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

In 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.

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

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.

Comparing Healthcare Utilization and Diagnoses in Immigrant Versus Nonimmigrant Youth

Introduction: To inform efforts to provide healthcare to uninsurable, immigrant youth, we describe The Access Partnership (TAP) hospital-based charity care program and compare healthcare utilization and diagnoses among TAP and Medicaid patients. Methods: We use propensity scores to match each TAP patient to three Medicaid patients receiving care at a pediatric clinic from October 2010 to June 2015 on demographic characteristics. We use descriptive statistics to compare healthcare visits and diagnoses. Results: TAP ( n = 78) and Medicaid patients ( n = 234) had similar healthcare utilization, though Medicaid patients had more outpatient visits (10.8 vs. 7.7, p = .002), and TAP patients were more likely to have ever received subspecialty care (38.5% vs. 22.2%, p = .005). Diagnoses were similar between groups, with some exceptions: TAP patients more likely to present with genital and reproductive disease (33.3% vs. 19.7%, p = .013); Medicaid patients more likely to present with endocrine, metabolic, and nutritional disease (52.1% vs. 28.2%, p < .001), psychiatric, behavioral disease, and substance abuse (41.0, 26.9%, p = .026). Conclusions: TAP patients had similar healthcare utilization and diagnoses to matched sample of Medicaid patients. Findings indicate policy proposals that extend public health insurance to all children would likely benefit immigrant children and not incur higher costs than those of low-income U.S. citizen children.