Nonprofit Hospitals Continue to Spend Less on Charity Care as Profits, Reserves Soar

By Consumers for Quality Care, on June 14, 2023

Nonprofit Hospitals Continue to Spend Less on Charity Care as Profits, Reserves Soar

A new study published in Health Affairs found that nonprofit hospitals continue to see their profits increase and their cash reserves grow while the amount they provide in the form of charity care has actually dropped over the years, according to reporting by Healthcare Dive.

While nonprofits enjoyed, on average, a $15 million increase in operating profits from 2012 to 2019 and reported cash reserves that increased by over 68 percent, they still spent less on charity care in 2019 than they did in 2012.

Previous studies have found that nonprofits spend less on charity care than for-profit hospitals, that wealthier nonprofits tend to spend less on charity care than poorer nonprofits, and that the amount spent on charity care by nonprofit hospitals is less than the amount these hospitals receive in tax breaks as a result of their tax-exempt status. In fact, according to data, the tax-savings benefit enjoyed by nonprofit hospitals has increased by 41 percent over the past nine years.

“With operating profits for nonprofit hospitals growing, the share of community health benefits they provide should also be growing to justify their favorable tax treatment,” researchers wrote in HA.

Even worse, some nonprofits provide less charity care to those in need than the amount they receive in tax breaks. Some nonprofit institutions also engage in predatory debt collection practices, even when consumers are eligible for financial assistance, or deny care for consumers with a certain amount of unpaid debt.

Lawmakers and watchdogs alike have questioned the current system, which allows nonprofits to rake in massive profits to the detriment of consumers and the community, particularly as nearly 40 percent of U.S. adults are currently saddled with medical debt.

Nonprofit hospitals should not be allowed to pad their bottom lines while, at the same time, cutting spending on charity care for patients in need. CQC urges lawmakers and regulators ensure that nonprofit health systems are part of the solution to our country’s health care challenges – not a part of the problem.