Reporting on Hospital Charity Care: Crunching the Numbers

Nonprofit hospitals receive millions of dollars in tax breaks each year to care for the poor and uninsured. But do they do enough to justify their lucrative, tax-exempt status?

Or do they act more like for-profit corporations, despite their tax breaks?

These questions are drawing increased attention nationally and are particularly relevant in our area where public hospitals have difficulty making ends meet. One of our county hospitals requires a nearly $40 million annual public subsidy, and a district hospital is striving to avert its second bankruptcy in five years.

Two of our local political leaders recently won approval for a state audit that will examine the issue at a sampling of California institutions.

We decided to shed light on the topic by looking at the charity care levels provided by 15 hospitals in two counties in northern California.

The term "charity care" refers to free or discounted care given to low-income, uninsured patients who qualify for such assistance.

The findings were stark.

We discovered that the responsibility of caring for the poor and uninsured falls largely on the region's public hospitals, which struggle under the weight.

Nonprofit hospitals provide only a fraction of local charity care.

To do the analysis, we used the annual financial reports that each hospital files with a state agency known as the Office of Statewide Health Planning and Development.

Although nonprofit hospitals also disclose charity care numbers on Internal Revenue Service 990 forms, we opted to use the state reports so we could include public and for-profit hospitals in our analysis, since only nonprofit institutions file the 990 forms.

We analyzed charity care in two ways. We looked at what percentage of operating expenses each hospital devotes to charity care and how that compares to the statewide average for nonprofit or public hospitals.

We also computed countywide charity care totals and looked at how the total is divided among the hospitals.

We ran a short sidebar in the newspaper explaining our methodology, and put a more complete how-we-did-it article online.

In the second part of our two-part series, we looked at executive compensation using data from IRS 990 forms and public records requests filed with the public hospitals.

One of the more popular features was an online database that my colleague, Daniel Willis, created listing compensation packages for executives and other highly paid employees at the hospitals. We also put the full 990 forms online with tabs so people could easily find various sections of the reports.

Photo credit: Jane Tyska/Bay Area News Group