Non Profit Hospitals Level of Charity

WHA Community Benefits Initiative George Quinn, Senior Vice President Wisconsin Hospital Association March 19, 2007 1 Major Points •The Environment •Community Benefits Program Design •The Community Benefits Report 2 Environment Grassley releases data on hospital charity care ―Senate Finance Committee Chairman Chuck Grassley (R-Iowa) released the results of a survey of charity care at 10 not-for-profit health systems and called on the IRS to adopt the Catholic Health Association's guidelines for calculating and publicly reporting community benefits and charity care. Grassley, who has scheduled a finance committee hearing Wednesday on charity care and community benefits at not-for-profit hospitals, criticized the industry for lack of standard criteria. In a statement, Grassley said, "Unfortunately, it's almost impossible to get an exact measurement of how much charity care and community benefit ... that non-profit hospitals offer to earn their special tax status." Grassley, who also released a letter from the Federation of American Hospitals on charity care at for-profit hospitals, said some for-profit hospitals provide "as much if not more charity care" than some not-for-profits. The federation, which represents 500 for-profit acute-care hospitals, said its members spent an average of $10.9 million on charity or discounted care in 2005 and wrote off an average of $10.2 million in bad debt. All figures are based on charges, not costs, a federation spokesman said. Charitycare accounting varied by hospital, the federation said.‖ 3 Environment “Greetings from the IRS…” 4 Environment “Greetings from the IRS…” 5 Environment “Greetings from the IRS…” 6 Environment Tax status of health systems faces scrutiny Communities question non-profit designation By GUY BOULTON - Posted: March 11, 2007 “A long-standing dispute between the City of Wauwatosa and Wheaton Franciscan Healthcare over property taxes touches on the complex issue of what standards a non-profit health care system must meet to be tax-exempt. The dispute, involving Wheaton Franciscan's outpatient center at 201 N. Mayfair Road, also is a small example of the increased scrutiny being given to health care systems' tax-exempt status by Congress, the Internal Revenue Service, states and municipalities. Among the issues being raised are non-profit hospitals' level of charity care, how they use proceeds from tax-exempt bonds and executive compensation. "This is a huge issue - not just here but everywhere," said Beth Aldana, an assistant city attorney for Wauwatosa. The city basically has challenged the contention that the outpatient center is an extension of Wheaton Franciscan Healthcare-St. Joseph hospital and therefore exempt from property taxes. It also contends that the center must show that it provides an acceptable level of charitable care or community benefit to be exempt from property taxes.” 7 Environment ATTORNEY GENERAL LAUTENSCHLAGER AND WHEATON FRANCISCAN HEALTHCARE ANNOUNCE NEW PAYMENT FOR SERVICES POLICY FOR UNINSURED FOR IMMEDIATE RELEASE: May 1, 2006 MADISON — Wisconsin Attorney General Peg Lautenschlager and Wheaton Franciscan Healthcare (WFH) announced an agreement today regarding WFH’s new payment for services policy. The new policy is effective today. Under the new policy, all Wheaton Franciscan Healthcare facilities are increasing the percentage discount for self-pay patients (i.e., patients without insurance). The amount accepted by WFH as payment for care will be consistent with that charged to patients with private insurance. The self-pay discount will be equal to the weighted average percentage discount offered to the three largest managed care payers, currently approximately 45% in the Milwaukee area. 8 Transparency 9 WHA Community Benefit Task Force The American Hospital Association (AHA), the Catholic Health Association (CHA) and VHA, Inc., feel that measuring and reporting community benefits provided by not-for-profit community hospitals is a proactive means to address ongoing questions raised by policymakers. Those organizations argue that today the community benefit role of not-for-profit health care organizations is not well understood, even by persons within our institutions and organizations. These national organizations are beginning to embrace the notion that a standardized approach to measuring and reporting community benefits that uses a uniform methodology is necessary and desirable. 10 WHA Community Benefit Task Force The Task Force directed staff to draft a plan for developing a community benefit report, including: Defining community benefit CHA? Include other ―benefits‖? Identifying data elements and process for collecting Make use of current reporting – Uncompensated care What process? Developing a PR/Marketing plan Should be an ongoing effort Gather info on best practices – put into Valued Voice Provide members with resources for local media, etc. Identifying timing and resources 11 What is a Community Benefit?  Community benefit is a planned, managed, organized, and measured approach to a health care organization’s participation in meeting identified community health needs.  It implies collaboration with a ―community‖ to ―benefit‖ its residents—particularly the poor, minorities, and other underserved groups—by improving health status and quality of life. Benefit Reporting: Guidelines and ―Community Standard Definitions…‖: CHA/VHA. 12 What is a Community Benefit? Community benefits respond to an identified community need and meet at least one of the following criteria:  Generates a low or negative margin  Responds to needs of special populations, such as minorities, frail elderly, poor persons with disabilities, the chronically mentally ill, and persons with AIDS  Provides services or programs that would likely be discontinued if the decision were made on a purely financial basis 13 Categories of Community Benefits Community Health Services Health Professions Education Subsidized Health Services Research Financial Contributions Community Building Activities 14 WHA Design for Community Benefits Reporting Hospital Data Uncompensated Care WHAIC Annual Report, Press Releases, Web Site, Media, Present ations, etc. Hospital “Stories” WHA Hospital Data on CB Activities (MHA Survey) Internal: Board, Mgt, Staff, Volunte ers External: Community Leaders, Policy Makers, General Public 15 Survey Instrument 16 WHA Community Benefits Report Communication Goals Proactively inform key audiences of the strengths and contributions of Wisconsin hospitals Promote the idea of quality and compassionate health care through consistent messages from Wisconsin hospitals Demonstrate that the community benefit purpose is being fulfilled 17 18 19 20 Uncompensated Care Story 21 22 23 Access to Primary and Preventive Health Services Story 24 25 ServePoint 26 Press Coverage The Wisconsin Hospital Association, Madison, launched a Web site late Tuesday that places a dollar figure on the free health programs its member hospitals give to their respective communities. According to a report available at www.wiservepoint.org, Wisconsin's 132 hospitals gave away more than $900 million worth of free services in 2005. About $158 million of that came in the form of true "charity care," which state law strictly defines as health care that providers give away knowing ahead of time they will not be paid. In a news release, the Hospital Association said Wisconsin is the first state in the country to see 100-percent participation from hospitals in voluntarily reporting community health services and programs, along with quality and safety data. The report does not break out communityservices expenditures by individual hospital, however, only reporting statewide total figures. The difference between the broader category of community benefits and the more precise definition of "charity care" is a key point of contention between the industry and some politicians. Most hospitals are non-profit businesses, and enjoy broad tax exemptions based on their charitable activities. However, those charitable activities, if narrowly defined, often amount to just a few percent of overall budgets. Hospital executives and advocates have long argued that their contribution to the community far exceed literal free health care to the poor. Oct 18, 2006 -- 7:50 AM PDT 27 28