Stung by critics, hospitals emphasize community benefit
Pressured by an economy in crisis, state budget cuts and questions about community benefit, hospitals in 2009 stressed the value they provide to their regions.
In one benefit battle, the Illinois Hospital Association challenged the “flawed assumptions” in a report questioning the charity care provided by 27 hospitals and health systems in the Chicago area.
The report, released by the Center for Tax and Budget Accountability, compared the value of hospital tax exemptions and charity care provided and concluded that the hospitals studied did not merit their tax-exempt status.
The IHA countered that the report overstated the hospitals’ potential tax liability while understating the benefits they provide. Former IHA president Ken Robbins explained that the CTBA used 2007 data instead of 2008 data from hospital Community Benefit Reports and understated the increase in hospital charity care by 35 percent.
The report “overestimates sales tax liability,” Robbins said, and mischaracterizes property taxes for the Chicago hospitals.
“The report acknowledges that the hospitals provided community benefits of $2.14 billion, or nearly five times the value of CTBA’s inflated estimated tax exemption value,” he said. “(It also) fails to take into account the hospitals’ Medicaid shortfall. Even the IRS agrees that shortfalls in Medicaid payments should be recognized as community benefit.”
According to Massachusetts Hospital Association President and CEO Lynn Nicholas, the global financial crisis and state Medicaid budget cuts led to a “deep and systemic decline” in hospital finances in the Bay State.
The MHA issued a report making the case that Massachusetts’ hospitals “serve as employers of choice and engines of economic growth for both the local and statewide economies” and thus deserve state and federal support in hard times.
“We want to show that supporting hospitals – at a time when we’re undertaking important cost-cutting strategies – is wise economic and healthcare policy,” said Nicholas.
Nicholas said the damage done to hospitals through budget cuts and underfunding makes it more difficult for Massachusetts to rebound economically.
Hospitals in Missouri also emphasized the “multiplier effect” of hospital jobs in a community. The Missouri Hospital Association claimed that in Missouri, each hospital job results in a total of 2.1314 jobs in the economy as a whole because hospital employees use their wages to purchase goods and services, which creates income and jobs for other businesses.
Thus, while Missouri hospitals’ payroll and benefits totaled $7.2 billion in 2007, there was an additional economic benefit to the state of $5.9 billion.
It is important for hospital advocates to emphasize such benefits, because there is money available in the American Recovery and Reinvestment Act, or stimulus package, that could help hospitals better serve low-income patients in their communities.
For instance, ARRA provides an increase in the federal matching portion of the Medicaid cost share and an increase in the disproportionate share hospital allotment.
“The federal efforts to stem the growth of the uninsured should help address the problems created by the poor economy,” said Daniel Landon, MHA senior vice president of governmental relations. He added that hospital officials should reach out to state leaders as the various states receive federal appropriations, in order to help craft legislation helpful to hospitals and the communities they serve.
