For the first time in nearly a decade, Oregon’s hospitals reported spending less to cover the cost of poor people’s medical care and other programs benefiting their communities. But a hospital trade group says they are more than meeting the state’s requirements despite some of them losing money.
Oregon hospitals reported spending $2 billion on free or subsidized care, education or other programs intended to improve community health in fiscal year 2023, according to Oregon Health Authority data released Monday.
That’s $200 million less than they spent the previous year. According to state officials, it’s the first time hospital community spending in Oregon has dipped since 2014.
Becky Hultberg, the Hospital Association of Oregon’s president and CEO, defended her members’ performance in a statement: “Oregon’s hospitals remain committed to their communities, providing services and support beyond direct patient care.”
The association noted that the hospitals’ reported community benefit spending amounted to about 40% more than minimum levels set by the state —and that notwithstanding the recent drop, overall spending was still up by about a third since 2018.
However, others say the most relevant number is for charity care, which is just one category of what state law considers hospitals’ community benefit spending. In the most recent year of reporting, hospitals spent $230.9 million on free medical care for low-income people, which is about 8%, or $20.5 million less than the previous year. Since 2020 the figure has dropped 17%.
“Charity care is probably the best proxy for how committed you are to your community,” Eli Rushbanks, policy director for medical debt advocacy group Dollar For, told The Lund Report. “If your charity care number is high, you are a hospital that is doing good by your community.”
A hospital spokesperson, told The Lund Report in an email that it makes sense for hospitals to spend less on charity care as more people become insured. Oregon policymakers have expanded the Medicaid-funded Oregon Health Plan to cover roughly a third of the state.
Meanwhile, some hospitals have rebounded since the pandemic, but others have not. About half of Oregon hospitals reported losses during the period covered by the new community benefit data, according to the association. Reimbursements, particularly under the Oregon Health Plan, generally are not keeping up with expenses that include labor costs.
However, Service Employees International Union Local 49 called the numbers “disappointing” in a statement to The Lund Report. The union released a report in 2022 that called into question whether hospitals were following charity care rules. The following year lawmakers approved a law tightening the state’s charity care requirements, one that is not reflected in the current data.
“Even with Oregon having a minimum community benefit spending floor, some hospitals clearly elected to do the bare minimum for their communities while others have risen to the occasion,” according to the union statement.
Hospitals report spending on wide-ranging community programs
When you dig deeper into the overall community benefit reporting picture, it gets complicated.
The vast majority of hospitals in Oregon are nonprofits that receive lucrative tax exemptions. They have long faced scrutiny over whether they are adequately caring for the neediest and benefiting communities in exchange for their tax-exempt status.
In the past, the measure was simple enough: care that’s written off or given away for free, known as charity care.
But because the Affordable Care Act expanded Medicaid coverage in 2014, the need for charity care dropped. In 2019, the Oregon Legislature adopted standards for broader “community benefit” spending to be tracked by the state.
The new system is more of a kitchen sink, giving hospitals credit for a variety of types of costs they incur. For hospitals, it allowed them to count spending on low-income patients as contributing to their “unreimbursed” care totals due to lower Medicaid reimbursements paid under the Oregon Health Plan.
“Hospitals’ impact can be felt throughout our communities--but they need a stable financial foundation upon which they operate,” Hultberg said in the hospital group’s statement.
In addition to spending less on charity care, hospitals in the most recent reporting also:
- Spent about $3 million less, a drop of 6%, for preventive screenings, vaccine clinics and other community health improvement projects.
- Spent $23 million less, a decrease of nearly 8%, educating doctors, nurses and other health professionals.
- Spent $14.5 million less, or 30%, on research distributed publicly.
- Spent $2.5 million less, or 14%, on administrative costs associated with managing community benefit programs.
Care for people covered by government health programs skews numbers
The rule allowing hospitals to report theoretical losses incurred from treating patients covered by government programs, including Medicaid, further complicates the overall picture.
The argument is that even though hospitals welcome those patients and rely on government health care program revenue to support their staffing and infrastructure, government programs do not reimburse at levels as high as commercial health insurers do.
Half of the overall ‘community benefit’ investment reported by hospitals in 2023, or $999.5 million, was attributed to costs that they say were not covered by reimbursements for the Medicaid-funded Oregon Health plan.
And this figure dropped in the most recent year, explaining about two-thirds of the overall community benefit spending drop.
As a result of a temporary federal boost in Medicaid reimbursements due to expanded enrollment, Oregon hospitals reported a $139 million decrease in community benefit ‘spending’ tallied for treating Oregon Health Plan members.
Meanwhile, ‘spending’ on other types of subsidized care increased slightly to $255 million in 2023. Theoretical losses from treating patients covered by the Veterans Health Administration, the Indian Health Service and other public programs increased to $118 million, up 5.7%.
Rushbanks, of the group Dollar For, questioned whether theoretical losses from accepting people covered by Medicaid should be used to evaluate hospitals’ community spending. He told The Lund Report that hospitals are required by federal law to care for people seeking medical attention. Additionally, he noted that for-profit hospitals that do not have tax exemptions also care for patients covered by Medicaid.
“It’s just not a very useful metric,” he said. “It muddies up the data.”
