Community Benefit

Teaching Hospitals Boost Community Spending: Study

June 4, 2018 3:18 pm

The findings ran counter to other research earlier this year on a broader group of not-for-profit hospitals.

June 4—Teaching hospitals are seeing a decrease in charity spending while increasing their spending on community health promotion, according to new research.

The new study adds to support for the Affordable Care Act (ACA), by concluding that its expansion of health insurance access, along with new regulations, research opportunities, and educational expectations, is likely changing the way hospitals allocate their community benefit dollars.

Even in states that did not expand Medicaid, hospital are not experiencing a decrease in charity care but are spending more on community benefits, according to the article. The article, “Changes in Teaching Hospitals’ Community Benefit Spending After Implementation of the Affordable Care Act,” was published in the May 22 issue of Academic Medicine.

Researchers at the Association of American Medical Colleges (AAMC) studied spending data for 184 teaching hospitals—93 percent of its members—from 2012 and 2015. Tax-exempt teaching hospitals are required annually to report community benefits.

The study concluded that although the hospitals’ charity care spending decreased by $804 million—about 16 percent—between 2012 and 2015, there was a $3.1 billion—or 20 percent—net increase to $18.4 billion in total community benefit spending. About $875 million of that increase was allocated for community health improvement activities, subsidized health services, and cash and in-kind contributions.

The results bore out the expectation that the implementation of the ACA, by increasing the number of Americans with health insurance, including Medicaid, would decrease the need for charity care, said Philip M. Alberti, PhD, senior director of health equity research and policy at AAMC and one of the report’s authors.

A novel piece of the study was its examination of the differences between teaching hospitals in states that expanded Medicaid and those that  did not expand the coverage, he noted in an interview.

“A lot of the conversation has been lumping all of those hospitals together,” Alberti said. “But there are really important differences between how the ACA changed the ways that different hospitals with different opportunities for healthcare coverage, specifically because of the expansion, made different choices or redistributed money.”

One “happy surprise” was the approach of teaching hospitals in non-expansion states, where there was no influx of newly Medicaid-covered patients.

Those facilities nonetheless chose to “put more dollars into community health improvement activities, cash and in-kind contributions to local community-based organizations,” Alberti said.

Alberti theorized that the rationale for that decision might have stemmed from an overall shift in focus to health promotion and illness prevention, rather than treatment.

“We do posit in this environment, where there is such a heightened focus on issues of healthcare and community health, that non-expansion-state hospitals still felt the desire and were compelled to do something; and those were areas of community spend to which they could dedicate more resources,” he said.

Mark Schlesinger, PhD, a professor at Yale and Rutgers universities, who has extensively researched community benefits, also was surprised at the overall amount of community-benefit spend increase.

“It was not just the substitution away from uncompensated care,” Schlesinger said in an inteview. “Even when you took that substitution effect into account—they’re treating Medicaid people now instead of uninsured because everyone expanded Medicaid in those places—there is more of the other kind of community benefit. That was kind of striking.”

The ACA’s requirement that tax-exempt hospitals produce Community Heath Needs Assessments (CHNAs) every three years might be impacting where the organizations are putting their money, Schlesinger said.

“It’s possible that we are now seeing the consequence of these [CHNAs] actually giving better focus to what the hospitals recognize as community needs or having community groups have better influence over the process because they now have these reports that identify needs,” he said.

Caution Needed

It might be too soon to put a lot of stock into the report’s findings, given its limited sampling, said Gary J. Young, PhD, director of the Center for Health Policy and Healthcare Research and a professor at the D’Amore-McKim School of Business and Bouve College of Health Sciences at Northeastern University.

“There’s certainly been a hope that this expansion of health insurance would reduce demand for hospital-based charity care and that hospitals would then take those savings and deploy them to other community benefit initiatives, particularly those promoting community health,” he said in an interview. “This study points in that direction.”

But, a study Young co-authored in January did not see that pattern, after examining  hundreds of tax-exempt hospitals nationwide.

Young’s study found community benefit spending increased only slightly and hospitals in socio-economically challenged communities with more uninsured individuals actually spent more on charity care and less on health promotion and prevention.

The sample type used in the recent research likely limits the ability of the results to be applied to all not-for-profit hospitals. AAMC members—academic medical centers and teaching hospitals with medical school affiliations—could be in better positions to provide more community health initiatives and are not representative of tax-exempt hospitals in general, Young said.

AAMC member hospitals “have a broader mission and, in some cases, may have more resources and more capabilities to engage in community health. And so it would not be able to say that the pattern that they report for these hospitals might in any way be generalizable to all tax-exempt hospitals in the country, which was the focus of our study,” he said.

Why Important

The results, though, are important, Young said, especially amid some concerns that hospitals might pocket any savings they get from a decrease in charity care.

“This paper adds to the discussion around this topic,” he said. “But we have to keep in mind that it’s something that people are going to want to look at more closely—not just for select groups of hospitals, but to see where we are beginning to see a pattern and a change in spending on community benefit among the larger group of tax-exempt hospitals.”

Alberti emphasized the trend in which some hospitals take the money saved on charity care and put it into activities that benefit community health.

“The general public should know the significant contributions to community health that academic health centers make above and beyond the care that they provide,” Alberti said. “It is important that legislators understand how tax-exempt status is yielding the kind of contributions to communities that it is intended to have.”

His analysis accounted for certain regulatory changes that might make it look like hospital community spending is going down, but that appearance is just a “reporting glitch.”

“I also think that given the rapidly shifting sands of health care that it’s an opportune moment to understand how the ACA has created a new baseline for community benefit for teaching hospitals, for scientists and health policy researchers that are interested in these issues, from which we can assess in future years continued changes in trends in community benefit spending,” he said.

Cheryl V. Jackson is a freelance writer. Follow her on Twitter: @cherylvjackson.


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