It's tempting to paint cash-thirsty state governments as villains in their efforts to require not-for-profit healthcare organizations to show evidence of greater community-benefits paybacks or lose their tax exemptions.
But many hospitals have handed officials a weapon by failing to fully document the assistance they give to the community. And in some instances, they have provided ammunition by failing to fully live up to their charitable missions.
In Washington, interest in charity-care legislation faltered after its champion, Rep. Brian Donnelly (D-Mass.), decided not to seek re-election. The issue took a back seat to more pressing concerns about reforming healthcare delivery and financing mechanisms. Meanwhile, federal agencies are concentrating their oversight on improving the accountability of tax-exempt providers' financial transactions.
Financially strapped states, struggling to cope with the enormous growth of programs to serve the healthcare needs of the poor, have jumped on the community-benefits bandwagon. But they're taking a different tack than Pennsylvania and Texas. In Pennsylvania, some county and municipal officials strong-armed hospitals to pay cash to help cover community services. In Texas, the attorney general filed suit against Methodist Hospital in Houston, and the governor signed legislation requiring that hospitals provide a minimum level of charity care to retain their tax exemptions.
Highlights of recent charity-care activity include the following:
In Massachusetts, the attorney general is issuing guidelines that establish several alternate methods to measure how much a not-for-profit hospital spends on community benefits. The guidelines also prescribe a process for defining a needy segment of the community and including the community in adopting a strategy for improving health.
In Indiana, legislation signed by Gov. Evan Bayh requires most of the state's community-owned, church-owned, not-for-profit and investor-owned hospitals to begin reporting their charity care to the state in 1996. The state Legislature debated and rejected the idea of mandating levels of charity care, but the issue could return when the state discusses a sweeping healthcare reform measure expected to be introduced early next year.
In Mississippi, the state has reached separate agreements with two Jackson-area hospitals that require them to provide a minimum amount of care or risk losing their licenses for new services granted under certificates of need. Under the agreements, at least 5% of patients in Methodist Medical Center's 64-bed satellite facility must qualify under charity-care rules, and a minimum of 15% of its patients must be Medicaid recipients. River Oaks Hospital agreed that 25% of its 10-bed birthing unit's patients will be Medicaid recipients.
In the past, crackdowns by governments often required tax-exempt institutions to meet minimum percentages for community-benefits givebacks as specified by a rigid formula. Now, states are giving hospital leaders time-and flexibility in options-to show their charitable commitment.
Healthcare executives can take advantage of this opportunity to better document and communicate the community services they provide that merit annual tax breaks estimated to be worth $9 billion. Opportunities exist to undertake-or expand-high-profile services for victims of domestic violence, and health education and prevention programs that illustrate the unique worth of healthcare providers.