Charity Care: Do Nonprofit Hospitals Give More than For-Profit Hospitals?
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J Gen Intern Med DOI: 10.1007/s11606-020-06147-9 © Society of General Internal Medicine 2020
INTRODUCTION
There is debate as to whether nonprofit hospitals in the USA provide sufficient benefit to their communities to warrant their tax exemption status,1 an exemption previously valued at $24.6 billion nationally.2 Despite the Affordable Care Act (ACA) reforms, there has been minimal change in community benefit spending by nonprofit hospitals, especially in the form of charity care.3 Charity care refers to unbilled and uncollected expenses that the hospital provides for patients unable to pay for services. While several studies have evaluated the amount and value of charity care provided by nonprofit hospitals or have compared charitable spending in a specific state, recent research comparing charity care across similar for-profit and nonprofit hospitals nationally is lacking.4–6 In this study, we matched for-profit hospitals to nonprofit hospitals that share the same size, location, and teaching status, and compared charitable spending relative to total expenses.
random intercepts for the matched group to allow for correlation between hospitals within matches. We then stratified the analysis by hospital size. Using data on median household income by zip code from the Dartmouth Atlas, we mapped each hospital to the average median household income for the hospital’s zip code. We then performed stratified analyses by median household income.
RESULTS
Average total charity care was $4.3 M for for-profit hospitals and $7.1 M for nonprofit hospitals. We present results in Table 1 using charity care as percent of total expenses. The overall mean for charity care as percent of total expenses was 2.62% for for-profit hospitals compared with 2.95% for Table 1 Charity Care as Percent of Total Expenses by Size For-profit hospitals
Nonprofit hospitals
Mean charity care as percent of total expenses (n = 725)*
Mean charity care as percent of total expenses (n = 2068)†
Overall
2.62%
2.95%
Small hospitals
1.81%
3.05%
Medium hospitals
2.96%
3.06%
Large hospitals
3.72%
2.60%
METHODS
We used the 2018 Medicare cost reports published by the Centers for Medicare & Medicaid Services, which is the most recent full year of data publicly available. The Medicare cost report includes data on hospital characteristics and utilization, as well as hospital charity care costs and total hospital expenses. All continuous measures were winsorized at the 95th and 5th percentiles. We matched for-profit hospitals to nonprofit hospitals on teaching hospital status, geographical region (West, South, Midwest, and Northeast), and bed size group (< 100 beds, 100–349 beds, and > 349 beds). Our primary outcome was charitable spending as percent of total expenses for for-profit and nonprofit hospitals, consistent with other studies which standardize charitable spending.3, 4 We tested the difference between nonprofit hospitals and forprofit hospitals by using a linear mixed-effects model with charity care as percent of total expenses as the o
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