Nonprofit hospital community benefit spending grows to $2B
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The state’s 23 nonprofit hospitals reported spending more than $2 billion on community benefits in fiscal year 2023, a 14.6% increase over the previous year.
That’s according to an annual report published by the state Office of Health Strategy (OHS). The “Hospitals’ Community Benefit Summary and Analysis Report” for fiscal 2023 was released Monday.
The 68-page report notes that to remain exempt from federal, state and local taxes, nonprofit hospitals are required by the Internal Revenue Service (IRS) to provide goods and services to benefit the community. The goods and services are broadly known as “hospital community benefits.”
The OHS report is an analysis of the community benefit and community-building activities of the state’s 23 nonprofit acute care hospitals as reported in tax filings to the IRS.
The report states that while statewide investment in community benefit topped $2 billion, it has declined as a percentage of total hospital expenses by 3% since 2016.
Some key findings in the report include:
- Unreimbursed Medicaid costs, reported by hospitals at $1.24 billion in fiscal 2023, account for 61% of total community benefit expenditures. Data submitted by hospitals show these costs are the fastest-growing segment of community benefit expenditures, accounting for 64% of the growth since 2016.
- Financial assistance at cost, or charity care, which includes free or discounted care for patients that meet eligibility requirements, totaled $283 million, or 14.67% of community benefit expenses, in fiscal 2023. Financial assistance at cost has declined by $61.8 million (17.9%) since 2016.
Hospital community benefits also include many of the investments hospitals make to address their local community health needs assessment (CHNA). These investments target needs identified in the hospital’s primary service area.
Stamford Hospital (18.62%), Bridgeport Hospital (13.61%) and Yale New Haven Hospital (12.05%) spent the most on these activities as a percentage of total hospital expenditures in FY 2023.
The report also provides recommendations to improve both transparency and accuracy in community benefit reporting, including:
- Increasing transparency on Medicaid and other cost calculation methodologies, ratios and beneficiary counts.
- Expanding requirements to report on the outcomes of financial assistance screening activities, and
- Aligning community benefit reporting on unreimbursed Medicaid costs to the revised calculation introduced in the fiscal 2023 Annual Report of Short-Term Acute Care Hospital’s Financial Status. This updated approach calculates the statewide Medicaid payment to cost ratio at 0.87 (or 87 cents per dollar), providing a more accurate and standardized representation of Medicaid costs and reimbursement.
“The federal government and states across the country have begun to look at community benefit more closely in recent years,” said Dr. Deidre Gifford, commissioner of OHS. “We want to provide policy makers in Connecticut with the data and tools they need to address healthcare access, affordability, equity and quality in our state.”
OHS also invites the public to comment on the report. Written comments must be received by May 28 and sent to the attention of Elisa Neira-Hamada, senior director, Health Equity, Office of Health Strategy, P.O. Box 340308, 450 Capitol Ave. MS51OHS, Hartford, CT 06016.
Comments may also be sent via email to OHS@ct.gov with the subject line “Community Benefit Summary and Analysis Report – Public Comment.”
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