Nonprofit, For-Profit, and Government Hospitals: Uncompensated	 
Care and Other Community Benefits (26-MAY-05, GAO-05-743T).	 
                                                                 
Before 1969, IRS required hospitals to provide charity care to	 
qualify for tax-exempt status. Since then, however, IRS has not  
specifically required such care, as long as the hospital provides
benefits to the community in other ways. Seeking a better	 
understanding of the benefits provided by nonprofit hospitals,	 
Congress requested that GAO examine whether nonprofit hospitals  
provide levels of uncompensated care and other community benefits
that are different from other hospitals. This statement focuses  
on, by ownership group, hospitals' (1) provision of uncompensated
care, which consists of charity care and bad debt, and (2)	 
reporting of other community benefits. The hospital ownership	 
groups were (nonfederal) government, nonprofit, and for-profit.  
To compare the three hospital ownership groups, GAO obtained 2003
data from five geographically diverse states with substantial	 
representation of the three ownership groups in each state. GAO  
analyzed cost data from two perspectives--each hospital group's  
percentage of (1) total uncompensated care costs in a state and  
(2) patient operating expenses devoted to uncompensated care.	 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-05-743T					        
    ACCNO:   A25198						        
  TITLE:     Nonprofit, For-Profit, and Government Hospitals:	      
Uncompensated Care and Other Community Benefits 		 
     DATE:   05/26/2005 
  SUBJECT:   Charitable organizations				 
	     Federal taxes					 
	     Hospital administration				 
	     Hospitals						 
	     Nonprofit organizations				 
	     Tax administration 				 
	     Tax exempt organizations				 
	     Tax exempt status					 
	     California 					 
	     Florida						 
	     Georgia						 
	     Indiana						 
	     Texas						 

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GAO-05-743T

Testimony

Before the Committee on Ways and Means, House of Representatives

United States Government Accountability Office

GAO

For Release on Delivery Expected at 10:00 a.m. EDT

Thursday, May 26, 2005

NONPROFIT, FOR-PROFIT, AND GOVERNMENT HOSPITALS

Uncompensated Care and Other Community Benefits

Statement of David M. Walker

Comptroller General of the United States

GAO-05-743T

Mr. Chairman and Members of the Committee:

I am pleased to be here today as you discuss issues regarding tax
exemptions for nonprofit hospitals. At this Committee's recent hearing on
the tax-exempt sector as a whole,  I emphasized the importance of
reviewing this sector, drawing parallels to our agency's call to reexamine
all major federal policies and programs in light of 21st century
challenges.1,2 Provisions granting federally recognized tax-exempt status
and associated policies have been layered on one another to respond to
challenges at the time, but they need to be reviewed and revised to
reflect 21st century changes and challenges. On a broad scale, a
comprehensive reexamination could help address whether exempt entities are
providing services and benefits to the public commensurate with their
favored tax status, whether the current number and nature of exemptions
continue to make sense, whether the conditions and restrictions on the
activities of tax-exempt entities remain relevant, and whether the
framework for ensuring that exempt entities adhere to the requirements
attendant to their status is satisfactory.

There are a number of issues that merit reexamination, including whether
nonprofit hospitals perform sufficiently different services of benefit to
the public to justify their tax exemption. To examine these hospitals'
tax-exempt status, we must look back several decades. Before 1969, the
Internal Revenue Service (IRS) required hospitals to provide charity care
to qualify for tax-exempt status. Since then, however, IRS has not
specifically required such care for a hospital to be exempt from federal
taxation and have access to tax-exempt bond financing and charitable
donations, as long as the hospital provides benefits to the community in
other ways. Community benefits include such services as the provision of
health education and screening services to specific vulnerable populations
within a community, as well as activities that benefit the greater public
good, such as education for medical professionals and medical research.
Nonprofit hospitals may also be exempt under state law from state and
local taxes.

1GAO, Tax-Exempt Sector: Governance, Transparency, and Oversight Are
Critical for Maintaining Public Trust, GAO-05-561T (Washington, D.C.: Apr.
20, 2005).

2GAO, 21st Century Challenges: Reexamining the Base of the Federal
Government, GAO-05-325SP (Washington, D.C.: February 2005).

Seeking a better understanding of the benefits provided by nonprofit
hospitals, this Committee requested that we examine whether nonprofit
hospitals provide levels of uncompensated care-care provided to a patient
that a hospital is not reimbursed for-and other community benefits that
are different from other hospitals. My remarks today will focus on our
examination, for selected states, of (1) the provision of uncompensated
care by state and local government-owned, nonprofit, and for-profit
hospitals and (2) hospitals' reporting of other community benefits.

To examine the provision of uncompensated care by the three hospital
ownership groups,3 we analyzed cost data from two perspectives, namely
each hospital group's percentage of (1) total uncompensated care costs in
a state and (2) patient operating expenses devoted to uncompensated care.
We obtained 2003 data from five states-California, Florida, Georgia,
Indiana, and Texas. Hospitals in these states include 46 percent of the
nation's for-profit hospitals and more than a quarter of all hospitals in
the three ownership groups. We selected these states because they
represented geographically diverse areas; had a number of hospitals in
each ownership group sufficient to make comparisons; and collected
hospital-specific uncompensated care data, which not all states maintain.4
We compared each hospital ownership group's provision of uncompensated
care by examining each group's uncompensated care costs5 as a percentage
of its total patient operating expenses.6 Our measure of uncompensated
care includes the cost of charity care as well as bad debt and deducts any
payments made by or on behalf of individual patients. We limited our
analysis of uncompensated care to nonfederal, short-term, acute care
general hospitals.7 In doing our work, we tested the reliability of the
state data and determined they were adequate for our purposes.8 To examine
hospitals' provision of community benefits other than uncompensated care,
we reviewed 21 hospital or hospital systems' reports and Web sites for
information about such benefits. These reports and Web sites covered
nonprofit, for-profit, and government hospitals in the five states. We
also examined laws in the five states regarding community benefit
requirements for nonprofit hospitals, reviewed the literature, and
interviewed state officials and state hospital association
representatives. In addition, we interviewed officials from the Centers
for Medicare & Medicaid Services (CMS), the American Hospital Association,
and the Federation of American Hospitals. We conducted our work from
February 2005 through May 2005 in accordance with generally accepted
government auditing standards. (See app. I for more detail on our scope
and methodology.)

3The state and local government-owned hospitals in this statement refer to
state-owned hospitals, such as those at state universities, and locally
owned hospitals, such as county and city hospitals. In this statement we
will refer to these as government hospitals. Federal hospitals, such as
those operated by the Department of Veterans Affairs, are not included in
this definition.

4Reliable, hospital-specific data were not available nationwide. In
addition, some states do not have sufficient diversity in hospital
ownership to make comparisons for the purpose of this analysis; in
particular, some states have very few for-profit hospitals.

5To obtain uncompensated care costs, we multiplied hospitals'
uncompensated care charges reported in the state data by
hospital-specific, cost-to-charge ratios from Medicare hospital cost
reports. These cost-to-charge ratios are specific to hospital costs and
charges as a whole, not to Medicare costs and charges.

6Patient operating expenses include those expenses incurred for patient
care. They exclude such expenses as those incurred for operating a parking
garage, gift shop, and certain other nonmedical expenses.

In summary, the cost burden of providing uncompensated care varied among
the three hospital groups, but the burden was generally concentrated in a
small number of hospitals. In four of the five states, government
hospitals, as a group, devoted substantially larger shares of their
patient operating expenses to uncompensated care than did nonprofit and
for-profit hospitals. The nonprofit hospitals' uncompensated care costs,
as a percentage of patient operating expenses, were higher on average than
those of the for-profit hospitals in four of the five states, but the
differences were generally not as great as the differences between the
government hospitals and both these groups. Further, the burden of
uncompensated care costs was not evenly distributed within each hospital
group but instead was concentrated in a small number of hospitals. For
example, in California's nonprofit hospital group, the top quarter of
hospitals, ranked by uncompensated care as a percentage of patient
operating expenses, averaged 7.2 percent devoted to uncompensated care
compared with an average of 1.4 percent for hospitals in the bottom
quarter.

7Cost, charge, and other data obtained from the states and other sources
are for individual hospitals, even if a hospital is part of a larger
hospital system.

8We excluded 8 percent of the hospitals in the five states because certain
key information, such as total patient operating expenses, was not
available.

Regardless of ownership status, the hospitals we reviewed reported
providing a wide range of other community benefits, from health education
to clinic services specifically for the community's indigent population.
Variations in the types of community benefits hospitals in the five states
reported providing could be explained by differences in the services
hospitals chose to provide as well as by variation in the applicability,
specificity, and breadth of state requirements.

                                   Background

In 2003, of the roughly 3,900 nonfederal, short-term, acute care general
hospitals in the United States,9 the majority-about 62 percent-were
nonprofit. The rest included government hospitals (20 percent) and
for-profit hospitals (18 percent). States varied-generally by region of
the country-in their percentages of nonprofit hospitals (see fig. 1). For
example, states in the Northeast and Midwest had relatively high
concentrations of nonprofit hospitals, whereas in the South the
concentration was relatively low.

9This total does not include critical access hospitals that provide
general acute care. Critical access hospitals are small, rural hospitals
that receive payment for their reasonable costs of providing inpatient and
outpatient services to Medicare beneficiaries, rather than being paid
fixed amounts under Medicare's prospective payment systems. By excluding
critical access hospitals, which are numerous and small, we removed the
effect that they would have on the distribution of hospitals by ownership
group.

Figure 1: Geographic Distribution of Nonprofit Hospitals in 2003

Note: Hospitals include nonfederal, short-term, acute care general
hospitals, but not critical access hospitals that provide general acute
care.

The five states we reviewed varied in number and ownership composition of
hospitals (see table 1). For example, in California and Indiana, nonprofit
hospitals accounted for over half of each state's hospitals. In Texas,
government hospitals made up the state's largest percentage, although the
distribution between nonprofit, for-profit, and government hospitals was
similar; in Florida, most hospitals were either nonprofit or for-profit,
while 11 percent were government.

Table 1: Distribution of Hospitals Reviewed, by Ownership Type, 2003

              Total number   Percent    Percent Percent state and local 
              of hospitals nonprofit for-profit              government 
California          331        51         27                      22 
Florida             169        43         46                      11 
Georgia             133        43         21                      36 
Indiana              97        56          9                      35 
Texas               332        33         32                      35 

Source: GAO analysis of state and CMS data.

Note: Hospitals include nonfederal, short-term, acute care general
hospitals.

The average size of hospitals in our study, as measured by patient
operating expenses, varied across the three ownership groups. (See table
2.) On average, nonprofit hospitals were larger than for-profit hospitals.
The pattern held in all five states but the magnitude of the difference
varied. For example, in California, nonprofit hospitals were twice as
large as for-profit hospitals, whereas in Texas, this difference was
smaller.

Table 2: Average Hospital Size as Measured by Patient Operating Expenses,
2003

                       Average patient operating expenses (in millions)
                       For-profit     Nonprofit    State and local government 
California               $71.7        $143.4                        $141.2 
Florida                  $90.8        $181.8                        $229.3 
Georgia                  $52.7         $91.8                         $72.4 
Indiana                  $62.1        $116.1                         $47.6 
Texas                    $73.9        $112.9                         $43.0 

Source: GAO analysis of state and CMS data.

Note: Hospitals include nonfederal, short-term, acute care general
hospitals.

Hospitals' Qualifications for Federal and State Tax-exempt Status

Hospitals may be extended a federal tax exemption by IRS if they meet the
Internal Revenue Code's qualifications for charitable organizations under
section 501(c)(3).10 Hospitals that qualify for nonprofit status are
exempt from federal income taxes and typically receive other advantages,
including access to charitable donations-which are tax deductible for the
individual or corporate donor-and tax-exempt bond financing. To qualify
for federal tax-exempt status, a hospital must demonstrate that it is
organized and operated for a "charitable purpose," that no part of its net
earnings inure to the benefit of any private shareholder or individual,
and that it does not participate in political campaigns on behalf of any
candidate or conduct substantial lobbying activities.11

Before 1969, IRS required hospitals to provide charity care to qualify for
tax-exempt status.12 Since then, however, IRS has not specifically
required such care, as long as the hospital provides benefits to the
community in other ways. This "community benefit" standard came into
existence with an IRS ruling, which concluded that a hospital's operation
of an emergency room open to all members of the community without regard
to ability to pay promoted health in a way consistent with other
activities-such as advancement of education and religion-that qualify
other organizations as charitable.13 In addition, the 1969 ruling
identified other factors that might support a hospital's tax-exempt
status, such as having a governance board composed of community members
and using surplus revenue to improve facilities, patient care, medical
training, education, and research.

Nonprofit hospitals may also receive exemptions from state and local
income, property, and sales taxes, which, in some cases, are of greater
value than the federal income tax exemption. Some states have defined
community benefits for nonprofit hospitals, but their statutes vary
considerably in their specificity and scope. Appendix II provides more
information on statutory definitions of community benefits in the states
we reviewed.

10Section 501(c) specifies 28 types of entities that are eligible for
tax-exempt status. Over 1.5 million entities have been recognized as
exempt by IRS.

11Charitable activities may include those that relieve the poor,
distressed, or underprivileged; those that lessen the burdens of
government; and those that promote social welfare.

12See, for example, IRS Rev. Rul. 56-185, 1956-1 C.B. 202.

13See IRS Rev. Rul. 69-545, 1969-2 C.B. 117. A revenue ruling is a
formally published interpretation of tax law by the IRS upon which
taxpayers are entitled to rely.

Government Payments for Uncompensated Care and Other Costs

Hospitals may receive direct payments from different government sources to
help cover their unreimbursed costs, including those for charity care, bad
debt, and low-income patients. For example, Medicare and Medicaid make
payments to hospitals that serve a disproportionate share of low-income
patients under their respective disproportionate share hospital (DSH)
programs. Medicare bad debt reimbursement partially reimburses hospitals
for bad debt incurred for Medicare patients. Other state payments may also
be available to hospitals, although their specific types vary widely. For
example, hospitals may receive payments from special revenues such as
tobacco settlement funds, uncompensated care pools that are funded by
provider contributions, and payment programs targeted at certain services
such as emergency services. (See app. III for more information on payments
for uncompensated care and other costs.)

Burden of Providing Uncompensated Care Varied among Hospital Groups, but Burden
           Was Generally Concentrated in a Small Number of Hospitals

In our review of hospitals' provision of uncompensated care in five
states, we analyzed cost data from two perspectives-namely, each hospital
group's percentage of (1) total uncompensated care costs in a state and
(2) patient operating expenses devoted to uncompensated care. The former
relationship showed hospitals' uncompensated care costs in dollars,
aggregated by groups; whereas the latter relationship showed hospitals'
uncompensated care costs as a proportion of their operating expenses,
thereby accounting for differences in hospital number and size among the
hospital groups. In general, government hospitals, as a group, accounted
for the largest percentage of total uncompensated care costs and devoted
the largest share of patient operating expenses to uncompensated care
costs. The uncompensated care cost burden was not evenly distributed
within each hospital group but instead was concentrated in a small number
of hospitals.

Government Hospitals Generally Accounted for the Largest Percentage of the
Uncompensated Care Costs in States Reviewed

Government hospitals, as a group, accounted for the largest percentage of
the total uncompensated care costs in three of the five states-California,
Georgia, and Texas. Nonprofit hospitals, as a group, accounted for the
largest percentage of the uncompensated care costs in Florida and Indiana.
For-profit hospitals, as a group, provided 20 percent or less of total
uncompensated care costs in each state we reviewed. (See table 3).

Table 3: Total Uncompensated Care Costs Incurred by Hospitals Reviewed, by
State, 2003

                       Total                                            
               uncompensated   Nonprofit  For-profit    State and local 
              care costs (in (percent of (percent of         government 
                   millions)      total)      total) (percent of total)
California         $2,307          34           9                 57 
Florida            $1,561          46          20                 34 
Georgia              $830          43          10                 47 
Indiana              $342          79           3                 17 
Texas              $2,101          39          18                 43 

Source: GAO analysis of state and CMS data.

Note: Hospitals include nonfederal, short-term, acute care general
hospitals.

In each of the five states, the nonprofit hospital groups accounted for a
larger percentage of total uncompensated costs compared with the
for-profit hospital groups. This difference was due, in part, to the
larger number of nonprofit hospitals and their larger size relative to the
for-profit hospitals. For example, in California, the nonprofit group's
percentage of total uncompensated care costs was almost four times higher
than that of the for-profit group, but this is not surprising, as
nonprofit hospitals outnumbered for-profit hospitals almost 2 to 1 and
were twice the size in patient operating expenses.

Government Hospital Groups Generally Devoted Largest Share of Patient Operating
Expenses to Uncompensated Care, but Shares Varied across States

In four of the five states reviewed, government hospitals devoted
substantially larger shares, on average, of their patient operating
expenses to uncompensated care than did nonprofit and for-profit
hospitals.14 (See fig. 2.) In those four states, the differences in
average percentages between the government hospital groups and the
nonprofit hospital groups ranged from about 4.3 percentage points in
Georgia to 11.3 percentage points in Texas. In contrast, in the fifth
state, Indiana, the nonprofit hospital group devoted the largest share, on
average, of patient operating expenses to uncompensated care. Between the
nonprofit and for-profit hospital groups, the nonprofit hospitals' average
percentages were greater in four of the five states-ranging from 1.2
percentage points greater in Florida to 2.3 percentage points greater in
Indiana. In contrast, in the fifth state, California, the nonprofit
group's average percentage was similar to that of the for-profit group.

14These results are consistent with studies showing a similar
relationship. See L. Fishman, "What Types of Hospitals Form the Safety
Net?" Health Affairs, vol. 16, no. 4 (July/August 1997); J. Mann, et al.,
"A Profile of Uncompensated Hospital Care, 1983-1995," Health Affairs,
vol. 16, no. 4 (July/August 1997); and S. Zuckerman, et al., "How Did
Safety-Net Hospitals Cope in the 1990s?" Health Affairs, vol. 20, no. 4
(July/August 2001).

Figure 2: Average Percent of Patient Operating Expenses Devoted to
Uncompensated Care, by Hospital Ownership Type, 2003

Notes: The average percent of patient operating expenses devoted to
uncompensated care for a hospital ownership group is calculated by
dividing the sum of uncompensated care costs for hospitals in that group
by the sum of the group's total patient operating expenses. Hospitals
include nonfederal, short-term, acute care general hospitals.

The five states varied in their hospitals' shares of patient operating
expenses devoted to uncompensated care, ranging from an average 4.1
percent for all Indiana hospitals to an average 8.3 percent for Texas
hospitals. (See table 4.) Similar state-to-state variation found in other
studies was due, in part, to differences in states' proportions of
uninsured populations, variation in Medicaid eligibility or payment
levels, and the presence of state programs that provide health insurance
to low-income uninsured individuals.15 Specifically, prior research showed
that hospitals located in states with more uninsured individuals and
hospitals in states with relatively more eligibility-restricted Medicaid
programs may have higher levels of uncompensated care. Our data are
consistent with these studies' findings on the uninsured. For example, in
our five-state review, Texas had the highest percentage of uninsured-25
percent-and the highest share, on average, of patient operating expenses
devoted to uncompensated care, whereas Indiana had the lowest percentage
of uninsured-13 percent-and the lowest average share.

Table 4: Average Percentage of Patient Operating Expenses Devoted to
Uncompensated Care, by State, 2003

               Average percentage of patient operating expenses devoted 
                                                  to uncompensated care 
California                                                       5.6 
Florida                                                          6.4 
Georgia                                                          8.2 
Indiana                                                          4.1 
Texas                                                            8.3 

Source: GAO analysis of state and CMS data.

Notes: We calculated the average percent of patient operating expenses
devoted to uncompensated care for each state by dividing the sum of
uncompensated care costs for hospitals in the state by the sum of the
hospitals' total patient operating expenses in the state. Hospitals
include nonfederal, short-term, acute care general hospitals.

For Each Hospital Group, Uncompensated Care Costs Were Concentrated in a Small
Number of Hospitals

For each group, uncompensated care costs were concentrated in a small
number of hospitals. We observed this pattern when examining the
percentages of patient operating expenses devoted to uncompensated care
costs as well as hospitals' shares of total uncompensated care costs in a
state. For the three hospital ownership groups, we ranked hospitals
according to their share of patient operating expenses devoted to
uncompensated care.

15See G. Atkinson, W. Helms, and J. Needleman, "State Trends in Hospital
Uncompensated Care," Health Affairs, vol. 16, no. 4 (July/August 1997); L.
Fishman, "What Types of Hospitals Form the Safety Net?" Health Affairs,
vol. 16, no. 4 (July/August 1997); A. Davidoff, A. LoSasso, G. Bazzoli,
and S. Zuckerman, "The Effect of Changing State Health Policy on Hospital
Uncompensated Care," Inquiry, vol. 37 (Fall 2000); K. Thorpe, E. Seiber,
and C. Florence, "The Impact of HMOs on Hospital-Based Uncompensated
Care," Journal of Health Politics, Policy and Law, vol. 26, no. 3 (June,
2001); and GAO, Nonprofit Hospitals: Better Standards Needed for Tax
Exemption, GAO/HRD-90-84 (Washington, D.C.: May 30, 1990).

We found that, for all three hospital groups, the top quarter of hospitals
devoted substantially greater percentages of their patient operating
expenses to uncompensated care, on average, compared with the bottom
quarter of hospitals. (See fig. 3.) For example, in California's nonprofit
hospital group, the top quarter of hospitals devoted an average of 7.2
percent compared with 1.4 percent for the bottom quarter of hospitals.
Similarly, in Florida's government hospital group, the top quarter of
hospitals devoted an average 19.6 percent compared with an average 5.2
percent for the bottom quarter of hospitals. From state to state, the
difference in ranges between top and bottom quarters was also substantial.
For example, in Indiana's government group, the average share of operating
expenses devoted to uncompensated care for hospitals in the top quarter
was about 3 times larger than for those in the bottom quarter; whereas in
California, the average share for the top quarter of hospitals was almost
13 times higher than that of the bottom quarter.

Figure 3: Average Share of Patient Operating Expenses Devoted to
Uncompensated Care for Hospitals Ranked in Top and Bottom Quarters, by
Ownership Type, 2003

Notes: Hospitals were ranked by percentage of patient operating expenses
devoted to uncompensated care. The average percent of patient operating
expenses devoted to uncompensated care for a hospital ownership group is
calculated by dividing the sum of uncompensated care costs for hospitals
in that group by the sum of the group's total patient operating expenses.
Hospitals include nonfederal, short-term, acute care general hospitals.

When examining hospitals' shares of total uncompensated care costs in a
state, we found that uncompensated care costs remained concentrated in a
disproportionately small number of hospitals. Specifically, each state's
top quarter of hospitals accounted for a disproportionately large share of
the state's uncompensated care costs. For example, in Texas, the top
quarter of hospitals accounted for about 50 percent of total uncompensated
care costs, yet accounted for only 18 percent of the total beds. (See
table 5). Moreover, in Texas, six major government teaching institutions
accounted for 34 percent of total uncompensated care costs, which amounted
to over half of the contribution of the hospitals in the top quarter. This
pattern was also true for California, Florida, and Georgia. For example,
in California, 13 major teaching hospitals accounted for 42 percent of
total uncompensated care costs.16 In contrast, in Indiana, total
uncompensated care costs were distributed more evenly across a greater
number of hospitals.

Table 5: Percentage of Total Uncompensated Care Costs in a State for
Hospitals Ranked in Top Quarter, 2003

                     Percentage of state's total Percentage of states' 
State                      uncompensated care         hospital beds 
California                                 68                    25 
Florida                                    47                    22 
Georgia                                    39                    19 
Indiana                                    21                    14 
Texas                                      50                    18 

Source: GAO analysis of state and CMS data.

Notes: Hospitals were ranked by percentage of patient operating expenses
devoted to uncompensated care. Hospitals include nonfederal, short-term,
acute care general hospitals.

Several factors explain which hospitals were likely to be in their group's
top and bottom quarters. For example, in our five-state analysis, we found
that whether a hospital was a teaching institution was an important
predictor of whether it would be in the top quarter of a state's
government hospital group. Hospitals that had teaching programs were more
likely to be in the top quarter of a government hospital group. In
contrast, teaching status was not an important predictor for either the
nonprofit or for-profit hospital groups' top quarter. For nonprofits,
hospitals in rural areas were more likely to be in the top quarter than
hospitals located in urban areas. Other factors that were outside the
scope of this study, such as differences in the proportion of uninsured
populations in the hospital market, may have also influenced the
likelihood of a hospital's inclusion in the top or bottom quarter.

16We defined major teaching hospitals as those hospitals having an intern
or resident-to-bed ratio of 0.25 or more and minor teaching hospitals as
those having an intern or resident-to-bed ratio greater than 0 and less
than 0.25.

     Hospitals Reported Providing a Wide Range of Other Community Benefits

In addition to providing uncompensated care, hospitals may provide other
services to their communities for which they are not reimbursed. In our
review of hospitals' Web sites and reports about community
benefits-published documents specifying the types and value of services
hospitals provide to communities-we found that, regardless of ownership
status, hospitals reported providing a wide range of community benefits.17
Variations in the types of community benefits hospitals reported providing
could be explained by differences in the community benefits hospitals
chose to provide as well as by variations in the applicability,
specificity, and breadth of state requirements.

Certain hospital industry guidance defines community benefits as the
unreimbursed goods and services hospitals provide that address their
communities' health needs, including health education, screening, and
clinic services, among others. Consistent with this industry definition,
we found through our review of reports and Web sites that hospitals
reported providing similar types of services, including:

           o  community health education such as parenting education, smoking
           cessation, fitness and nutrition, health fairs, and diabetes
           management;
           o  health screening services such as screening for high
           cholesterol, cancer, and diabetes;
           o  clinic services, including clinics targeted to specific groups
           in the community, such as indigent patients;
           o  medical education for physicians, nurses, and other health
           professionals;
           o  financial contributions, including cash donations and grants,
           to community organizations;
           o  coordination of community events and in-kind donations-such as
           food, clothing, and meeting room space-to community organizations;
           and
           o  hospital facility and other infrastructure improvements.

           Community health education and health screenings were listed by
           most of the reports and Web sites we reviewed. Clinic services,
           support groups, community event coordination, cash contributions
           to charities, and medical education for health professionals were
           listed by over half of the reports we reviewed.18

           Because of the wide variation in hospitals' reporting of community
           benefits, we were not able to discern clear patterns in the
           provision of these benefits across hospital ownership groups. The
           variation could be explained by differences in the community
           benefits hospitals chose to provide as well as by variations in
           the applicability, specificity, and breadth of state requirements.
           Specifically, the five states reviewed require all hospitals to
           report financial data, including data on the cost of charity care
           they provide. However, as shown in table 6, California, Indiana,
           and Texas also have statutory requirements for nonprofit hospitals
           to develop plans for meeting their communities' health needs and
           to report annually on the types and value of the community
           benefits they provide.19 Of these three states, only Texas and
           Indiana require nonprofit hospitals to report using standardized
           forms and have the explicit statutory authority to impose fines
           for noncompliance as part of the requirements.20 The Texas form is
           more specific, as it includes line-items that capture the
           hospitals' unreimbursed costs associated with providing
           traditionally "unprofitable" health services such as trauma care
           and community clinics, education of medical professionals, medical
           research, and cash and in-kind donations made by the hospital to
           local charities. Indiana's form provides nonprofit hospitals more
           flexibility in delineating the types and value of their community
           benefits but includes supplementary guidance to nonprofit
           hospitals about what should be considered community benefits,
           including financial or in-kind support of public health programs,
           community-orientated wellness and health promotion programs, and
           outreach clinics in economically depressed communities. California
           has no form for annual community benefit reports but requires that
           hospitals classify the services provided into broad, statutorily
           defined categories, including cash and in-kind donations to public
           health programs, efforts to contain health care costs and enhance
           access, and services that help maintain a person's health.

17To determine the types of community benefits hospitals reported
providing, we reviewed 15 publicly available reports about community
benefits for nonprofit and for-profit hospitals and six government
hospitals' Web sites.

18Our findings on the types of community benefits hospitals reported
providing are consistent with our findings in GAO/HRD-90-84 and industry
publications.

19Georgia requires all "hospital authorities," which create or operate
nonprofit hospitals, to submit "community benefit reports" that disclose
the cost of charity and indigent care provided. GA. CODE ANN. S: 31-7-90.1
(2004). However, this information is otherwise required of hospitals in
all groups in Georgia as part of financial reporting requirements. GA.
CODE ANN. S: 31-6-70 (2004).

20In Texas, for-profit and government hospitals receiving Medicaid DSH
payments are generally required to meet the same community benefit
reporting requirements as nonprofit hospitals. TEX. HEALTH & SAFETY CODE
ANN. S: 311.046(e) (2004).

Table 6: Community Benefit Requirements for Nonprofit Hospitals

                                                      Penalties for           
State       Description of requirements            noncompliance           
Californiaa Maintain community benefit plans that  None explicitly         
               include measurable objectives for      authorized as part of   
               meeting the community's needs within   requirements.           
               specified time frames and mechanisms   
               to evaluate effectiveness. In          
               addition, report annually on the       
               plans, as well as the types and value  
               of community benefits provided.        
Florida     None.                                  Not applicable.         
Georgiab    None.                                  Not applicable.         
Indianac    Maintain and report annually on        Fines explicitly        
               community benefit plans that include   authorized as part of   
               measurable objectives for meeting the  requirements for        
               community's health care needs within a failure to make annual  
               specified time frames, evaluation      report.                 
               strategies, and a budget. In addition, 
               must describe the types and value of   
               any additional community benefits.     
Texasd      Maintain and report annually on        Fines explicitly        
               community benefit plans that include   authorized as part of   
               measurable objectives for meeting the  requirements for        
               community's health care needs within   failure to make annual  
               specified timeframes, mechanisms for   report.                 
               evaluating effectiveness, and a                                
               budget. In addition, must describe the Hospitals that fail to  
               types and value of community benefits  provide the required    
               provided.                              community benefits must 
                                                      be reported annually to 
               At a minimum, hospitals are required   attorney general and    
               to provide:                            comptroller.            
                                                      
               (1) charity and government-sponsored   
               indigent care at a level that is       
               reasonable in relation to community    
               needs, the available resources of the  
               hospital, and the tax-exempt benefits  
               received;                              
                                                      
               (2) charity and government-sponsored   
               indigent health care equal to 100      
               percent of state tax-exempt benefits;  
               or                                     
                                                      
               (3) charity care and other community   
               benefits equal to at least 5 percent   
               of net patient revenue, provided that  
               charity care and government-sponsored  
               indigent health care are provided in   
               an amount equal to at least 4 percent. 

Source: GAO analysis.

aCAL. HEALTH & SAFETY CODE S:S: 127345, 127350, and 127355 (2004).

bGeorgia requires all "hospital authorities," which create or operate
nonprofit hospitals, to submit "community benefit reports" that disclose
the cost of charity and indigent care provided. GA. CODE ANN. S: 31-7-90.1
(2004). However, this information is otherwise required of hospitals in
all groups in Georgia as part of financial reporting requirements. GA.
CODE ANN. S: 31-6-70 (2004).

cIND. CODE S: 16-21-9-4 - 16-21-9-8 (2004).

dTEX. HEALTH & SAFETY CODE ANN. S:S: 311.043 - 311.047 (2004).

According to state officials or state hospital association representatives
in the five states we reviewed, for-profit and government hospitals are
not required to report on the community benefits they provide outside of
the requirements to report financial data, including data on the cost of
charity care they provide. However, as we found through our review, some
of these hospitals report publicly-for promotional purposes-on the
community benefits they provide, either through published reports or by
posting general information on their Web sites.

Moreover, the three states with community benefit reporting
requirements-California, Indiana, and Texas-conduct limited monitoring of
nonprofit hospitals' community benefit reports. For example, according to
officials from state agencies, none of the three states conducts audits of
nonprofit hospitals' self-reported community benefits information,
although Texas reviews the reports to ensure that "reasonable" types of
services are listed as community benefits. In addition, these states do
not routinely use the data collected through community benefit reports to
review hospitals' tax-exempt status.

                            Concluding Observations

Our comparison of the hospital ownership groups' uncompensated care costs,
as a percentage of patient operating expenses, was instructive.
Differences between the nonprofit and for-profit groups were often small
when compared with the substantial differences between the government
group and the other two groups. Moreover, the burden of uncompensated care
costs was not evenly distributed among hospitals, which meant that a small
number of nonprofit hospitals accounted for substantially more of the
uncompensated care burden than did others receiving the same tax
preference.

As for the other community benefits hospitals reported providing, we were
not able to discern a clear distinction among the government, nonprofit,
and for-profit hospital groups. Hospitals in the five states reported
conducting a variety of activities, which the hospitals themselves
considered community benefits. We were unable to assess the value of these
benefits or make systematic comparisons between hospitals or across
states.

These observations illustrate a larger point that I and others raised at
the hearing last month-namely, that current tax policy lacks specific
criteria with respect to tax exemptions for charitable entities and detail
on how that tax exemption is conferred. If these criteria are articulated
in accordance with desired goals, standards could be established that
would allow nonprofit hospitals to be held accountable for providing
services of benefit to the public commensurate with their favored tax
status.

Mr. Chairman, this concludes my prepared statement. I will be happy to
answer questions you or the other Committee Members may have.

                          Contact and Acknowledgments

For further information regarding this testimony, please contact A. Bruce
Steinwald at (202) 512-7101. Kristi Peterson, Thomas Walke, Joanna Hiatt,
Kelly DeMots, Mary Giffin, Emily Rowe, Craig Winslow, and Hannah Fein
contributed to this statement.

Appendix I: Scope and Methodology

To examine the provision of uncompensated care by the three hospital
ownership groups, we obtained 2003 uncompensated care data from five
states-California, Florida, Georgia, Indiana, and Texas. We obtained all
other data, such as cost-to-charge ratios,1 patient operating expenses,2
and all descriptive statistics, from 2002 and 2003 Medicare hospital cost
reports.3 We selected the five states because they represented
geographically diverse areas; had a number of hospitals in each ownership
group sufficient to make comparisons; and collected hospital-specific
uncompensated care data, which not all states maintain.4 The 2003 state
uncompensated care data and 2002 and 2003 Medicare hospital cost reports
were the most recent available at the time of our analysis. We also
interviewed health officials from all five states as well as officials
from the Centers for Medicare & Medicaid Services (CMS), the American
Hospital Association, and the Federation of American Hospitals. We limited
our analysis to nonfederal, short-term, acute care general hospitals for
which a cost report was available.5 This analysis included critical access
hospitals that provide general acute care. Our study included about 92
percent of nonfederal, short-term, acute care hospitals in the five
states.

We defined uncompensated care as the sum of charity care and bad debt
costs as reported in the state data. To determine uncompensated care
costs, we multiplied uncompensated care charges by a hospital-specific
cost-to-charge ratio. Although specific definitions of charity care
varied, states generally defined it as charges for patients deemed unable
to pay all or part of their bill, less any payments made by, or on behalf
of, that specific patient. States generally defined bad debt as the
uncollectible payment that a patient is expected to, but does not pay. Our
definition of uncompensated care does not include any contractual
allowances or cost shortfalls.6 In addition, we did not subtract any
charity care-specific block grants or donations a hospital may receive, as
this information was not available for all states.

1These cost-to-charge ratios are specific to hospital costs and charges as
a whole, not to Medicare costs and charges.

2Patient operating expenses include those expenses incurred for patient
care. They exclude such expenses as those incurred for operating a parking
garage, gift shop, and certain other nonmedical expenses.

3The reporting period of certain hospitals differed between the state data
and the cost reports. Therefore, we combined the 2003 state data with the
cost report, either 2002 or 2003, that best overlapped the state data's
reporting period.

4Reliable, hospital-specific data were not available nationwide. In
addition, some states do not have sufficient diversity in hospital
ownership to make comparisons for the purpose of this analysis; in
particular, some states have very few for-profit hospitals.

5Cost, charge, and other data obtained from the states and other sources
are for individual hospitals, even if a hospital is part of a larger
hospital system.

We analyzed uncompensated care cost data from two perspectives--namely,
each hospital ownership7 group's percentage of (1) total uncompensated
care costs in a state, and (2) average patient operating expenses devoted
to uncompensated care. To examine factors that could explain differences
in the provision of uncompensated care by hospital ownership groups, we
examined certain hospital characteristics including a hospital's size,
teaching status, and location. We used patient operating expenses to
measure hospital size. For teaching status, we defined major teaching
hospitals as those hospitals having an intern/resident-to-bed ratio of
0.25 or more and minor teaching hospitals as those having an
intern/resident-to-bed ratio greater than 0 and less than 0.25. We defined
a hospital as urban if it was located in a metropolitan statistical area
and as rural if it was not located in a metropolitan statistical area. We
supplemented our analysis with a review of the literature to determine
other factors that could explain differences in the provision of
uncompensated care by hospital ownership groups.

We assessed the reliability of the hospital Medicare cost reports and the
reliability of state uncompensated care cost data from California,
Florida, Georgia, Indiana, and Texas in several ways. First, we performed
tests of data elements. For example, we examined the values for
uncompensated care costs and patient operating expenses to determine
whether these data were complete and reasonable. We also verified that the
dollar amount of uncompensated care in the 2003 data was consistent with
the amount in 2002. Second, we reviewed existing information about the
data elements. For example, we compared descriptive statistics we
calculated from the Medicare hospitals cost reports with statistics
published by CMS. Third, we interviewed state and agency officials
knowledgeable about the data in our analyses and knowledgeable about
hospital uncompensated care costs. We determined that CMS and all five
states performed quality assurance tests on the data before releasing
them. Overall, we determined that the data we used in our analyses were
sufficiently reliable for our purposes.

6Contractual allowances are the difference between a hospital's full
charges for a service and the payment it has agreed to accept for that
service from a particular insurer. Cost shortfalls are the difference
between the accepted payment for a service and the actual cost of that
service, in the case that the payment is less than the cost.

7In order to determine a hospital's ownership status, we compared its
ownership from the state data (if available) to that from the Medicare
cost report data. Where the two sources did not match, we used the
2002-2003 AHA Guide to confirm one of the sources as correct. If possible,
we also confirmed ownership status using the hospital's Web site.

To examine hospitals' provision of community benefits other than
uncompensated care, we reviewed 21 hospital reports and Web sites for
information about such benefits in five states. Specifically, we reviewed
12 publicly available reports about the community benefits provided by
nonprofit and for-profit hospitals and 3 reports for for-profit hospital
systems representing multiple hospitals. We also reviewed 6 government
hospitals' Web sites to determine the extent to which they publicized the
provision of services that are generally considered community benefits. We
also examined laws in five states regarding community benefit requirements
for nonprofit hospitals, reviewed the literature, and interviewed state
officials and hospital association representatives.

We conducted our work from February 2005 through May 2005 in accordance
with generally accepted government auditing standards.

Appendix II: Statutory Definitions of Community Benefits in the Five
States Reviewed

Table 7 summarizes the statutory definitions of community benefits for
nonprofit hospitals in the states we reviewed. We found that the statutes
vary considerably in their specificity and scope. In addition, of the five
states we reviewed, only the Texas statute contains an explicit link
between the statutory definition of community benefits and hospitals'
qualifications for state tax exemptions.

Table 7: Statutory Definitions of Community Benefit for Purposes of
Requirements Specific to Nonprofit Hospitals

                                                     Cross-reference to tax   
               Statutory definition of community     exemption in community   
State       benefit                               benefit provisions       
Californiaa Hospital activities to address        No provisions explicitly 
               community needs and priorities        cross-referencing        
               through disease prevention and        definitions and related  
               improvement of health status,         requirements to tax      
               including, but not limited to:        exemption.               
                                                     
               (1) health care services, rendered to 
               vulnerable populations (e.g., charity 
               care and unreimbursed costs of        
               providing services to uninsured and   
               underinsured);                        
                                                     
               (2) health promotion, prevention      
               services, adult day care, child care, 
               medical research and education,       
               nursing and other professional        
               training, home delivered meals, aid   
               to the homeless, and outreach         
               clinics;                              
                                                     
               (3) financial or in-kind support of   
               public health programs;               
                                                     
               (4) donation of funds, property, or   
               other resources for a community       
               priority;                             
                                                     
               (5) health care cost containment;     
                                                     
               (6) enhancement of access to health   
               care;                                 
                                                     
               (7) services offered without regard   
               to profitability to meet a community  
               need; and                             
                                                     
               (8) goods and services to help        
               maintain a person's health.           
Florida     Not defined.                          Not applicable.          
Georgiab    Not defined, but community benefit    No provisions explicitly 
               reporting requirement refers to       cross-referencing        
               charity and indigent care.            definitions and related  
                                                     requirements to tax      
                                                     exemption.               
Indianac    Unreimbursed cost to hospitals of     No provisions explicitly 
               providing charity care,               cross-referencing        
               government-sponsored indigent care,   definitions and related  
               donations, education,                 requirements to tax      
               government-sponsored program          exemption.d              
               services, research, and subsidized    
               health services. Does not include     
               hospital taxes or other government    
               assessments.                          
Texase      Unreimbursed cost to hospitals of     Numerous provisions      
               providing charity care, government-   cross-referencing        
               sponsored indigent health care,       definition of community  
               donations, education,                 benefit and related      
               government-sponsored program          requirements to tax      
               services, research, and subsidized    exemption.               
               health services, but not hospital     
               taxes or other government             
               assessments.                          

Source: GAO analysis.

aCAL. HEALTH & SAFETY CODE S:S: 127340 and 127345(c) (2004).

bGA. CODE ANN. S: 31-7-90.1 (2004).

cIND. CODE ANN. S:S: 16-18-2-64.5 and 16-21-9-1 (2004).

dThere are no provisions explicitly cross-referencing community benefits
to nonprofit hospitals' tax exemption, but hospital-owned physician
offices or practices, or other property not substantially related to
inpatient facilities, must provide or support charity care or community
benefits, as it is defined above, to qualify for property tax exemption.
IND. CODE ANN. S: 6-1.1-10-18.5 (2004).

eTEX. HEALTH & SAFETY CODE ANN. S:S: 311.042 and 311.045 (2004).

Appendix III: Government Payments for Uncompensated Care and Other
Unreimbursed Costs

Hospitals may receive direct payments from different government sources to
help cover their unreimbursed costs. Such payments may include special
Medicare and Medicaid payments, known as disproportionate share hospital
(DSH) payments, Medicare bad debt reimbursement, and other state payments.

Medicare DSH: The Medicare DSH adjustment provides payments to hospitals
that serve a disproportionate share of low-income patients. The Congress
mandated this adjustment in 1986 to address the concern that hospitals
that serve such patients have higher Medicare costs per case because they
have higher overhead and labor costs and their patients are in poorer
health with more complications and secondary diagnoses. Hospitals qualify
for the Medicare DSH adjustment based on their low-income patient share.1
The low-income patient share is computed as the percentage of a hospital's
Medicare inpatient days attributable to patients that are eligible for
both Medicare part A and Supplemental Security Income2 plus the percentage
of total inpatient days attributable to patients eligible for Medicaid,
but not Medicare part A. For hospitals that qualify for a DSH adjustment,
their actual adjustment is based on several factors, including the number
of acute care beds, number of patient days for low- income patients, and
location (rural or urban). See table 8 for Medicare DSH payments in 2003
to the hospitals in the selected states we analyzed.

1To qualify for Medicare DSH, a hospital must have a share of low-income
patients that exceeds 15 percent. Alternately, large hospitals located in
urban areas can qualify if more than 30 percent of their total net
inpatient care revenue is for indigent care and comes from state and local
governments (excluding Medicare and Medicaid funds).

2Medicare Part A pays for inpatient hospital stays, care in a skilled
nursing facility, hospice care, and some home health care. The
Supplemental Security Income program makes payments to people with low
income who are at least 65 or are blind or have a disability.

Table 8: Medicare DSH Payments to Hospitals Reviewed, 2003 (in millions)

State               Medicare DSH payment to hospitals (in millions) 
California                                                   $1,122 
Florida                                                         486 
Georgia                                                         209 
Indiana                                                          94 
Texas                                                           637 

Source: GAO analysis of state and CMS data.

Note: Hospitals include nonfederal, short-term, acute care general
hospitals.

Medicaid DSH: The Medicaid statute requires that states make DSH
adjustments to the payment rates of certain hospitals treating large
numbers of low-income and Medicaid patients. The Medicaid DSH adjustment
was established by the Congress in 1981 and establishes broad guidelines
for hospital eligibility to receive Medicaid DSH and for the methods used
to compute the amount of payment. States have discretion in designating
DSH hospitals and calculating adjustments for them.3 States also vary in
terms of program rules and resource levels as well as the degree to which
they target payments to different types of hospitals.4

Medicaid DSH is the largest source of financial support for hospital
uncompensated care and is funded jointly by the states and the federal
government. State approaches to financing the state portion of Medicaid
DSH include obtaining funds from hospitals through provider taxes or
intergovernmental transfers in order to establish the state's contribution
required to obtain the federal match for Medicaid DSH funding. Therefore,
it is not always possible to determine what portion of Medicaid DSH
payments to individual hospitals is the net additional payment to the
hospital.

Medicare bad debt reimbursement: Medicare partially reimburses acute care
hospitals for bad debts resulting from Medicare beneficiaries' nonpayment
of deductibles and copayments after providers have made reasonable efforts
to collect unpaid amounts. If a hospital can document that a Medicare
patient is indigent, the hospital can then forgo collection efforts from
the patient. Medicare pays hospitals 70 percent of their reimbursable bad
debts, except critical access hospitals,5 for which it pays 100 percent of
their reimbursable bad debts. See table 9 for total Medicare bad debt
reimbursements in 2003 to the hospitals in the selected states we
analyzed.

3Congressional Research Service, Medicaid Disproportionate Share Payments
(Washington, D.C.: 2005), 15.

4Congressional Research Service, Medicaid Reimbursement Policy
(Washington, D.C.: 2004), 36.

Table 9: Medicare Bad Debt Reimbursements to Hospitals Reviewed, 2003

              Medicare bad debt reimbursement to hospitals (dollars in 
State                                                     millions) 
California                                                     $160 
Florida                                                          55 
Georgia                                                          45 
Indiana                                                          20 
Texas                                                            78 

Source: GAO analysis of state and CMS data.

Note: Hospitals include nonfederal, short-term, acute care general
hospitals.

Other state sources: Other state sources of payment to hospitals for
uncompensated or unreimbursed care vary widely, and may include special
revenues such as tobacco settlement funds, uncompensated care pools that
are funded by provider contributions, and payment programs targeted at
certain services such as emergency services. For example, Massachusetts
has used a portion of the state's tobacco settlement fund to help cover
uncompensated care costs.

(290443)

5See GAO, Medicare: Modest Eligibility Expansion for Critical Access
Hospital Program Should Be Considered, GAO-03-948 (Washington, D.C.:
September 2003).

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www.gao.gov/cgi-bin/getrpt?GAO-05-743T.

To view the full product, including the scope

and methodology, click on the link above.

For more information, contact A. Bruce Steinwald at (202) 512-7101.

Highlights of GAO-05-743T, a testimony before the Committee on Ways and
Means, House of Representatives

May 26, 2005

NONPROFIT, FOR-PROFIT, AND GOVERNMENT HOSPITALS

Uncompensated Care and Other Community Benefits

Before 1969, IRS required hospitals to provide charity care to qualify for
tax-exempt status. Since then, however, IRS has not specifically required
such care, as long as the hospital provides benefits to the community in
other ways. Seeking a better understanding of the benefits provided by
nonprofit hospitals, this Committee requested that GAO examine whether
nonprofit hospitals provide levels of uncompensated care and other
community benefits that are different from other hospitals. This statement
focuses on, by ownership group, hospitals' (1) provision of uncompensated
care, which consists of charity care and bad debt, and (2) reporting of
other community benefits. The hospital ownership groups were (nonfederal)
government, nonprofit, and for-profit.

To compare the three hospital ownership groups, GAO obtained 2003 data
from five geographically diverse states with substantial representation of
the three ownership groups in each state. GAO analyzed cost data from two
perspectives-each hospital group's percentage of (1) total uncompensated
care costs in a state and (2) patient operating expenses devoted to
uncompensated care.

Government hospitals generally devoted substantially larger shares of
their patient operating expenses to uncompensated care than did nonprofit
and for-profit hospitals. The nonprofit groups' share was higher than that
of the for-profit groups in four of the five states, but the difference
was small relative to the difference found when making comparisons with
the government hospital group. Further, within each group, the burden of
uncompensated care costs was not evenly distributed among hospitals but
instead was concentrated in a small number of hospitals. This meant that a
small number of nonprofit hospitals accounted for substantially more of
the uncompensated care burden than did others receiving the same tax
preference.

Figure: Average Percent of Patient Operating Expenses Devoted to
Uncompensated Care, by Hospital Ownership Type, 2003

Hospitals in the five states-nonprofit, for-profit, and government
hospitals-reported providing a variety of services and activities, which
the hospitals themselves defined as community benefits. Community benefits
include such services as the provision of health education and screening
services to specific vulnerable populations within a community, as well as
activities that benefit the greater public good, such as education for
medical professionals and medical research. GAO was unable to assess the
value of these benefits or make systematic comparisons between hospitals
or across states.

These observations illustrate a larger point-namely, that current tax
policy lacks specific criteria with respect to tax exemptions for
charitable entities and detail on how that tax exemption is conferred. If
these criteria are articulated in accordance with desired goals, standards
could be established that would allow nonprofit hospitals to be held
accountable for providing services and benefits to the public commensurate
with their favored tax status.
*** End of document. ***