Charity Care Provided By Not-for-Profit Hospitals

Main Category: Public Health
Also Included In: Aid / Disasters
Article Date: 24 Oct 2007 - 10:00 PDT

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The Detroit Free Press on Tuesday examined "the issues that are putting nonprofit hospitals and their tax-exempt status under scrutiny as never before in an important debate" for the U.S.

Not-for-profit hospitals nationwide receive $12.6 billion annually in tax exemptions. To gain and maintain federal and state tax-exempt status, hospitals are required to provide an unspecified amount of no-cost care but some states do not require hospitals to file reports detailing their charity care and the Internal Revenue Service, which requires hospitals to file an annual statement, "demands little detail about charity care," according to the Free Press. IRS, which currently is reviewing its rules, never has revoked a hospital's tax-exempt status based on its failure to provide no-cost care, the Free Press reports.

Hospitals say the exemptions allow them to "fill a critical need" in the health system as employers reduce or eliminate health benefits, according to the Free Press. However, critics "point to high bills" sent to uninsured patients, the "lack of publicity about charity care, long waits at community clinics and hospitals' flights to the suburbs, where costly, state-of-the-art facilities are being built to cater to insured patients," according to the Free Press.

Susan Sherry, deputy director of Boston-based Community Catalyst, said, "Nonprofit hospitals receive enormous advantages through tax breaks, and we believe that those health care institutions should be clear to the community about the specific financial assistance programs and community benefits provided in exchange for these significant tax benefits." Community Catalyst is spearheading an effort by 25 community groups that want to require hospitals to spend at least 5% of their revenue or operating costs, whichever is greater, on no-cost care.

Sister Mary Ellen Howard, a former hospital administrator and director of the Cabrini Clinic in Detroit, said, "The way our health care system is structured now, doctors and hospitals make money on the number of procedures they do on insured patients, particularly well-insured patients. The system is not set up to reward institutions that help make people healthy; there are no financial incentives to do that" (Anstett, Detroit Free Press, 10/23).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation© 2005 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

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