Not-for-profit hospitals provide more community benefits than their for-profit counterparts, but those benefits vary and are not linked closely to tax exemptions, according to a new report.
The report drafted by the Council on the Economic Impact of Health System Change recommends that state regulations tie the amount of tax exemptions to the community benefits provided by not-for-profit hospitals.
When investor-owned chains buy not-for-profit hospitals, the report said, regulations should be in place to protect the charitable assets of the hospitals and "direct their proper use."
The report stopped short of recommending regulation of conversions in order to ensure access to healthcare and retain some community control. It said such regulation may be appropriate but also could cause price increases.
The council, an independent health policy panel, is headed by Stuart Altman, former chairman of the Prospective Payment Assessment Commission, and includes numerous healthcare experts from the industry and academia.
The report, which the council was scheduled to discuss at a meeting in Washington late last week, said public and major teaching hospitals provide the "lion's share" of charity care that the not-for-profit sector claims. The report said the community benefits provided by private not-for-profit hospitals are often variable and "concentrated in a few hospitals."
If community benefits are defined as only pure charity care, the value of not-for-profits' tax exemptions exceeds their community benefits, the report said. If items such as bad debt, losses from public programs, and the expense of teaching and research are counted, however, not-for-profits' community benefits often exceed the value of their tax exemptions.
Meanwhile, it said, if investor-owned hospitals include their taxes as community benefits, their community benefits exceed that of not-for-profits.