Nonprofit hospitals gave out $100 billion in benefits to communities in 2017, with financial aid being the biggest source, according to an analysis from the American Hospital Association.
The analysis released Wednesday comes as the AHA has been pressing Congress for more regulatory flexibility and funding to help hospitals weather the financial crisis sparked by the COVID-19 pandemic.
“This new analysis shows that improving the health of their communities remains at the heart of the mission of hospitals and health systems,” said AHA President and CEO Rick Pollack in a statement.
Nonprofit hospitals are required to serve their communities to get tax exemption status and report such contributions to the federal government. AHA examined the 2017 data for 2,764 hospitals.
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The analysis found that community benefits were 13.8% of their total expenses in 2017, the latest year of data available.
“Approximately half of this total was attributed to expenditures for financial assistance for patients and absorbing losses from Medicaid and other means-tested government program underpayments,” AHA said.
- Other programs and activities funded by nonprofit hospitals include underwriting research with 0.5% and health profession education with 1.7%.
- Hospitals also spent an average 0.1% on community building activities that include environmental improvements and workforce development.
- The analysis also found 0.3% of community expenses was on cash and in-kind contributions to community groups.
- AHA also found that in 2017, 71% of nonprofit hospitals and systems surveyed had a Medicare reimbursement shortfall where claims reimbursements were less than the cost of treating Medicare patients.
AHA noted that most hospitals want any Medicare shortfall to be treated as a community benefit.
“By continuing to treat patients eligible for Medicare, hospitals alleviate the Federal government’s burden for directly providing medical services,” the AHA said. “The IRS has acknowledged that lessening the government burden associated with providing Medicare benefits is a charitable purpose.”
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Hospitals gave more to community benefits in 2017 compared with 2016, when nonprofits gave out $95 billion, according to a 2019 analysis from AHA.
The analysis comes as hospitals are under a major financial strain due to the COVID-19 pandemic, which has forced many systems to cancel and scale back elective surgical procedures vital to their bottom line. Hospitals have also seen their patient volume plummet, further straining finances for systems
Congress has passed $175 billion in funding to help prop up all providers. However, the AHA and other provider groups question if it is going to be enough to help hospitals weather the storm.
Several hospital groups have pressed Congress to install more funding and for the Trump administration to expand regulatory flexibility on providers, including making certain changes to expand telehealth options permanent.