Oct 11, 2023 - Health

Sanders, hospital lobby clash over nonprofits' service

A hospital sign with the 'H' replaced with a dollar sign

Illustration: Lazaro Gamio/Axios

Sen. Bernie Sanders and one of the biggest hospital lobbies on Tuesday offered clashing views on how much nonprofit health systems benefit the communities they serve.

Driving the news: Sanders (I-Vt.), who chairs the Senate HELP Committee, issued a report that found six of the biggest nonprofit hospital systems dedicated less than 1% of their total revenue to charity care in 2021 a key criteria for maintaining their tax-exempt status that Sanders wants tightened.

  • But the American Hospital Association countered with its own findings that tax-exempt hospitals offered $129 billion in total benefits to their communities in 2020, amounting to an average of about 15.5% of their total expenses.

The big picture: Nonprofit hospitals are tax-exempt because they provide community benefits and financial assistance to patients. But lawmakers and other industry watchers have become increasingly concerned about their priorities.

By the numbers: Three hospital systems on a list of 16 analyzed by Senate HELP Committee staff spent more than 5% of their revenue on free or discounted medical care for patients who cannot pay.

  • CommonSpirit Health, which had the highest revenue of nonprofit chains analyzed in the report, spent 1.5% of its revenue on charity care while paying its outgoing and incoming CEOs a total of $32 million in 2021, according to the report.

The other side: The American Hospital Association called the Senate report "totally off base," saying it excluded other community services nonprofit hospitals provided.

  • "This tunnel-visioned 'research' neglects to consider that under the law community benefit is defined by much more than charity care and includes patient financial aid, health education programs and housing assistance, just to name a few," AHA CEO Rick Pollack wrote in a blog post.
  • AHA's analysis of 2,790 hospitals encompasses financial assistance programs, community-building activities, Medicare shortfall and bad debt expenses in its calculation of the total benefit a hospital provided to its community.

What we're watching: Sanders' report calls for Congress to create tighter charity care requirements for tax-exempt hospitals.

  • Congress should define community engagement necessary to be a nonprofit hospital, restrict nonprofit hospitals' use of debt collection and establish criteria for nonprofit hospital financial assistance programs, the report said.
  • If the hospitals analyzed in the Senate report "don't substantially increase charity care they should lose their tax exempt status," Sanders posted on X Tuesday.
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