The Enid News and Eagle, Enid, OK

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November 2, 2013

Oklahoma hospitals: Small fraction of revenue spent on charity care

Despite a congressman’s recent assurance that many hospitals “do the work for free,” Oklahoma’s hospitals on average spend less than 3 percent of their net patient revenues on charity care, records show.

During a town hall meeting last month, 2nd District Congressman Markwayne Mullin, R-Okla., assured callers worried about the uninsured: “There are a lot of hospitals out there that do the work for free.”

While records show nearly all Oklahoma hospitals report providing some free care, only a small portion of hospital revenue on average goes toward such care.

Statewide, Oklahoma hospitals spent an average of 2.7 percent of their net patient revenues on charity care in 2012, federal records show. That amounted to more than $187 million in free care for the poor by hospitals statewide, out of $6.8 billion in net patient revenues.

The federal financial reports for 117 hospitals in the state were obtained by Oklahoma Watch and analyzed and reported with the Tulsa World. The data was compiled from hospital cost reports obtained from the Centers for Medicare and Medicaid Services, and cost-report data collected by the American Hospital Directory.

Oklahoma hospitals charity care data

Nonprofit hospitals receive a federal tax exemption in exchange for providing a “community benefit” that includes “charity care.” Community benefits include programs that improve public health, the financial shortfall from treating patients insured by Medicaid, medical research and “charity care.”

Charity care is treatment, often for the uninsured, for which a hospital does not expect to get payment.

There is no federal minimum requirement for the amount of charity care that tax-exempt hospitals must provide. Nonprofit hospitals simply must list the community benefits they provide in order to maintain their federal tax-exempt status.

Those benefits can include shortfalls from treating Medicaid patients, spending on medical research and programs to improve community health.

Additionally, 23 states require hospitals to provide a community benefit, and at least five states, including Texas, require them to provide a set minimum amount of charity care in exchange for their tax exemption. Texas requires nonprofit and publicly-owned hospitals to provide charity care equal to at least 4 percent of net patient revenue, and an additional 1 percent in other community benefits.

Oklahoma has no community benefit requirements in exchange for exempting nonprofit hospitals from income and property taxes.

In 2009, a congressional committee estimated the total value of tax breaks given to tax-exempt hospitals at $6 billion a year. Other estimates have ranged up to $12 billion.

A bipartisan U.S. Senate proposal to require hospitals to provide a minimum level of annual charity care in 2009 was shelved after stiff opposition from the American Hospital Association.

Texas state Sen. Rodney Ellis has sponsored legislation in that state to increase transparency in reporting charity care.

“Nonprofit hospitals enjoy millions in state and local tax breaks,” Ellis said in an email. “The majority of nonprofit hospitals are good actors and provide charity care for those who need it, but a state shouldn’t continue to provide tax exemptions for hospitals that neglect the needs of their community when they have the resources to provide care for those who need it most.”

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