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Study questions 'community benefits' paid by tax-exempt hospitals

April 17, 2013|By Ari Bloomekatz

Private, tax-exempt hospitals spent an average of 7.5% of their operating expenses on community benefits in 2009, according to a new study that raises questions about whether the amount is enough.

Overall, the study published Wednesday in the New England Journal of Medicine showed hospitals "varied widely" in the level of "community benefits" they provided, ranging from 20% of the operating budget at some to 1% at others. They concluded that most of the expenditures benefited patient care while "little was spent on community health improvement."

Researchers used tax data from about 1,800 hospitals that provide general, acute care services to analyze the financial support they provided to the surrounding community in various ways before the implementation of the Patient Protection and Affordable Care Act.

That act, signed into law by President Obama in March 2010, "requires tax-exempt hospitals to conduct assessments of community needs and address identified needs," according to the study.

The law has raised controversy around the nation and the study's authors say that "at the local level, a number of hospitals have had their property-tax exemptions challenged or revoked on the grounds that the community benefits they provide are inadequate."

And "at the federal level, congressional hearings have been held to address the issue of whether tax-exempt hospitals are sufficiently accountable for providing community benefits at levels that justify their federal income-tax exemption," according to the article, an exemption they say is worth about $13 billion each year.

"Of the expenditures reported for community benefits," researchers found, "hospitals devoted, on average, more than 85% to services directly related to patient care," the study said.

"Almost half these expenditures went to subsidizing the cost of care for patients covered by means-tested government insurance programs, mostly Medicaid."

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Twitter: @aribloomekatz

ari.bloomekatz@latimes.com

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