Not-for-profit hospitals?

The name 'not-for-profit hospital' implies health care for the poor in exchange for tax breaks. But it turns out it's not that simple.

Kai Ryssdal: Most hospitals in this country are considered not-for-profit. There's a kind of deal implied: They get tax breaks -- federal, local, property. It adds up. And in return, they do charity care, treating the poor that for-profits may not provide.

But it's not so simple. From the Marketplace Health Desk at WHYY in Philadelphia, Gregory Warner reports.


Gregory Warner: Last summer, Holly Lang did an experiment. She took uninsured people to 34 not-for-profit hospitals and asked about financial assistance.

 Holly Lang: And we were just shut down.

Only two hospitals gave her info required by law. Lang runs the Hospital Accountability Project for Georgia Watch. She says tax-exempt hospitals need to do better.

Lang: They don’t pay property tax, they don’t pay income taxes and so we need them to act in that community manner.

Nationwide, about half of tax-exempt hospitals spend just a fraction of their budget -- 1.5 percent -- on free and discounted medical care. That’s according a survey of hospital tax returns by the magazine Modern Healthcare. Republican Senator Chuck Grassley co-wrote a bill that made hospitals report that data to the IRS for the first time. It was an amendment to the health care reform law.

Chuck Grassley: I think these organizations still need to do a lot more in exchange for generous tax benefits.

Tom Getzen is a health economist with Temple University. He says the new IRS definition of charity care doesn’t include all the things hospitals do and don’t get paid for, like when uninsured people don’t pay their bills or community outreach programs that help seniors, the mentally ill and unmarried pregnant women.

Tom Getzen: Those things, they’re usually not big money winners. They’re money drains. And those are the kinds of community benefits we expect an excellent community oriented hospital to be doing.

And for now, there’s no way for government to measure that.

 In Philadelphia, I'm Gregory Warner for Marketplace.

About the author

Gregory Warner is a senior reporter covering the economics and business of healthcare for the entire Marketplace portfolio.

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