“Charity”: a selfless virtue. We help because we should, if we can. Charity should not plunge the giver into penury, but charity demands that we-who-have share with those who-have-less.
How extraordinary, and maybe expected, that hospitals have now redefined the virtue. In a long ago-time, hospitals in this country were nonprofit entities that paid no taxes. In return, they gave “charity” to patients who could not pay. Hospitals that ran a surplus could more easily contribute; hospitals that served mostly the poor sought donations (tax-deductible) to safe afloat. Community members gave charity to the hospital, so it could in turn give charity care. The 1946 Hill-Burton legislation — the federal spigot for hospital construction money — forced hospitals to provide charity care.
Enter Orwellian healthcare. The distinction between for-profit and nonprofit has melded into an accountant’s sheet. The hospitals look much the same; the executives make the same seven-figure salaries; many patients, including poor patients, have insurance to cover much of their tab. For uninsured patients, the hospital sends a bill — ironically, a bill that is higher than the bill sent to insurers.
Insured patients, though, often face onerous deductibles, co-pays, and hidden charges (remember the out-of-network codicils, the policies that fall short of covering treatments, the denials for prior authorizations ). Again, the hospital sends a bill. Hospitals today are businesses; and some patients are deadbeats. Fifty-seven percent of households earning $40,000 or less had medical debt. Keen to turn red ink black, hospitals have been dunning those deadbeats, turning to professional bill collectors who are not schooled in compassion.
As for the need to provide charity, that has shrunk. In 1997 the Hill Burton provision ended; today only 127 facilities continue to operate under that mandate. Fourteen states (plus the District of Columbia and Puerto Rico) no longer have any Hill-Burton compliant facilities. (https://www.hrsa.gov/get-health-care/affordable/hill-burton/facilities) The Affordable Care Act included a provision for charity care. The IRS still requires it for nonprofit status. Some states require hospitals to extend charity care. But each hospital sets its own parameters: How much charity care? To whom (by zip code? by income? by insurance status? by immigration status?).
The notion has sunk into irrelevance. In 2020, half of all hospitals contributed less than 1.4%of operating expenses to “charity;” 8% of hospitals contributed 0.1%. The big givers — 9% of hospitals — contributed 7%. Furthermore, there is no correlation to explain the disparity. The Wall Street Journal dissected “charity care.” Ironies abound. Nonprofit hospitals wrote off 2.3% of patient revenue on financial aid; for-profit hospitals wrote off 3.4%. Major hospitals emerged as the cheapest; e.g., the WSJ cited California’s Stanford Medicine and Louisiana’s Ochsner Health. Avera Health in South Dakota spent half of 1% on financial aid. Although hospitals in states that expanded Medicaid have more patients who can pay, the “charity” from those states was higher than in those states that did not expand Medicaid. Another irony: hospitals with paid boards contributed less than those with unpaid boards.
Some hospitals have included “community education” “job training” and Medicaid shortfall under their “charity umbrella;” but that hardly helps those patients facing huge bills.
To add to the confusion, “charity care” does not equate with “uncompensated care.” Patients who receive a bill must pay, or fall into the “medical debt” swamp swimming with bill-collectors. Some patients who fall into that swamp might have been rerouted to “charity care” if only … If only some official told them to apply, if only they could have figured out the application, if only the hospital had correctly routed them to “charity.” Nonprofit hospitals, using 2017 expenditures or earlier, suggested that they billed/collected $2.7 billion from patients who might have received “charity care” if those patients had filled all the “ifs.”
There is hope. States, cities, and towns have challenged the “nonprofit” umbrella that lets nonprofit hospitals pay no taxes, and finance with tax-exempt bonds. Today the value of those exemptions far exceeds the “charity” the hospitals provide: “charity” emerges as profitable. Kaiser Health describes the impact in Pottstown, Pennsylvania, when one hospital converted to nonprofit status: the school district lost $900,000 a year.
Communities and states are demanding that hospitals define meaningful “charity” In 2019, Oregon set floors on community benefit spending, considering the hospital’s profit margin. Illinois and Utah tied “charity” to the property taxes they might have paid. Other states, seeing one way to alleviate consumer “medical debt,” are considering requirements for “fair share” benefits.
“Charity” will not plunge hospitals into penury. But it will save millions of Americans from penury. That, after all, marks the essence of charity.
Joan Retsinas is a sociologist who writes about health care in Providence, R.I. Email joan.retsinas@gmail.com.
From The Progressive Populist, November 1, 2023
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