New Jersey nonprofit hospitals doled out $2.4 billion in community benefits in 2013, report says
That includes $1 billion in financial assistance to senior citizens, the needy and the uninsured.
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Nonprofit hospitals in New Jersey provided $2.4 billion in community benefit in 2013, according to a report from EY.
That represents 13.4 percent of their total expense, and includes $1 billion in financial assistance to senior citizens, the needy and the uninsured.
To cap things off, the hospitals injected roughly $475 million into other community benefits, including professional education, subsidized health services and community health improvement, accounting for an additional 2.7 percent of total hospital expense.
The report from EY -- formerly Earnst & Young -- was commissioned by the New Jersey Hospital Association to analyze the economic impact of the state's 63 nonprofit hospitals. The company also reviewed the hospitals' community benefit activity for tax year 2013.
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The state's average of 13.4 percent in community benefits is higher than the national average of 12.3 percent, as reported by EY and the American Hospital Association. That's based on 2012 data, the most recent available for nationwide totals.
"This independent report verifies our annual findings that New Jersey's hospitals continue to give back to their communities while serving as key economic drivers," said NJHA President and CEO Betsy Ryan in a statement. "These not-for-profit hospitals represent a lot more to their communities than bricks and mortar -- they are significant contributors to the overall well-being of their communities and expect to remain that way for a long time to come."
The report further indicates that nonprofit hospitals generate a fair amount of tax revenue for local New Jersey governments. They're not paid for directly by the hospital; rather, they're primarily paid by hospital employees and suppliers. Since the hospitals are tax-exempt, their direct taxes are limited to local property taxes, and while they also pay some employment and payroll taxes, (including FICA and unemployment insurance), these payments -- totaling $182.4 million -- are included in employee compensation, not as taxes.
With 189,864 full- and part-time employees, the nonprofits also drove economic activity. Indirectly, the hospitals supported more than 50,000 jobs, many related to hospital suppliers, and over 63 "induced" jobs, related mostly to employee consumption. In total, the report cites over 250,000 jobs created or supported by nonprofit hospitals.
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The report also details the impact those organizations have on state and local tax revenue.
"New Jersey's not-for-profit hospitals remit relatively small direct tax payments but generate state and local tax revenue through direct payments to labor and indirect and induced economic activity," according to the report.
In other words, the hospitals' overall tax impact is mostly indirect. Employees and other businesses pay taxes as a result of ongoing hospital operations, generating about $1.5 billion in state and local taxes in 2013. State taxes make up 57 percent of that total.
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Locally, property taxes represented the greatest share of state and local tax revenue, about 42 percent.
The nonprofits also pay a couple of assessments that benefit the state financially. A 0.53 assessment on each hospital's total operating revenue brought in $114 million in 2013, and a $10 per adjusted admission assessment netted about $17 million.
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