Analysis Suggests Government And Nonprofit Hospitals’ Charity Care Is Not Aligned With Their Favorable Tax Treatment

2021 ◽  
Vol 40 (4) ◽  
pp. 629-636
Author(s):  
Ge Bai ◽  
Hossein Zare ◽  
Matthew D. Eisenberg ◽  
Daniel Polsky ◽  
Gerard F. Anderson
Keyword(s):  
Charity Care ◽  
Nonprofit Hospitals

The Evolution of Charity Care within the Healthcare Industry

2006 ◽  
Vol 4 (1) ◽  
pp. 101-116 ◽  
Author(s):  
Pamela C. Smith ◽  
Aaron D. Crabtree
Keyword(s):  
Charity Care ◽  
Nonprofit Hospitals ◽  
Tax Exempt ◽  
Long Time ◽  
State And Local ◽  
To Come ◽  
Definition Of ◽  
State Examination ◽  
Concise Definition

Tax-exempt classification of nonprofit hospitals has been increasingly subject to federal and state examination. Considering the benefits tax-exempt entities receive, it should not be surprising that these organizations face heavy regulatory scrutiny. The problem for tax-exempt hospitals is the lack of a clear and concise definition of charity care in order to maintain exempt status. State and local regulations aside, the IRS has not presented a consistent position regarding standards for nonprofit hospitals. This paper examines the evolution of hospital tax-exempt status and its relationship to charity care. Given the IRS's evolving and conflicting definitions of charity care, we can expect this issue to be debated for a long time to come.

scholarly journals Charity Care Provision by US Nonprofit Hospitals

2020 ◽  
Vol 180 (4) ◽  
pp. 606 ◽  
Author(s):  
Ge Bai ◽  
Farah Yehia ◽  
Gerard F. Anderson
Keyword(s):  
Care Provision ◽  
Charity Care ◽  
Nonprofit Hospitals

Measuring Nonprofit Hospitals’ Provision of Charity Care Using IRS and CMS Data

2019 ◽  
Vol 64 (5) ◽  
pp. 293-314
Author(s):  
Darrell J. Gaskin ◽  
Bradley Herring ◽  
Hossein Zare ◽  
Gerard Anderson
Keyword(s):  
Charity Care ◽  
Nonprofit Hospitals

Strategic Reporting by Nonprofit Hospitals: An Examination of Bad Debt and Charity Care

2020 ◽  
Author(s):  
Amanda Beck ◽  
Collin Gilstrap ◽  
Jordan Rippy ◽  
Brian Vansant
Keyword(s):  
Charity Care ◽  
Nonprofit Hospitals ◽  
Bad Debt

Comparison of Trends in Nonprofit Hospitals’ Charity Care Eligibility Policies Between Medicaid Expansion States and Medicaid Nonexpansion States

2021 ◽  
pp. 107755872110396
Author(s):  
Ge Bai ◽  
Hossein Zare ◽  
Matthew D. Eisenberg ◽  
Daniel Polsky ◽  
Gerard F. Anderson
Keyword(s):  
Affordable Care Act ◽  
Medicaid Expansion ◽  
Care Provision ◽  
Policy Changes ◽  
Charity Care ◽  
Nonprofit Hospitals ◽  
Medicaid Coverage ◽  
Longitudinal Trend ◽  
Tax Exempt ◽  
The Affordable Care Act

Nonprofit hospitals provide charity care to financially disadvantaged patients according to their self-designed eligibility policies. The Affordable Care Act may have prompted nonprofit hospitals to adopt more generous eligibility policies, but no prior research has examined the longitudinal trend. The expansion of Medicaid coverage in many states has been found to reduce charity care provision, but it is unclear whether the change in charity care eligibility policies differed between Medicaid expansion and nonexpansion states. Using mandatory tax filings, we found that both hospitals in Medicaid expansion states and hospital in nonexpansion states adopted more generous eligibility policies in 2018 than in 2010, but the change was greater in the former for discounted charity care; while the former provided less charity care regardless of their policy changes, the latter provided more when their policies became more generous. This study has implications for policy discussions on the justification of nonprofit hospitals’ tax-exempt status.

Price management in nonprofit hospitals

2014 ◽  
Vol 26 (1) ◽  
pp. 50-80
Author(s):  
Rabih Zeidan ◽  
Saleha Khumawala
Keyword(s):  
Empirical Evidence ◽  
Anecdotal Evidence ◽  
Charity Care ◽  
Uninsured Patients ◽  
Nonprofit Hospitals ◽  
Price Increases ◽  
Price Management ◽  
Care Requirements

This study examines whether nonprofit hospitals (NPHs) use price increases to overstate reported charity care spending. Anecdotal evidence points to hospitals raising prices to maximize Medicare's supplemental reimbursement and to maximize collection from self-pay and uninsured patients. This study provides empirical evidence that NPHs raise prices in part to satisfy the state's charity care requirements and to substitute real care with price-valued charity care. The ratio of charges to costs (RCC), price standardized by cost - a measure for comparing revenues generated to estimate costs allocations, is used to test the association between price increases and charity care reporting by NPHs. We hypothesize and find evidence that NPHs facing financial and political pressures in addition to charity care regulations are more likely to report a higher value of charity care.

State-Level Community Benefit Regulation and Nonprofit Hospitals' Provision of Community Benefits

2018 ◽  
Vol 43 (2) ◽  
pp. 229-269 ◽  
Author(s):  
Simone R. Singh ◽  
Gary J. Young ◽  
Lacey Loomer ◽  
Kristin Madison
Keyword(s):  
Community Health ◽  
State Level ◽  
Health Needs ◽  
Charity Care ◽  
Nonprofit Hospitals ◽  
Community Benefit ◽  
Minimum Income ◽  
Needs Assessments ◽  
Community Benefits ◽  
Eligibility Standards

Abstract Do nonprofit hospitals provide enough community benefits to justify their tax exemptions? States have sought to enhance nonprofit hospitals' accountability and oversight through regulation, including requirements to report community benefits, conduct community health needs assessments, provide minimum levels of community benefits, and adhere to minimum income eligibility standards for charity care. However, little research has assessed these regulations' impact on community benefits. Using 2009–11 Internal Revenue Service data on community benefit spending for more than eighteen hundred hospitals and the Hilltop Institute's data on community benefit regulation, we investigated the relationship between these four types of regulation and the level and types of hospital-provided community benefits. Our multivariate regression analyses showed that only community health needs assessments were consistently associated with greater community benefit spending. The results for reporting and minimum spending requirements were mixed, while minimum income eligibility standards for charity care were unrelated to community benefit spending. State adoption of multiple types of regulation was consistently associated with higher levels of hospital-provided community benefits, possibly because regulatory intensity conveys a strong signal to the hospital community that more spending is expected. This study can inform efforts to design regulations that will encourage hospitals to provide community benefits consistent with policy makers' goals.

The Accountability of Nonprofit Hospitals: Lessons from Maryland's Community Benefit Reporting Requirements

2009 ◽  
Vol 46 (2) ◽  
pp. 122-139 ◽  
Author(s):  
Bradford H. Gray ◽  
Mark Schlesinger
Keyword(s):  
Data Capture ◽  
Internal Revenue Service ◽  
Charity Care ◽  
Nonprofit Hospitals ◽  
Community Benefit ◽  
Internal Revenue ◽  
Reporting Requirements ◽  
New Community

Under Internal Revenue Service requirements, nonprofit hospitals will begin filing new community benefit reports in 2010. Maryland has had similar requirements since 2004. This paper, based on interviews at 20 hospitals, describes how Maryland's requirements affected hospitals and their activities. Increases in reported community benefit expenditures since the program began are due to both changes in activities and better data capture. Charity care accounts for one-third of community benefit dollars. A key distinction concerns whether hospitals take an accounting or managerial approach to community benefit. The Maryland experience suggests the issues that will arise when the national requirements are implemented.

scholarly journals Strategic reporting by nonprofit hospitals: an examination of bad debt and charity care

2021 ◽  
Author(s):  
Amanda Beck ◽  
Collin Gilstrap ◽  
Jordan Rippy ◽  
Brian Vansant
Keyword(s):  
Cost Of Debt ◽  
Charity Care ◽  
Nonprofit Hospitals ◽  
Social Good ◽  
Hospital Managers ◽  
Community Benefits ◽  
Stakeholder Pressure ◽  
Tax Exempt ◽  
Using Data ◽  
Bad Debt

AbstractIn this paper, we examine bad debt and charity care reporting by nonprofit hospitals around bond issuance. Given the tax advantages afforded to nonprofit hospitals, including the ability to issue tax-exempt debt, hospital managers encounter stakeholder pressure to provide community benefits. When nonprofits issue debt, they also face economic pressure to meet creditors’ financial performance expectations. We document a reporting strategy that allows nonprofit hospitals to reduce the cost of bond debt while simultaneously alleviating regulators’ and community members’ concerns about inadequate provision of charity care. Using data from public bond issues for California nonprofit hospitals, we find that hospital managers shift costs from bad debt expense to charity care in periods prior to a public bond issuance and that the strategy is associated with a lower cost of debt. Our results inform those relying on accounting measurements to infer nonprofit hospitals’ social good provisions and financial health.

Do hospitals earn their nonprofit status? Evidence from New Hampshire in 2012

2018 ◽  
Vol 30 (1) ◽  
pp. 69-85
Author(s):  
Catherine Plante ◽  
Linda Ragland
Keyword(s):  
Best Interest ◽  
Charity Care ◽  
Nonprofit Hospitals ◽  
Content Type ◽  
The Difference ◽  
Almost All ◽  
First Time ◽  
True Measure ◽  
Practical Implications ◽  
Hospital Research

Purpose The purpose of this paper is to add to the stream of research examining the difference between the amount of taxes waived for nonprofit hospitals and the amount of charity care they provide. Design/methodology/approach The study is an archival study. Findings Almost all nonprofit hospitals in the sample provide enough charity care to cover their waived taxes. Almost none provide enough charity care at the level that has been proposed to the federal government for hospitals to maintain their nonprofit status. Research limitations/implications As with most hospital research, a limitation is this study’s focus on a single state to control for regulatory differences among states. Practical implications The data on the new Form 990 allow better measurement and transparency regarding a nonprofit hospital’s charity care. For legislators, regulators, and taxpayers, the results from this study raise questions about: the large variations in the amount of charity care provided among nonprofit hospitals and whether enough is being done in terms of providing charity care. Social implications There is great variation among nonprofit hospitals as to the amount of charity care provided. Relying upon a nonprofit hospital’s altruistic nature may not be enough to ensure that they act in the best interest of society. Originality/value This study is unique because, for the first time, a true measure of taxes waived is used in the analysis. All previous research has had to proxy taxes.

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