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Nonprofit hospitals get a tax break because they provide charity care and other community benefits. That break costs the United States some $13 billion a year in foregone taxes, according to the Government Accountability Office.

But very few nonprofit hospitals say how many patients they serve, or explain how they calculate the cost of care for indigent, uninsured patients. The Internal Revenue Service regards this as optional information.

There are exceptions. A few hospitals stand out for their clarity in an otherwise opaque area. Their disclosures may offer clues to understanding the value of charity care.

North Shore University Hospital in Manhasset, New York, reported that it served 32,545 patients at a cost of $17.1 million in 2009; 36,866 patients at a cost of $17.5 million in 2010; and 23,347 patients at a cost of $16.4 million in 2011, at an average annual cost to the hospital of $569 per charity care patient.

“We try to be as transparent as possible in our public disclosures,” says North Shore spokesman Terry Lynam. “We’re actually quite proud of our extensive community benefit activities.”

The Kentucky-based Norton group, which counts five hospitals, said it provided free care to 3,970 patients at a cost of $10.1 million in 2009; 5,575 patients at a cost of $11.3 million in 2010; and 7,772 patients at a cost of $12.8 million in 2011, at an average annual cost to the hospital of $2,078 per patient.

Boston Medical Center’s 2011 I.R.S. 990 reported that 75,938 charity patients were served at a cost of $93.8 million, an average of $1,235.23 per patient; its 2010 990 says that 77,055 patients were served at a cost of $89.5 million, an average annual cost to the hospital of $1,162 per patient. These numbers were confirmed by B.M.C. in an email.

Intermountain Healthcare, based in Salt Lake City, Utah, said in an email that 239,000 patients were served in F.Y. 2011 at a cost of $252 million, an average annual cost to the healthcare system of $1,054 per patient.

Averaging these nine years of patient statistics from three hospitals and a large healthcare system, and rounding up, suggests that the average charity patient cost these healthcare providers around $1,400.

No federal agency tracks the actual value of charity care provided, but healthcare systems routinely blame society’s neediest for high medical costs, saying that they have no choice but to pass along to other consumers their financial burden of caring for the poor. The American Hospital Association says that hospitals spent $46 billion on charity care last year, including bad debt, but does not say how many patients received charity care.

Hospital claims that they provide other community benefits, in addition to charity care, are valid, said Jessica Curtis of Boston-based Community Catalyst, a watchdog organization. The group recognizes the value of Medicaid and Children’s Health Insurance Program reimbursement shortfalls. She points to other health services provided at a loss, such as burn units and neo-natal intensive care units.

She also cites “community health improvement activities, which allow hospitals in certain circumstances to address the social and economic factors that we know impact overall health, including economic opportunity, community safety, housing, environmental factors.”

Dr. Brad Gray, healthcare expert at the Urban Institute, says there are too many variables to track hospital costs per charity care patient. He cites such problems as inpatient vs. outpatient statistics and whether to include Medicare and Medicaid patients.

Nevertheless, treating the medical needs of poor people was the basis for the original tax exemptions given to nonprofit hospitals, and Dr. Merle Lenihan, a Texas physician who wrote her doctoral thesis last year on charity care, estimates that only a half million people annually receive charity care.

“The health care conversation in this country would be a lot different if we knew how many patients actually receive charity care,” Lenihan said.

Rita Healy

Rita Healy

Rita Healy's first article for 100Reporters was published in October 2013 (http://100r.org/2013/10/the-63000-broken-leg-or-how-hospitals-make-money-off-charity-care/). The experience formed the basis for her interest in producing this series.

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