While California not-for-profit hospitals provide more charity care on average than their for-profit counterparts, there is a wide variation in the actual amount of charity care they provide.
A new study found that not-for-profit hospitals in California provide more charity care on average than for-profit hospitals, but that there's a wide variation in the amount of charity care they provide.
The study published in the August issue of Health Affairs looked at charity care and uncompensated care spending at 264 hospitals in the state, of which 200 (76%) were not-for-profits. The study found that charity care accounted for an average of 1.9% of operating expenses among not-for-profit hospitals and 1.4% among for-profit hospitals. Both types of hospitals spent an average of 4.4% of operating expenses on uncompensated care.
Study co-author Erica Valdovinos, MD, a resident in the Department of Emergency Medicine at Alameda County Medical Center in Oakland, said the study looked at a number of factors that drive charity care.
"We looked at several variables potentially related to demand for charity care, including patient demographic factors like the percentage of uninsured patients and the percentage of patients living below the poverty level, as well as hospital factors that might affect demand for charity care such as the presence of an emergency department or status as a trauma center," said Valdovinos.
The study considered the difference in the amount of charity care provided by not-for-profits as "significant" compared to the amount provided by for-profits, and also found the amount of charity care administered at not-for-profits varied.
"We found that charity care at more than 30% of not-for-profit hospitals accounted for less than 0.9% of their operating expenses," said Valdovinos. "And on the other side, we found less than 5% of not-for profits provided charity care at a level of 5% of operating expenses or higher." The study found that charity care accounted for between 1% and 1.9% of operating expenses at 30% of not-for-profits and between 2% and 2.9% at about 20% of not-for-profits.
To that point, the study noted that "we saw substantial variation in charity care spending at not-for-profit hospitals and identified factors other than not-for-profit status that affected this spending."
The study also addressed the issue of setting minimum standards for charity care at hospitals, something California legislators have proposed in the past. It cited legislation in Texas that requires not-for-profit hospitals to dedicate at least 4% of net patient revenue to charity care but noted that after the law was passed, some hospitals "that had dedicated a higher proportion of their budgets to charity care decreased their spending."
It noted that "it remains unclear whether setting minimum benchmarks" generates a higher level of charity care. The study added that "given the influence of patient and hospital factors on charity care, it may be impossible to establish minimum charity care benchmarks that make sense for all not-for-profit hospitals."
Jan Emerson-Shea, vice president of external affairs for the California Hospital Association, said the study only looked at one aspect of services that not-for-profits provide in their communities. She cited programs like free screenings for diabetes and cancer, wellness services, and public education programs that are adopted as part of a hospital's Community Health Needs Assessment.
She suggested the main driver of charity care tends to be demand for service. "A not-for-profit hospital in an upscale community like Newport Beach isn't likely to provide the same level of charity care as a hospital in an urban area with a large population of people without insurance," said Emerson-Shea.