In 2020, Strong Memorial Hospital spent $91 million less on charity care and community investment than the value it gained from its nonprofit tax exemption, a Lown Institute study found.
In what it calls the first index of its kind, the Massachusetts-based Lown Institute analyzed the finances of 1,773 nonprofit hospitals nationwide. It found that 1,350 have “fair share” deficits, meaning that they spent less on charity care than the benefit they reaped in taxes not paid.
Released Tuesday, the institute’s 2023 report comes a year after a similar analysis released in 2022.
A medically-focused nonprofit that describes its mission as incentivizing healing over profits and promoting health equity, the Lown Institute compiles its rankings using publicly available figures nonprofit hospitals and health systems report to the Internal Revenue Service and the Centers for Medicare and Medicaid Services. It factors in outstanding debt institutions.
According to the Lown Institute, Strong Memorial’s 2020 fair share deficit was among the nation’s highest, ranking it 12th highest.
In a separate analysis of health care systems using 2018 financial data released last year, the Lown Institute said Strong Memorial’s parent, the University of Rochester Medical Center system, had the 25th-largest fair share deficit nationally—$163 million, by its calculation.
In the 2022 health-system analysis, the institute looked at 275 U.S. health systems, finding that 227 spent less on charity care than they gained from the value of their nonprofit tax breaks.
If institutions racking up fair share deficits were to close the nation’s $14.2 billion 2020 fair-share gap, the Lown Institute calculates that the savings would be enough to erase medical debt owed by 18 million Americans and pull some 600 failing rural hospitals out of the red.
URMC spokesman Chip Partner says URMC strongly disagrees with the Lown Institute’s fair share methodology. The institute’s calculations fail to consider $180 million in red ink Strong Memorial booked on Medicaid reimbursements that fell short of the cost of care delivered, he notes.
And the institute’s analysis “also ignores the benefit of investing in medical research, including clinical trials that make advanced treatments available to residents regardless of ability to pay; training doctors, nurses, and other health professionals who comprise a large percentage of our region’s health care workforce; and community health initiatives like serving as New York State’s COVID vaccine hub for the Finger Lakes region during 2021 and 2022, which achieved vaccination rates of more than 70 percent across a nine-county region,” Partner adds.
In a response to the Lown Institute’s 2022 fair share analysis, American Hospital Association CEO Rick Pollack in a 2022 blog post criticized the institute’s analysis as “missing the mark.”
Asked by URMC’s Partner to pen a comment for this article, Pollack referred him to the 2022 blog post, stating that he had nothing new to add, Partner says.
In the 2022 post, Pollack said “it is imperative to stress that financial assistance is only one part of a hospital’s total community benefit and does not account for the numerous programs and services that hospitals tailor and provide to meet the many varied needs of their community. In addition, not all the services that hospitals provide to their communities are included as part of community benefit reporting and are not captured in the Lown Institute’s analysis.”
“For fair share spending we focus on direct community health spending and charity care, and don’t include all categories of community benefit as reported to the IRS,” Lown Institute senior policy analyst Judith Garber acknowledges, pointing to a 2022 article she and Lown Institute president Vikas Saini co-authored for further elaboration.
Such omissions are made “by design,” the Lown Institute officials wrote, “because it’s an open secret that not all spending hospitals can claim as community benefits are actually meaningful for community health. The broad definition of community benefit—one of many loopholes in the U.S. tax code—allows hospitals to include spending on items that don’t directly address community health need.”
Will Astor is Rochester Beacon senior writer. The Beacon welcomes comments and letters from readers who adhere to our comment policy including use of their full, real name. Submissions to the Letters page should be sent to [email protected].