Charity Care and Profit
Content
NOT-FOR-PROFIT HOSPITAL DISCLOSURES
MARGIN AND MISSION
25%
= hospital or local system
Of 113 profitable hospitals surveyed, 66, or 58.4% reported less-than-average charity care
20% 15%
10% 5%
Profit Margin
0
-5%
-10%
2.5%
-15% -20%
Average amount of total expenses (excluding bad debt) that hospitals spent on providing charity care
5%
Threshold proposed by staff members for Sen. Chuck Grassley in 2008 to define whether hospitals could claim exemption from taxes
-25%
-30% -35% 0 2% 4% 6% 8% 10% 12%
Cost of Charity, as Percentage of Total Expenses
CHARITY OR DEBT Many hospitals surveyed told the IRS that a portion of their bad debt----owed
by patients who were billed but didn't pay----would have qualified for charity care
Number of hospitals
83
19
8
23
8 4 3 >50-60% 4 >60-70% 2 >70-80% 2 >80-90%
Bad debt percentage called charity
None
>0-10%
>10-20%
>20-30%
>30-40%
>40-50%
STACKING IT ALL UP 8.3% of total expenses is the average that hospitals devoted to community benefits recognized by the federal government. 2.5%
Charity care at cost
10.6% of total expenses is the average that hospitals
devoted to items not recognized by as community benefit by the federal government.
3.3%
Unreimbursed Medicaid expenses
2.5%
1%
2.3%
Bad debt, at cost
7.3%
Unreimbursed Medicare expenses, at cost
“Community building” activities
“Other benefits” including research, medical resident education and clinical services on which the provider takes a financial loss
Source: Modern Healthcare analysis of IRS Form 990 tax disclosures for 156 hospitals filing for tax year 2009 MODERN HEALTHCARE GRAPHIC/ERIC SEMELROTH
MARGIN AND MISSION
25%
= hospital or local system
Of 113 profitable hospitals surveyed, 66, or 58.4% reported less-than-average charity care
20% 15%
10% 5%
Profit Margin
0
-5%
-10%
2.5%
-15% -20%
Average amount of total expenses (excluding bad debt) that hospitals spent on providing charity care
5%
Threshold proposed by staff members for Sen. Chuck Grassley in 2008 to define whether hospitals could claim exemption from taxes
-25%
-30% -35% 0 2% 4% 6% 8% 10% 12%
Cost of Charity, as Percentage of Total Expenses
CHARITY OR DEBT Many hospitals surveyed told the IRS that a portion of their bad debt----owed
by patients who were billed but didn't pay----would have qualified for charity care
Number of hospitals
83
19
8
23
8 4 3 >50-60% 4 >60-70% 2 >70-80% 2 >80-90%
Bad debt percentage called charity
None
>0-10%
>10-20%
>20-30%
>30-40%
>40-50%
STACKING IT ALL UP 8.3% of total expenses is the average that hospitals devoted to community benefits recognized by the federal government. 2.5%
Charity care at cost
10.6% of total expenses is the average that hospitals
devoted to items not recognized by as community benefit by the federal government.
3.3%
Unreimbursed Medicaid expenses
2.5%
1%
2.3%
Bad debt, at cost
7.3%
Unreimbursed Medicare expenses, at cost
“Community building” activities
“Other benefits” including research, medical resident education and clinical services on which the provider takes a financial loss
Source: Modern Healthcare analysis of IRS Form 990 tax disclosures for 156 hospitals filing for tax year 2009 MODERN HEALTHCARE GRAPHIC/ERIC SEMELROTH
