(Photo from Pixabay-Pexels)
This story is part of TRACE (Toward Response and Community Equity), a year-long series that will track how and where the region’s government, philanthropic, civic and private sector is working toward a more just recovery.
The essence of public health is prevention. And prevention requires a commitment to long-term investments. Yet, a study out this month showed one reason why COVID may have been so devastating for vulnerable communities.
Nonprofit hospitals only spent $2.3 out of every $100 on charity care — less than their government-based and almost half as much as their for-profit hospital counterparts — even as their bottom lines have benefited from the Patient Protection and Affordable Care Act (ACA).
“These results suggest that many government and nonprofit hospitals’ charity care provision was not aligned with their charity care obligations arising from their favorable tax treatment,” according to a report released this month in Health Affairs magazine. The researchers used the 2018 Medicare Hospital Cost Reports in their comparison of the charity care from 1,024 government, 2,709 nonprofit, and 930 for-profit hospitals.
Local researchers from the Hospital of the University of Pennsylvania and the PolicyLab at Children’s Hospital of Philadelphia reported similar findings last June ,after reviewing the tax records for over 1,600 nonprofit hospitals. They concluded that the Patient Protection and Affordable Care Act (ACA) or Obamacare led to financial relief for hospitals but “either no change or a decline in direct community spending.”
In fact, the research team found that urban and large hospitals which experienced the greatest net gains from the Medicare expansion, decreased their community-directed spending.
In the first year of the ACA’s implementation, hospital charity care costs dropped 13% and their bad debts stabilized, which added up to an average $1.2 million in savings per hospital according to a Pittsburgh Post-Gazette analysis. But the ACA, which was enacted in March 2010, was concerned too about public health investment.
That is why nonprofit hospitals were mandated to conduct a community health needs assessment (CHNA) every three years, and implement strategies to address the health priorities that have the potential to improve population health. Hospitals are required to get input from the local public health departments and from medically underserved, low-income and minority populations.
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They can also get input from diverse voices — community advocates, community organizations, academics, local governments, school districts, providers, heath plans, business and labor representatives. Hospitals who failed to meet this IRS requirement, which went into effect in 2012, faced a $50,000 fine and risked having their tax-exempt status revoked.
This was the federal government’s solution to a growing controversy that hospitals with a nonexempt status were neither paying taxes nor providing adequate charity care. Instead, activists charged, they were using their nonprofit status to save billions in annual taxes which hurt the very communities in which they were situated, while shortchanging their obligatory community benefit.
Groups like the American Hospital Association reject this picture and instead call hospitals the “backbone of the communities they serve,” effectively tailoring programs and services to meet each community’s unique needs.
The CHNA provision covered about 80% of the country’s hospitals and was considered an important win to improve community health. According to the Centers for Disease Control and Prevention, it would provide communities with a “snapshot of local policy, system and environmental change strategies currently in place and help identify areas for improvement.”
CHNAs were mandated to include input from “persons who represent the broad interests of the community served by the hospital facility, including those with special knowledge of or expertise in public health.”
In addition to the needs assessment, the statue required that nonprofit hospitals:
- develop an implementation strategy that would be updated annually to address the community needs identified in the CHNA.
- establish a written financial assistance policy (FAP) and a written policy governing emergency medical care. Hospitals were not allowed to charge people more than the amounts they charged insured patients.
- also, they couldn’t put an account in collection before determining if a patient was eligible for financial assistance.
There was a plan and a procedure. It included a cross-section of people and there were penalties. So why weren’t hospitals and public health providers more prepared to face a pandemic?
“We know that Medicaid expansion helps lift financial burdens that hospitals face, but it wasn’t clear if those savings were being redirected back into the community because of it,” said Genevieve P. Kanter, an economist and assistant professor of medicine, medical ethics and health policy at the University of Pennsylvania and a member of the research team.
Research from the New England Journal of Medicine, looking at 1,800 hospitals across the country, also concluded that “most of (hospitals) benefit-related expenditures (were) allocated to patient care services. Little was spent on community health improvement.”
Health advocates have argued for years that instead of funneling resources into the community to improve the health of the most vulnerable, many hospitals have plowed it into salaries paid to top health system executives.
A 2018 study in the Clinical Orthopaedics and Related Research journal found that pay increases for CEOs and other hospital executives have grown steadily throughout the 21st century with the average heath system president being paid over $1 million in cash. That same year Generocity reported on local top nonprofit earners, many of which sat at the head of the region’s largest healthcare systems.
The Philadelphia Department of Public Health and the Health Care Improvement Foundation joined in helping 18 hospitals across Philadelphia and the surrounding counties to collaboratively develop the Southeastern Regional Community Health Needs Assessment “to identify and prioritize community health needs that hospitals and health systems will be addressing as a part of their community benefit initiatives.”
Racism and discrimination was rated 14th of 16 concerns.
“Such experiences can result in further mistrust of healthcare providers and institutions and can lead to forgoing care and increased morbidity,” the report explained. The proposed solutions were to create opportunities for medical professionals and communities to interact outside of the healthcare setting, to offer implicit bias training, and to focus on the care for vulnerable communities, like people living in poverty.
But that was before COVID-19 would ravage the health and increase death rates in minority communities.
The pandemic is forcing a reckoning within the public health community as it grapples with issues such as underinvestment and disparate treatment in communities of color as well as demands for more transparency.
However, there’s been no recent postings to the Southeast Regional CHNA’s website. It was last updated on July 1, 2019.-30-
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