Hoping to make a good showing when they file their first Form 990 with the IRS, not-for-profit hospitals are already beginning to make big changes to their charity care policies, according to one financial analyst. Though it will be a year or two before hospitals must file the Form 990--Schedule H, which defines and discloses their charity care spending and policies on charity and bad debt--some hospitals are already taking aggressive steps to demonstrate that they're doing the right thing. Many are lowering the threshold at which a patient can qualify for free care, according to Jeff Schaub, senior director with the Fitch Ratings public health care group. In fact, some hospitals have raised the free-care limit drastically, from 100 percent to 400 percent of the poverty level, he said. Meanwhile, it also relieves for-profits of some of their charity-care load, which could have other long-term competitive results.
All of this doesn't do much to clear up the muddy waters around the issue of what charity care really is vs. what bad debt is. It's worth noting, however, that this essentially shifts costs that would have been classified as bad debt into the charity care side of the balance sheet. The Healthcare Financial Management Association, for its part, suggests that financial execs rely on the Financial Accounting Standards Board's definitions of the two when attempting to demonstrate that they're upping charity care levels.
To learn more about this issue:
- read this InsideARM piece
ALSO: With Form 990 forcing hospitals to take a closer look at their bad debt, a great number of facilities are likely to begin selling that debt, experts predict. Article
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