Thursday , June 24 2021

Chicago-area hospitals providing less charity care

The amount of charity care provided by the area’s biggest hospitals edged down at a time when more people are losing the health insurance they need to pay for treatment.

Free care for low-income patients represented less than 2.5 percent of net revenue for all but one of Cook County’s largest hospitals in 2019, according to newly released state data. The exception: County-run Stroger Hospital spent just over half its revenue on free care—not including bad debt, which is billed but not recovered in full.

“Hospitals that are rich and charge a lot provide very little charity care,” says Gerard Anderson, a professor of health policy and management at the Johns Hopkins Bloomberg School of Public Health. “Hospitals that are poor and don’t charge as much provide proportionally more.”

Collectively, the largest area hospitals saw charity care expenses fall 1 percent as revenues rose 3 percent in 2019, compared with the previous year. The pre-pandemic figures add fuel to the debate over whether not-for-profit hospitals are providing enough charity care to justify property tax exemptions worth hundreds of millions of dollars. Activists say wealthy hospitals should do more, alleviating the disproportionate burden on Cook County’s public health system and other safety nets at a time when more people lack health insurance.

Even before COVID-19 started spreading, the ranks of uninsured people in Illinois were rising alongside efforts to undermine the Affordable Care Act. From 2016 to 2019, the number of people without health insurance in the state increased 11 percent to 905,900, according to a Kaiser Family Foundation analysis.

Despite more people in need of financial assistance, the largest hospitals in the county by net revenue spend a minuscule portion of that money on free care, according to the Illinois Health Facilities & Services Review Board.

University of Chicago Medical Center spent $20 million on charity care, or 1 percent of net revenue; Northwestern Memorial Hospital spent $21.9 million, or 1.1 percent; Rush University Medical Center spent $20.4 million, or 1.5 percent; Loyola University Medical Center spent $6.3 million, or 0.5 percent; and Advocate Christ Medical Center spent $23.5 million, or 2 percent.

Meanwhile, Cook County Health’s flagship hospital spent $309.5 million, or 50.9 percent of its revenue—and more than double the amount spent by the 10 other large not-for-profits combined. Cook County Heath gets a tax allocation from the county for public health and correctional health operations, but it doesn’t get taxpayer money for traditional medical services.

“Clearly, the other providers in the Cook County ecosystem are not carrying their weight, and how to get them to do that has eluded me so far,” Cook County Board President Toni Preckwinkle said late last year.

Some hospitals say they’re providing more free care during the pandemic, likely due to people losing their jobs—and the employer-sponsored health insurance that comes with them. But industry observers expect charity care to decline slightly since fewer people sought nonemergency care during the pandemic, and the federal government reimbursed providers for treating uninsured COVID patients.

Most of the hospitals say they don’t aim to spend a certain amount on charity care annually, as the cost is based on the number of patients who qualify for financial assistance and the types of services provided.

Since the passage of the Affordable Care Act, Northwestern Memorial Hospital has been “increasing funding to community health center partners, supporting care coordination efforts and making investments to support those most in need—none of which is recorded as charity care expense,” the hospital says in an email.

The University of Chicago Medical Center says in an email that it provides a range of community benefit programs, noting, “the narrow focus entirely on charity care grossly undervalues the breadth of our role and provides a misleading view of our organization’s sizable impact on those we serve.”

Rush did not respond to a request for comment. Representatives for Advocate Aurora Health, Loyola Medicine, Northwest Community Healthcare, NorthShore University HealthSystem’s Evanston Hospital and University of Illinois Hospital say they’re committed to ensuring all eligible patients have access to free or reduced care.

To maintain their tax exempt status in Illinois, not-for-profit hospitals are supposed to spend at least as much on charitable services for low-income people as they would otherwise pay in property taxes.

In addition to free medical treatment, many hospitals also factor in costs associated with medical research and educating health care professionals, as well as losses they say they incur treating Medicaid patients.

For example, University of Chicago Medical Center says the cost of treating patients on government-run Medicaid—which pays far less than private insurance and Medicare—exceeds reimbursements by more than $100 million each year.

“The state decided how much it wanted to pay for Medicaid and so that’s a government determination for a reasonable rate for a hospital,” Anderson says. “The fact that (hospitals) charge more—and can get more—doesn’t necessarily make it a community benefit, but it’s on the list.”

Additionally, for-profit hospitals get the same reimbursements from Medicare and Medicaid as tax-exempt, nonprofit hospitals that list shortfalls among their charitable contributions, says Tim Classen, associate professor of economics at Loyola University Chicago’s Quinlan School of Business.

Pediatric charity care costs are often low, largely because there are relatively few uninsured kids in Illinois—roughly 120,000, Lurie Children’s Hospital Chief Financial Officer Ron Blaustein says.

“We’re at a disadvantage if we don’t get to include these other dollars”—from low Medicaid reimbursements to investments in programs that address health inequities—as charitable services, Blaustein says.

In Chicago, progressive aldermen have called for a program that would require wealthy not-for-profit hospitals to make “payments in lieu of taxes” to the city.

“We can’t keep raising taxes and expecting low-income and working families to carry the tax burden,” says Ald. Jeanette Taylor, 20th. “Once we get back to something close to normal—it will be a conversation.”

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