Study Analyzes Whether Nonprofit Hospitals Meet Their Community Obligations

Analysis of whether nonprofit hospitals are meeting community benefit standards

There is concern that the tax exemptions received by nonprofit hospitals exceed the community benefits they provide. From 1995 to 1997, researchers at the Massachusetts Health Research Institute determined the size of this gap and whether it represented a potential revenue source to finance care for the uninsured.

Researchers also examined state initiatives to ensure that hospitals meet their community obligations.

Key Findings

  • Researchers found that:

    • Fewer than 25 percent of the hospitals sampled provided free care equal to or greater than the value of their tax exemptions.
    • When 50 percent of bad debt (for patients not paying their bills) was included with free care, only 45 percent of hospitals provided care greater than or equal to the value of their tax exemptions.
    • It was estimated that even if all nonprofit hospitals were required to provide care equal to their tax exemption, the total would not be enough to pay for the uninsured.