Under Affordable Care Act, hospital revenues up, charity care spending down: report

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Hospitals have made cuts to charity care despite rising profits, according to a new investigation. (jansucko/iStock)

Hospitals receive billions in federal tax breaks with the caveat that they show they’re helping the local community, but many saw soaring revenues even as they were spending less on charity care, thanks to the Affordable Care Act.

An investigation by Politico found that the top seven hospitals in the U.S., as ranked by U.S. News & World Report, collected more than $33.9 billion in revenue for 2015, up from $29.4 in 2013 before the ACA took effect, but their spending on charity care dropped during that time, decreasing from $414 million in 2013 to $272 million in 2015.

Hospitals can inflate how much they’re spending in the community since the definition of “community benefit” is sometimes unclear. In addition to free screenings and community outreach and education, healthcare organizations can count staff education and Medicare and Medicaid underpayments in that figure, for example.

As population health initiatives grow in importance, research shows providers must address social issues to improve health on a wide scale, as FierceHealthcare has reported. The ACA does push for increased emphasis on population health, but many hospitals view community health initiatives as something that's outside of their traditional mission.

Another wrinkle is the future of the healthcare law, which could have a significant impact on hospitals’ bottom lines. An increase in uncompensated care costs could hinder additional spending on charity care and community health programs.

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Meanwhile, many of the hospitals in the Politico spotlight are gaining wealth and expanding while the communities they serve continue to suffer from poor health, according to the article, which calls out Johns Hopkins as one example.

“Tax-exempt hospitals could absolutely be doing more, given what they’re saving,” Lauren Taylor, a doctoral student in health policy at Harvard and co-author of the 2013 book “The American Health Care Paradox,” told the publication.