Report: U.S. Charity Care Provided by Hospitals Leaving Much to be Desired

Healthcare provided to the most vulnerable populations often constitutes a tiny sliver of overall hospital budgets.

Kaiser Family Foundation (Levinson, Hulver, & Neuman, 2022) recently released a report on national charity care levels for hospitals and health systems illustrating some dire financial news. 

The report acknowledged that approximately 58 percent of U.S. households are currently earning below an annual income of $40,000, and estimated personal medical debt across the U.S. has reached approximately $195 billion. 

However, charity care only represented 1.4 percent or less of total operating expenses at half of all hospitals in 2020, with significant variations across hospital designations. Additionally, it was found that 8 percent of all hospitals had 0.1 percent of operating expenses related to charity care. 

It was also noted that there was no meaningful difference in charity care contributions between government, for-profit, and nonprofit hospitals. This was surprising, since as you know, nonprofit hospitals receive significant tax exemptions. The article did mention that despite nonprofit status, which makes up about 58 percent of all community hospitals in the U.S., many states have requirements that set expectations for all hospitals regardless of tax exemption to provide some level of charity care.   

Before I throw some hospitals completely under the bus, I do want to acknowledge some factors that may contribute to the low numbers, which include potential discrepancies among hospitals in attributing charity care versus bad debt/write-offs. 

However, many health systems were cited as not updating their charity care policies, and according to a 2021 study from Sage Publications on charity care, they found that in 2018, a total of 32 percent of hospitals continued to have stricter policies that expected patients to be at or below 200 percent of the federal poverty level. Understanding that many of these patients are likely already on Medicaid means very few such patients are actually receiving the benefits of full charity care. About 62 percent of hospitals in the study were found to offer discounted care for patients at or below 400 percent of the federal poverty level; however, it was reported that the definitions of “discounted care” were inconsistent across health systems (Bai, et.al, 2021).

In my continued digging, I was able to find a Journal of the American Medical Association (JAMA) study by Goodman, Flanagan, and Probst, who completed a cohort study of the top 170 nonprofit hospitals in the U.S. They found that 47 of the hospitals actually expanded charity coverage during the pandemic, while 12 hospitals further restricted their charity care, with the largest restriction being residency requirements for home locations within the community hospital region – and U.S. citizenship requirements. Some unusual exclusions were also found, such as denying charity care for birth control, or specialized outpatient services. 

Do you think your hospital and/or health system is giving enough in charity care for your community? The responses from Monitor Mondays listeners may surprise you; they can be viewed here.

Programming Note: Listen to Tiffany Ferguson’s live reporting on the SDoH every Monday on Monitor Mondays at 10 a.m. EST.