U.S. hospitals, on average, said they give the equivalent of 5% of their net operating income in charity care, although some hospitals said they provide considerably more, according to a report by PricewaterhouseCoopers' Health Research Institute. Charity care may be widely underreported, however, because classifying patients as charity is a costly and burdensome process at many hospitals and much charity care is instead accounted for as bad debt, the report said. Bad debt has soared at U.S. hospitals in recent years, said Kelly Barnes, a partner with PricewaterhouseCoopers' Health Industries Group. About 92% of hospitals surveyed said part of their bad debt could be classified as charity. Calculating the value of charity care was further complicated by the fact that only about 16% of the hospitals assessed their charity care based on the cost of services rather than charges; 9% used a combination of costs and charges; and 75% used charges alone, the report said. The report was based a survey of 100 hospital chief financial officers and interviews with 15 healthcare leaders.
The institute released the report in advance of a House Ways and Means Committee hearing Thursday on not-for-profit hospitals' tax-exempt status. Nearly 70% of the hospitals surveyed said they had revised charity-care policies in the past year and in almost every case had adopted more generous policies in doing so. More than half of the hospitals reported posting their charity-care policies online. Read the report. The results paint a different picture of hospitals' openness than a report earlier this month by the Access Project, Boston, which found few hospitals willing to participate in a survey on charity-care policies. Read Modern Healthcare coverage of the Access Project study. -- by Ralph Loos