Journal of Healthcare Management - November/December 2014 - (Page 414)

Charity Care in Nonprofit Urban Hospitals: Analysis of the Role of Size and Ownership Type in Washington State for 2011 Joseph S. Coyne, DrPH, professor, Health Policy & Administration, and director, Center for International Health Services Research & Policy, Washington State University, Spokane; Natalie M. Ogle, health data analyst, Kaiser Permanente, Portland, Oregon; Sterling McPherson, PhD, assistant professor, Program in Excellence in Addiction Research, Washington State University; Sean Murphy, PhD, assistant professor, Health Policy & Administration, Washington State University; Gary J. Smith, PhD, clinical associate professor, Health Policy & Administration, Washington State University; and Gregg Agustín Davidson, FACHE, CEO, Skagit Regional Health, Mount Vernon, Washington E X E C U T I V E S U M M A R Y Nonprofit hospitals are expected to serve their communities as charitable organizations in exchange for the tax exemption benefits they receive. With the passage into law of the Affordable Care Act, additional guidelines were generated in 2010 to ensure nonprofit hospitals are compliant. Nonetheless, the debate continues on whether nonprofit hospitals provide adequate charity care to their patient population. In this study, charity care provided by 29 Washington State nonprofit urban hospitals was examined for 2011 using financial data from the Washington State Department of Health. Charity care levels were compared to both income tax savings and gross revenues to generate two financial ratios that were analyzed according to hospital bed size and nonprofit ownership type. For the first ratio, 97% of the hospitals (28 of 29) were providing charity care in greater amounts than the tax savings they accrued. The average ratio value using total charity care and total income tax savings of all the hospitals in the study was 6.10, and the median value was 3.46. The nonparametric Kruskal-Wallis test results by bed size and nonprofit ownership type indicate that ownership type has a significant effect on charity care to gross revenue ratios (p = .020). Our analysis indicates that church-owned hospitals had higher ratios of charity care to gross revenues than did the other two ownership types-government and voluntary-in this sample. Policy implications are offered and further studies are recommended to analyze appropriate levels of charity care in nonprofit hospitals given new requirements for maintaining a hospital's tax-exempt status. For more information about the concepts in this article, contact Dr. Coyne at jsc@wsu.edu. 414

Table of Contents for the Digital Edition of Journal of Healthcare Management - November/December 2014

Interview With Ninfa M. Saunders, DHA, RN, FACHE, President and CEO of Navicent Health
Career Management in Today’s Healthcare Environment
Using Time-Driven Activity-Based Costing to Identify Value Improvement Opportunities in Healthcare
Charity Care in Nonprofit Urban Hospitals: Analysis of the Role of Size and Ownership Type in Washington State for 2011
Management Involvement on the Board of Directors and Hospital Financial Performance
Social Media: How Hospitals Use It, and Opportunities for Future Use

Journal of Healthcare Management - November/December 2014