Hospital ownership and community benefit: looking beyond uncompensated care

Not-for-profit (NFP) hospitals have come under increased public scrutiny for management practices that are inconsistent with their charitable focus. Of particular concern is the amount of community benefit provided by NFP hospitals compared to for-profit (FP) hospitals given the substantial tax benefits afforded to NFP hospitals. This study examines hospital ownership and community benefit provision beyond the traditional uncompensated care comparison by using broader measures of community benefit that capture charitable services, community assessment and partnership, and community-oriented health services. The study sample includes 3,317 nongovernment, general, acute care, community hospitals that were in operation in 2006. Data for this study came from the 2006 American Hospital Association Hospital Survey and the 2006 Area Resource File. We used multivariate regression analyses to examine the relationship between hospital ownership and five indicators of community benefit, controlling for hospital characteristics, market demand, hospital competition, and state regulations for community benefit. We found that NFP hospitals report more community benefit activities than do FP hospitals that extend beyond uncompensated care. Our findings underscore the importance of defining and including activities beyond uncompensated care when evaluating community benefit provided by NFP hospitals.

The charity offering. Despite disparity in margins, rich and poor hospitals offer similar levels of subsidized care

Despite large variations in margins among hospitals, there is a much smaller difference in how much goes toward free and subsidized spending. But hospital officials say focusing on free care unfairly excludes other subsidized spending and community services. Poudre Valley Health System's Rulon Stacey, left, says the system has increased subsidized health spending to $26.1 million, not all of which is reflected as charity care.

Hospitals collaborate to reduce ED overuse

ED Connections, a joint project of two competing hospitals in Lincoln, NE, has reduced the number of emergency visits by uninsured and underinsured frequent users by 56%, saving the two hospitals about $700,000 in uncompensated care costs. When patients being treated in the emergency department say they can't afford their medication or have other needs, they receive a card with the ED Connections phone number that they can call for help. When patients enroll in the program, staff conduct a psychosocial assessment and work with them to create an action plan and goals. The team works closely with patients to help them follow their plan of care.

Does uninsurance affect the health outcomes of the insured? Evidence from heart attack patients in California

In this paper, I examine the impact of uninsured patients on the in-hospital mortality rate of insured heart attack patients. I employ panel data models using patient discharge and hospital financial data from California (1999-2006). My results indicate that uninsured patients have an economically significant effect that increases the mortality rate of insured heart attack patients. I show that these results are not driven by alternative explanations, including reverse causality, patient composition effects, sample selection or unobserved trends and that they are robust to a host of specification checks. The primary channel for the observed spillover effects is increased hospital uncompensated care costs. Although data limitations constrain my capacity to check how hospitals change their provision of care to insured heart attack patients in response to reduced revenues, the evidence I have suggests a modest increase in the quantity of cardiac services without a corresponding increase in hospital staff.

Setting a standard: Illinois bill bases hospitals' tax-exempt status on charity-care levels; plan could be model for other states

Illinois hospitals are cheering legislation that defines how they can qualify for property tax exemptions. "Hospitals have been on hold for a year-plus in making improvements and investments in their communities... many hospitals were concerned about their future survival," says Maryjane Wurth, president and CEO of the Illinois Hospital Association.

Frequent-user patients: reducing costs while making appropriate discharges

Homeless patients who lack access to the health resources they need to maintain their health on their own pose a challenge for hospitals: Premature discharge of such patients can result in their being readmitted to the hospital in a short time, leading to higher costs for the hospital. Hospitals can address this problem by developing clear, effective homeless discharge policies and by developing ongoing relationships with appropriate medical respite care providers. A hospital also can benefit from spearheading an initiative to develop a medical respite program, enlisting the assistance of other community stakeholders.

Dentists demonstrating professionalism: Dentists in private practice settings provide free or reduced-fee care

Access to oral health care is an issue that has received attention at the local, state, regional, and national levels. This study focuses on how dentists in private practice settings attempt to address problems regarding access to care through personal initiatives. These dentists donate or discount services in their own offices to individuals who face access barriers. These donated or discounted services may go unreported and unnoticed. The research question addressed in this study is: What was the amount and type of free and reduced-fee care that dentists in the community of Brookline, Massachusetts, provided during the 2008 calendar year.

The right patient

This article offers professional opinions and advice on how physicians should prepare in order to protect themselves and their practices during this turbulent time in healthcare reform. This article presents real-life scenarios to help physicians understand what they may face and what actions they should take in anticipation of the future in healthcare. The article focuses on the concept of "the right patient," defining the characteristics of patients that benefit the financial aspect of a practice and those who do not. Its purpose is not to encourage physicians to deny care to patients who are poorly insured or uninsured, but to guide in the establishment of a smart and safe balance between the two. Strategies are discussed on how to attract the right patient and what these patients mean to the practice. The importance of practice marketing is also highlighted, along with an emphasis on the necessity of change in order to survive in the future healthcare environment.

New requirements for hospitals to maintain tax-exempt status

Tax-exempt hospitals are now facing more legislative requirements to maintain tax-exempt status. This article outlines each of these requirements imposed by the Patient Protection Act of 2010. Health care administrators, executives, and consultants must be aware of these new laws to ensure each facility is capable of maintaining tax-exempt status. Despite the issuance of new requirements, a conclusive definition of charity does not exist. Therefore, the debate surrounding charity care and the justification for tax-exempt status will continue.

The effect of minimum nurse staffing legislation on uncompensated care provided by California hospitals

This study assesses whether California's minimum nurse staffing legislation affected the amount of uncompensated care provided by California hospitals. Using data from California's Office of Statewide Health Planning and Development, the American Hospital Association Annual Survey and InterStudy, the authors divide hospitals into quartiles based on preregulation staffing levels. Controlling for other factors, they estimate changes in the growth rate of uncompensated care in the three lowest staffing quartiles relative to the quartile of hospitals with the highest staffing level. The sample includes short-term general hospitals over the period 1999 to 2006. The authors find that growth rates in uncompensated care are lower in the first three staffing quartiles as compared with the highest quartile; however, results are statistically significant only for county and for-profit hospitals in Quartiles 1 and 3. The authors conclude that minimum nurse staffing ratios may lead some hospitals to limit uncompensated care, likely due to increased financial pressure.

Factors associated with closures of emergency departments in the United States

CONTEXT

Between 1998 and 2008, the number of hospital-based emergency departments (EDs) in the United States declined, while the number of ED visits increased, particularly visits by patients who were publicly insured and uninsured. Little is known about the hospital, community, and market factors associated with ED closures. Federal law requiring EDs to treat all in need regardless of a patient's ability to pay may make EDs more vulnerable to the market forces that govern US health care.

OBJECTIVE

To determine hospital, community, and market factors associated with ED closures.

DESIGN

Emergency department and hospital organizational information from 1990 through 2009 was acquired from the American Hospital Association (AHA) Annual Surveys (annual response rates ranging from 84%-92%) and merged with hospital financial and payer mix information available through 2007 from Medicare hospital cost reports. We evaluated 3 sets of risk factors: hospital characteristics (safety net [as defined by hospitals caring for more than double their Medicaid share of discharges compared with other hospitals within a 15-mile radius], ownership, teaching status, system membership, ED size, case mix), county population demographics (race, poverty, uninsurance, elderly), and market factors (ownership mix, profit margin, location in a competitive market, presence of other EDs).

SETTING

All general, acute, nonrural, short-stay hospitals in the United States with an operating ED anytime from 1990-2009.

MAIN OUTCOME MEASURE

Closure of an ED during the study period.

RESULTS

From 1990 to 2009, the number of hospitals with EDs in nonrural areas declined from 2446 to 1779, with 1041 EDs closing and 374 hospitals opening EDs. Based on analysis of 2814 urban acute-care hospitals, constituting 36,335 hospital-year observations over an 18-year study interval (1990-2007), for-profit hospitals and those with low profit margins were more likely to close than their counterparts (cumulative hazard rate based on bivariate model, 26% vs 16%; hazard ratio [HR], 1.8; 95% confidence interval [CI], 1.5-2.1, and 36% vs 18%; HR, 1.9; 95% CI, 1.6-2.3, respectively). Hospitals in more competitive markets had a significantly higher risk of closing their EDs (34% vs 17%; HR, 1.3; 95% CI, 1.1-1.6), as did safety-net hospitals (10% vs 6%; HR, 1.4; 95% CI, 1.1-1.7) and those serving a higher share of populations in poverty (37% vs 31%; HR, 1.4; 95% CI, 1.1-1.7).

CONCLUSION

From 1990 to 2009, the number of hospital EDs in nonrural areas declined by 27%, with for-profit ownership, location in a competitive market, safety-net status, and low profit margin associated with increased risk of ED closure.

Short of the mark. A Modern Healthcare analysis of Form 990s shows some very profitable hospitals offering little subsidized care

A Modern Healthcare analysis finds a widely uneven distribution in the levels of charity care given to the poor by various hospitals. Many of the charitable healthcare providers even acknowledge billing patients who, in retrospect, probably should have qualified for free care. "Hospitals, if they're not-for-profits, should act like a charity," says Sen. Chuck Grassley, left. "I expect nonprofit hospitals to fulfill their not-for-profit status by providing whatever charity care is needed".

A two-dimensional equity proposal for self-sufficiency in municipal safety-net hospitals

This article advances a two-dimensional equity approach for self-sufficiency in municipal safety-net hospitals that will strengthen provider self-sufficiency and protect the safety-net mission of providing a dignified floor of health services to the most disadvantaged members of the society. The model responds to the failure of current delivery strategies to effectively cope with the changing market configurations in safety-net systems that have eliminated the possibility of cross-subsidization which has long been the mainstay of safety-net systems. The identified pathway to self sufficiency is made up of (1) a differential service delivery framework which includes a two-tier patient system, uniform standards of care and service levels, and the creation of a community health campus; (2) independent sector ownership; and (3) intergovernmental policy actions restricting ownership of safety-net hospitals to nonprofit entities. Although this model is explained by demonstrating potential application in safety-net hospitals, it is believed that the model is applicable in ambulatory care settings. Future work can focus on the construction of an ambulatory variation of the model and the empirical testing of the hospital and ambulatory models.

Public vs. private provision of charity care? Evidence from the expiration of Hill-Burton requirements in Florida

This paper explores the consequences of the expiration of charity care requirements imposed on private hospitals by the Hill-Burton Act. We examine delivery care and the health of newborns using the universe of Florida births from 1989 to 2003 combined with hospital data from the American Hospital Association. We find that charity care requirements were binding on hospitals, but that private hospitals under obligation "cream skimmed" the least risky maternity patients. Conditional on patient characteristics, they provided less intensive maternity services but without compromising patient health. When obligations expired, private hospitals quickly reduced their charity caseloads, shifting maternity patients to public hospitals. The results in this paper suggest, perhaps surprisingly, that requiring private providers to serve the underinsured can be effective.

Do hospital chief executive officers extract rents from Certificate of Need laws?

Prior research suggests that Certificate of Need (CON) laws reduce competition in the hospital services industry. As a result, this study empirically investigates if not-for-profit hospital chief executive officers (CEOs) are able to extract rents from CON laws in the form of higher compensation. A sample of 256 not-for-profit hospital CEOs in states with and without CON laws and data for 2007 are used in the empirical analysis. The study considers the endogenous nature of a CON law and allows such a law to indirectly affect CEO compensation through its impact on the number of hospitals and beds. The multiple regression results indicate that special and public interests both motivate the decision of a state to maintain a CON law. CON laws are shown to reduce the number of beds at the typical hospital by 12 percent, on average, and the number of hospitals per 100,000 persons by 48 percent. These reductions ultimately lead urban hospital CEOs in states with CON laws to extract economic rents of $91,000 annually.

Time is money: opportunity cost and physicians' provision of charity care 1996-2005

OBJECTIVE

To test whether physicians' provision of charity care depends on their hourly wage.

DATA SOURCES

Secondary data from four rounds of the Community Tracking Study (CTS) Physician Survey (1996-2005). Data are nationally representative of nonfederal office- and hospital-based physicians spending at least 20 hours per week on patient care.

STUDY DESIGN

A two-part model with site-level fixed effects, time trend variables, and site-year interactions is used to model the relationship between physicians' hourly wage and both their decision to provide any charity care and the amount of charity care provided. Salaried and nonsalaried physicians are modeled separately.

DATA COLLECTION/EXTRACTION METHODS

Data from each round of the CTS were merged into a single cross-sectional file with 38,087 physician-year observations.

PRINCIPAL FINDINGS

The association between physician's hourly wage and the likelihood of providing charity care is positive for salaried physicians and negative for nonsalaried physicians. Among physicians providing any charity care, hourly wage is positively associated with the amount of charity care provided regardless of salaried status. Practice characteristics are also significant.

CONCLUSIONS

The financial considerations of salaried physicians differ significantly from those of nonsalaried physicians in the decision to provide charity care, but factor similarly into the amount of charity care provided.

A FAIR way to reduce uncompensated care

Intermountain Healthcare's leadership committed the organization to a systematic redesign of the initial patient encounter process. The redesigned process ensured clear and timely application of the organization's charity care policies. Results included an 11 percent decrease in bad-debt expense and a 40 percent increase in charity care approved.

The insurance safety net. Minnesota's public and private programs

More than 725,000 people in Minnesota get their health insurance coverage through safety-net programs.This article describes the four safety-net insurance programs operating in Minnesota--Medical Assistance, MinnesotaCare, General Assistance Medical Care, and the Minnesota Comprehensive Health Association-their eligibility guidelines, coverage limitations, and financing mechanisms.

The economic recession: early impacts on health care safety net providers

While the recession increased demands on the health care safety net as Americans lost jobs and health insurance, the impact on safety net providers has been mixed and less severe--at least initially--than expected in some cases, according to a new study of five metropolitan communities by the Center for Studying Health System Change (HSC). Even before the recession, many safety net providers reported treating more uninsured patients and facing tighter state and local funding. Federal expansion grants for community health centers during the past decade, however, have increased capacity at many health centers. And, programs to help direct people to primary care providers may have helped stem the expected surge in emergency department use by the uninsured during the downturn. Federal stimulus funding--the 2009 American Recovery and Reinvestment Act--has assisted hospitals and health centers in weathering the economic storm, helping to offset reductions in state, local and private funding. And, the economic downturn has generated some potential benefits, including lower rents and broader employee applicant pools. While safety net providers have adopted strategies to stay financially viable, many believe they have not yet felt the full impact of the deepest recession since the Great Depression.