Hospitals delivered $129B in community benefits in 2020

The COVID-19 pandemic didn’t deter nonprofit hospitals from delivering billions of dollars in benefits to their communities, a new report states.

Nonprofit hospitals provided more than $129 billion in benefits to their communities in 2020, the first year of the pandemic, according to an analysis by the American Hospital Association. Hospitals provided $20 billion more in community benefits in 2020 than in the previous year, the report states.

The report comes as some federal lawmakers have raised questions about nonprofit hospitals and whether they are meeting their obligations as tax-exempt organizations.

The American Hospital Association report states that community benefits amounted to 15.5% of hospitals’ total expenses in 2020.

Hospitals provided $57 billion, or 7% of their total expenses, to provide care for patients with financial need, according to the report. The support included underpayment from Medicaid and other government programs aimed at assisting this with lower incomes.

Rick Pollack, president and CEO of the American Hospital Association, touted the report as more evidence of the essential work health systems provide.

“This report reaffirms that hospitals and health systems play an unparalleled role within the health care sector, serving as vital pillars in promoting the health and well-being of their communities,” Pollack said in a statement. “Particularly commendable is the manner in which hospitals responded to the challenges posed by the pandemic, intensifying their commitment to delivering essential care, services and programs necessary to confront this historic crisis.”

The report also points to hospitals operating programs to improve community health, support research and subsidize health services.

Critics have said nonprofit hospitals should be providing more support to their communities.

In August, a bipartisan group of U.S. senators asked the IRS to determine if nonprofit hospitals were fulfilling the obligations that come with their tax breaks.

Four senators, including U.S. Sens. Elizabeth Warren, D-Mass., and Chuck Grassley, R-Iowa, are seeking more answers. They wrote a letter to the Internal Revenue Service and the Treasury Inspector General for Tax Administration asking for an investigation to determine if hospitals are complying with requirements for nonprofits. The other senators on the letter include U.S. Sens. Raphael Warnock, D-Ga., and Bill Cassidy, a Louisiana Republican and a doctor.

The lawmakers noted the growing amount of Americans struggling with medical debt, and they questioned hospitals for their tactics to collect those debts, including reports of garnishing wages and the denial of care.

The Lown Institute, a think tank that has been critical of hospital spending practices, produced a report earlier this year suggesting hospitals are getting more in tax breaks than they are giving in support of their communities. The institute estimated the “fair share” deficit of more than 1,350 hospitals amounted to $14.2 billion in 2020.

The hospital association has faulted the Lown Institute’s report in the past, saying it fails to account for contributions such as medical research and training programs for physicians and nurses.

The American Hospital Association has also been repeatedly saying that many hospitals continue to struggle and are still dealing with the financial fallout of the pandemic. In a blog last week, the hospital association stated, “Hospitals and health systems are still recovering, and will need to be financially strong and healthy in order to keep their patients and communities healthy.”

In an interview with Chief Healthcare Executive® at the American Hospital Association Leadership Summit in July, Pollack said hospitals continue to battle staffing shortages, higher costs and labor difficulties.