Northeast Ohio hospitals provided $1.6 billion in community benefit in 2018, according to an analysis of their most recent Internal Revenue Service (IRS) filings.
Community benefits are programs and activities that provide treatment or promote health and healing as a response to community needs. The objectives of these programs or activities include improving access to healthcare services and enhancing public health.
The IRS classifies community benefit into three major categories:
- Financial assistance and means-tested government programs. This includes charity care as well as Medicaid shortfall, which is the difference between the cost to provide these services and the reimbursement received.
- Community benefit services, which include health professionals’ education, subsidized health services, research, and community health improvement activities.
- Community-building activities, which include things like housing, economic development and environmental improvement.
The level of community benefit provided by Northeast Ohio hospitals has steadily increased each year, up from $1.5 billion in 2017 and $1.4 billion in 2016.
Financial assistance and means-tested government programs by far are the largest component of hospital community benefit. In 2016, 2017 and 2018 these programs accounted for 59%, 60%, and 64% of total community benefit respectively.
Medicare Shortfall and Bad Debt
While the federal government determines what counts as community benefit activities with respect to IRS Form 990 filings, there are additional ways hospitals contribute to their communities. For example, hospitals subsidize the cost of the care they provide to Medicare patients, also known as Medicare shortfall, as well as provide what is called “bad debt,” which is the cost of care for which hospitals expected to – but did not – receive payment. When Medicare shortfall and bad debt are added to the equation, this brings Northeast Ohio hospitals’ contribution to more than $2 billion. Of that, more than $642 million is uncompensated care, which includes both charity care and bad debt.
Additional Value
Beyond community benefit, hospitals provide value to their communities in other ways as well. In 2018, hospitals provided more than $8 billion in the form of wages and benefits for their employees. These dollars then circulate in the community, creating more jobs and generating additional economic activity. And when it comes to the care hospitals provide, nearly 1.5 million people were treated in hospital emergency departments, more than 336,000 people received inpatient care, and more than 376,000 people received outpatient care in 2018.
About The Center’s Analysis
The Center’s community benefit analysis is based on data reported by its non-federal, acute-care member hospitals on their IRS Form 990s. Public hospitals are not required to submit an IRS 990. In this case, comparable, independently reported data was used.
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