Editorial: Make healthcare local again

When I first started at Modern Healthcare, the phrase “healthcare is local” was ubiquitous. But the past four years have given us record dealmaking. In an effort to save money, leverage scale or, for some, simply survive, hospitals across the country have merged.

That consolidation often begets regional leadership models, which begets fewer local funding decisions. These changes have occurred coincident with population health efforts that require hyperlocal information to target social determinants of health. That data is imperative to funding social service programs that even the most optimistic admit will take years or even decades to bear fruit.

So I offer a suggestion to maintain the industry’s local focus.

The CMS, whose favorite word is transparency, should require hospitals and health systems to file one Medicare cost report for each facility they own or operate. Each facility would receive an individual provider ID. But the CMS isn’t the only federal agency tracking how hospitals invest in and impact their communities that doesn’t get local data.

In analyzing nearly 9,000 Internal Revenue Service forms filed by tax-exempt hospitals and systems from 2013 to 2017, our data reporter Tim Broderick found that many of them reported multiple facilities under one Form 990. We couldn’t discern what an individual facility reported in community benefit spending because its information was pooled into the entire system’s data. And we know two facilities operating under one system could be serving vastly different populations with vastly different needs.

Many hospitals and systems are keeping close track of their community benefit spending for reasons greater than maintaining tax-exempt status. The more they invest in keeping patients healthy, the lower the overall cost to treat them when they do fall ill and ultimately, the lower the hospital’s or system’s contribution to the nation’s closely scrutinized healthcare costs.

There is local reporting of community benefit spending in an organization’s community health needs assessment, but that’s done only every three years.

Melinda Hatton, general counsel for the American Hospital Association, said that in the vast majority of cases, systems are able to link a facility to a Schedule H, the part of the Form 990 where providers can give a narrative account of their community benefit spending. “In the schedule itself, some of the categories link very easily to the populations served, such as the one that reports Medicaid underpayments,” she added.

Northeastern University professor Gary Young heard that argument when he spoke with hospital leaders during his time on the IRS’ Advisory Committee on Tax Exempt and Government Entities in 2012.

But times have changed. “Consolidation has made healthcare less local when it needs to be more local, and it really presents some conflict on what information is available to local leaders,” said Young, director of Northeastern’s Center for Health Policy and Healthcare Research.

The IRS is two weeks late in providing Sen. Chuck Grassley (R-Iowa) information on audits of tax-exempt hospitals and what providers do to advertise financial assistance to eligible patients. An IRS official said the agency knew the April 1 deadline had passed but could not say when answers would be provided. 

Grassley has said Congress has done its job writing laws that push hospitals to justify their tax exemptions, which were estimated at $24.6 billion for 2011. But for the purpose of living up to their own mantras, the CMS, the IRS and healthcare executives should look for ways to make healthcare local again.