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Charity care barely dents Ohio nonprofit hospital earnings

By   /   February 19, 2016  /   News  /   No Comments

Part 1 of 8 in the series Measuring Uncompensated Care

When Ohio was considering expanding Medicaid in 2013, nonprofit hospitals in the state lobbied for the change, hoping to ease their charity care costs. But that year Ohio nonprofits profited to the tune of $2.8 billion, with charity care accounting for a slim portion of total expenses.

A Watchdog.org review of tax year 2012 and 2013 financials from 80 nonprofit Ohio Hospital Association members found that net charity care costs amounted to an average of just 2.4 percent of Ohio nonprofit hospitals’ expenses.

For the 80 hospitals and hospital networks, average revenue less expenses — what amounts to profit if they operated as for-profit companies — was $34.8 million. Only nine reported expenses greater than their revenue; of those nine, six reported net charity care costs equal to less than 1 percent of their total expenses.

Some of the larger institutions had hundreds of millions of dollars in nonprofit profit.

The renowned Cleveland Clinic reported $740 million in net revenues and net charity care costs equal to 2.5 percent of the network’s total expenses. OhioHealth reported $348 million in net revenues, with net charity care costs equal to 5.3 percent of expenses.

Most of the nonprofit hospitals would have netted millions even with no funding for the charity care they provided. If not for direct offsetting revenue to defray the cost of caring for uninsured patients with no Medicaid coverage and no ability to pay, charity care costs would have equaled, on average, 3.3 percent of total expenses.

When hospital lobbyists discuss uncompensated care, it’s easy to assume this is a reference only to charity care. That’s not the case; in 2013, charity care was the smallest portion of many Ohio hospitals’ overall uncompensated care costs.

Unreimbursed Medicaid costs averaged 4.3 percent of nonprofit OHA members’ 2013 expenses, and the cost of bad debt — an expense hospitals report when billed patients fail to pay — was greater still, averaging 5.6 percent.

Adding working-age Ohioans with no kids and no disabilities to the Medicaid rolls should reduce hospitals’ charity care and bad debt costs. At the same time, though, unreimbursed Medicaid costs — the difference between what a hospital charges for care and what Medicaid pays — will increase because the program systematically underpays for services.

In a 2013 Community Benefit Report, OHA said its members provided $988 million in charity care, while absorbing Medicaid losses of $1.23 billion and bad debt totaling $840 million.

“Medicaid losses to Ohio hospitals continues [sic] to grow as nearly 2.4 million Ohioans are now beneficiaries of this program,” OHA said. Since Medicaid expansion took effect in January 2014, another 650,000 Ohioans have enrolled.

There is no Community Benefit Report for 2014 listed on OHA’s website, and OHA did not respond to a request for comment.

RELATED: Gov. Kasich’s Medicaid expansion end-run

Under President Barack Obama’s 2010 health law, states can bring in billions in new federal welfare spending by expanding their Medicaid programs to cover anyone with income at or below 138 percent of the federal poverty line.

From OHA’s perspective, Medicaid expansion is beneficial because it shifts the cost of care for the poor to state and federal taxpayers. From the perspective of state politicians, Medicaid expansion is good because federal taxpayers pick up most of the costs.

In the short term, the deal is sweetened by Obamacare’s 100 percent federal match through the end of this year, and a promise to never cut the federal match below 90 percent. The feds pay for 62 percent of Ohio’s traditional Medicaid costs.

Because Obamacare was designed to push millions of low-income Americans into Medicaid, the law also included a series of cuts to the Disproportionate Share Hospital payments made to hospitals caring for large numbers of uninsured patients.

But while OHA was lobbying for Ohio to expand Medicaid to balance the financial burden of DSH cuts, the American Hospital Association was lobbying to delay the DSH cuts. Originally scheduled to begin phasing in two years ago, the DSH cuts have been delayed to 2018.

Ohio Gov. John Kasich, a Republican, helped OHA lobby for Obamacare expansion for much of 2013 before unilaterally expanding Medicaid and demanding the Ohio Controlling Board accept Obamacare funding or bankrupt the state’s Medicaid program.

According to the Ohio Department of Medicaid, Kasich’s Obamacare expansion sharply reduced hospitals’ uncompensated care costs in 2014.

Medicaid expansion does not guarantee care for the poor, but rather guarantees federal taxpayers will cover a portion of its costs. Under federal law in place since the 1980s, hospitals are required to provide emergency treatment regardless of a patient’s ability to pay.

Though Kasich promotes Obamacare expansion as necessary to help the drug-addicted, mentally ill, and working poor get preventative health care instead of relying on hospital emergency rooms, Ohio’s emergency room utilization increased in 2014.

Congress recently passed an Obamacare repeal bill that would have ended the law’s Medicaid expansion, but it was vetoed by the president in January.

Details about Ohio nonprofit hospitals’ charity care costs follow. Data shown are for calendar year 2013 with the exception of hospitals whose tax years end mid-year.

Hospital/Network Revenue Less Expenses Net charity care as % of expenses Unreimbursed Medicaid as % of expenses Bad debt as % of expenses Year
Adena Health System $25,325,613 2.86% 8.51% 6.22% 2013
Akron Children’s $42,177,694 0.68% 12.25% 1.41% 2013
Akron General $22,282,587 2.28% 1.03% 1.80% 2013
Alliance Community Hospital $3,756,084 1.84% 3.91% 2.51% 2013
Ashtabula County Medical Center $2,691,104 0.74% 0.88% 9.84% 2013
Atrium Medical Center $9,957,196 6.19% 3.98% 1.66% 2013
Aultman Hospital $2,434,350 3.21% 3.99% 2.32% 2013
Barnesville Hospital $963,715 0.51% 8.33% 6.23% 2013
Bellevue Hospital $2,425,971 1.11% 8.52% 8.01% 2013
Belmont Community Hospital -$982,715 0.70% 5.08% 3.80% 2012
Blanchard Valley Regional Health Center $52,481,585 3.62% 2.52% 2.24% 2013
Christ Hospital $23,446,088 2.00% 3.63% 2.14% 2012
Cincinnati Children’s Hospital $135,665,395 1.02% 13.81% 0.83% 2012
Cleveland Clinic $740,023,684 2.49% 1.82% 6.03% 2013
Community Hospitals & Wellness Centers $963,649 2.96% 5.31% 2.86% 2012
Coschocton County Community Hospital $415,404 -0.19% 6.15% 0.00% 2013
Dayton Children’s Hospital $48,756,238 0.15% 10.03% 1.70% 2012
Diley Ridge Medical Center $11,984,462 3.34% 4.92% 5.40% 2012
East Liverpool City Hospital -$780,782 0.11% 5.76% 0.00% 2013
East Ohio Regional Hospital $1,326,388 0.60% 5.77% 4.66% 2013
Fairfield Medical Center $20,412,004 1.09% 2.87% 4.25% 2013
Firelands Regional Medical Center $25,393,499 2.12% 2.21% 1.21% 2013
Fisher-Titus Medical Center $4,784,617 1.32% 1.89% 4.77% 2013
Fulton County Health Center $438,075 0.75% 4.65% 3.45% 2013
Galion Community Hospital $5,746,348 1.76% 2.31% 8.48% 2012
Genesis Healthcare System $19,722,780 1.90% 3.10% 8.25% 2013
Good Samaritan Hospital – Dayton $28,232,023 3.91% 3.09% 1.73% 2013
Harrison Community Hospital -$1,663,821 0.70% 6.54% 14.14% 2013
Henry County Hospital -$620,939 0.99% 4.48% 2.94% 2012
Holzer Hospital $12,094,345 1.10% 4.54% 5.03% 2012
Humility of Mary Health Partners $38,518,806 4.21% 2.44% 6.70% 2013
Kettering Medical Center $117,331,843 1.79% 1.97% 0.89% 2013
Knox Community Hospital $6,015,239 4.03% 3.89% 2.44% 2013
Lake Health $5,477,922 1.61% 5.09% 10.33% 2013
Licking Memorial Hospital $32,351,257 4.28% 6.92% 12.36% 2013
Lima Memorial Health System $18,949,209 2.91% 3.25% 7.55% 2013
Madison County Hospital $922,270 1.89% 8.38% 8.84% 2013
Magruder Hospital $1,362,936 1.59% 5.11% 4.98% 2013
Marietta Memorial Hospital -$1,296,999 2.66% 3.92% 10.67% 2012
Mary Rutan Hospital $121,055 3.44% 9.22% 5.92% 2013
McCullough-Hyde Memorial Hospital $210,922 1.10% 3.36% 11.03% 2013
Memorial Hospital – Fremont -$8,700,702 0.43% 2.50% 2.45% 2012
Mental Health Svcs. Clark, Madison Counties $1,377,107 2.58% 0.00% 0.72% 2012
Mercy Allen Hospital $2,193,870 4.22% 4.01% 10.82% 2013
Mercy Health System – Northern Region -$32,138,415 0.04% 0.50% 2.84% 2013
Mercy Hospital Anderson $34,557,934 4.47% 5.63% 6.93% 2013
Mercy Hospital Clermont $15,476,053 5.84% 3.86% 10.81% 2013
Mercy Hospital Fairfield $43,784,956 3.68% 5.06% 8.18% 2013
Mercy Hospital Tiffin $7,917,583 3.18% 5.74% 4.59% 2013
Mercy Hospitals West -$11,247,660 3.38% 5.58% 13.35% 2013
Mercy Medical Center – Canton $10,129,938 2.93% 4.05% 5.59% 2013
Mercy St. Anne Hospital $8,407,857 4.30% 1.79% 18.81% 2013
Mercy St. Charles Hospital $7,287,423 3.47% 1.29% 9.85% 2013
Mercy St. Vincent Medical Center $28,391,170 2.41% 3.16% 10.51% 2013
Mercy Willard Hospital $3,898,862 4.23% 4.48% 6.42% 2013
Miami Valley Hospital $72,199,830 4.78% 4.04% 1.50% 2013
Mount Carmel Health System $89,420,681 2.62% 3.35% 2.56% 2012
Nationwide Children’s Hospital $243,553,124 0.75% 3.39% 2.92% 2013
OhioHealth $348,701,147 5.28% 2.88% 4.71% 2012
ProMedica Bay Park Hospital $6,129,942 2.24% 2.32% 10.77% 2013
ProMedica Defiance Regional Hospital $15,615,998 1.37% 3.63% 6.35% 2013
ProMedica Flower Hospital $17,250,343 2.60% 1.55% 4.84% 2013
ProMedica Fostoria Community Hospital $3,885,952 3.16% 5.82% 6.75% 2013
ProMedica St. Luke Hospital $1,426,951 1.22% 1.22% 8.14% 2013
ProMedica Toledo Hospital $1,880,316 2.01% 2.46% 5.17% 2013
Salem Community Hospital $3,708,723 2.00% 1.14% 2.19% 2012
Selby General Hospital $1,545,804 1.99% 4.09% 12.75% 2012
Southeastern Ohio Regional Medical Center $3,908,401 1.07% 2.69% 2.26% 2013
Southern Ohio Medical Center $12,515,459 2.51% 3.42% 8.57% 2012
Southwest General Health Center $23,359,887 2.38% 2.42% 1.08% 2013
Springfield Regional Medical Center $24,053,797 2.41% 6.11% 8.58% 2013
St. Vincent Charity Medical Center -$2,025,158 2.12% 3.42% 4.86% 2013
Summa Health System $54,534,066 1.43% 2.14% 2.05% 2013
Trinity Health System $12,549,761 1.81% 4.88% 5.79% 2013
Union Hospital $7,745,801 3.70% 7.55% 6.28% 2013
University Hospitals Health System $244,438,000 2.85% 2.75% 2.44% 2013
Upper Valley Medical Center $7,370,842 6.09% 5.19% 1.05% 2013
Van Wert County Hospital Association $8,801,758 0.29% 6.42% 0.67% 2013
Wayne Healthcare $3,121,720 1.78% 6.16% 11.62% 2013
Wood County Hospital $3,782,983 2.61% 4.51% 5.83% 2012
Part of 8 in the series Measuring Uncompensated Care

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Jason is an Ohio-based reporter covering labor issues for Watchdog.org, with a focus on right-to-work, public employee unions and Obamacare. Before joining Watchdog, Jason was communications director for Media Trackers Ohio. His work has been featured at FoxNews.com, Hot Air, The Daily Signal, RedState, Townhall and elsewhere. His investigations into labor union spending and Obamacare's Medicaid expansion have been cited by national commentators including Jim Geraghty, Michelle Malkin, Erick Erickson, Dana Loesch and Mark Levin. Jason can be reached on Twitter at @jasonahart and by email at jhart@watchdog.org