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Of Interest

How healthcare providers make, spend, borrow and invest money.
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By Melanie Evans

Charity care now a cause for more conversation

Modern Healthcare reported this week that free and discounted medical care accounted for a modest 1.52% of the median not-for-profit hospital budget, based on an analysis of 1,800 disclosure forms.

The disclosure data, provided by GuideStar, offers the most comprehensive snapshot yet of how not-for-profit hospitals earn tax breaks. Hospitals, for the first time in 2009, had to itemize on tax forms how much they spend on free care and discounts and other subsides to benefit communities. Those tax forms recently became public. Patient advocates and policymakers expect sharp public debate about those tax breaks as local communities begin to examine the new hospital disclosure on charity care and other subsidized services. “It's quite helpful to finally have a baseline,” says Mark Rukavina, executive director of the Access Project, a patient advocacy group. “These data give us a baseline for charity-care expenses and other expenses that will be reported on schedule H. That's going to be beneficial for policymakers and for members of the community alike. And I think that, again, the reporting of this information is helpful because it establishes charity care as a real legitimate part of the healthcare safety net.” So what did we find? We considered variation in hospital spending on free and discounted medical care. Here's a breakdown of spending on charity care as a percentage of total expenses. This shows that three-quarters of hospitals in the analysis spent 2.73% or less of budgets on charity care.

First quartile: 0.69%

Median: 1.52%

Third quartile: 2.73%

We reported that losses on Medicaid accounted for the single largest subsidy that hospitals reported. Here's a breakdown of Medicaid losses as a percentage of total expenses:

First quartile: 1.4%

Median: 3.02%

Third quartile: 5.09%

Here's the variation for other subsidized benefits, which include research, medical education, money losing services and grants.

First quartile: 0.41%

Median: 1.33%

Third quartile: 3.29%

You can follow Melanie Evans on Twitter: @MHmevans.

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