Article Misleads on Hospitals’ Charity Care Spending

A recent Modern Healthcare article misleadingly suggests that hospitals and health systems provided less charity care between 2020 and 2023. The truth is much different. In fact, the author’s own data tells a very different story, and it is important to set the record straight.

In reality, hospitals’ overall charity care increased over the last three years. According to the data cited in the article from Merritt Research Services, median charity care spending for all hospitals grew by 13% between 2021 and 2022 alone.

Hospitals’ expenses also increased during this period — at a far greater pace. The AHA has documented — again and again — how operating expenses have skyrocketed. Costs grew 17.5% between 2020 and 2022, driven by increases in labor expenses, drug costs, and spending on medical supplies and equipment. These expenses created historic financial headwinds, with record numbers of hospitals incurring negative operating margins. This massive growth in expenses has pushed many hospitals and health systems to the brink.

These twin realities contradict the article’s disingenuous headline, as well as its lead quotation from a professor whose research agenda has been funded by an anti-hospital dark money organization. Put simply, Modern Healthcare is able to break the entirely unremarkable news of a “proportional” decrease in the ratio of charity care and hospital expenses only because hospital expenses grew so precipitously.

It’s basic math: When the denominator (expenses) increases as much as it has over the past three years, but the numerator (charity care) does not increase as much, then of course the overall proportion will look different. But rather than reporting that “news,” and rather than reporting the truly newsworthy fact that hospitals provided increasing levels of financial assistance despite facing historic growth in expenses, Modern Healthcare misleads readers into thinking that hospitals were not adequately providing care to the patients and communities they serve.

That journalistic defect alone would be enough to undermine Modern Healthcare’s misleading thesis. But its math is doubly flawed because the author leaves out many of the total benefits that hospitals and health systems provide to their communities. Put another way, by erroneously focusing on just one metric of how hospitals support their communities (charity care), the numerator is actually far smaller than reality reflects.

For example, benefits to communities include things like financial assistance for patients, other community programs to advance health and wellness, and perhaps most important, significant Medicaid and Medicare underpayments (i.e., the difference between what those programs pay for care and what it costs to provide care and treatment to Medicare and Medicaid patients). And according to a recent AHA study, total hospital benefits to communities were $130 billion in 2020 alone (the most recent year for which comprehensive data is available). This was a nearly $20 billion increase from 2019.

It is reckless and wrong to allege that hospitals are somehow deliberately “squeez(ing) their charity care spending to maintain financial viability” without presenting any evidence to back up this outrageous assertion. It is equally wrong for Modern Healthcare to offer that quote without reporting that the speaker is funded by Arnold Ventures — a shadowy organization with an obvious bias against hospitals.

The truth is that hospitals have been rocked by wave after wave of external financial challenges over the last three years, but that has not stopped them from providing critical care to the most vulnerable and needy patients and communities. This is the important news that Modern Healthcare should be reporting.