Strong Memorial’s ‘fair share’ deficit among highest nationwide

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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]

5 thoughts on “Strong Memorial’s ‘fair share’ deficit among highest nationwide

  1. Weren’t we lectured during the Obamacare debate that once the bill passed (and we found out what was in it) , it greatly reduce the need for “charity” type care because a gazillion more people would be insured. We were also told that people using the Emergency Room as their clinic would be reduced, as well as unpaid hospital bills. (to my knowledge in practice this left a lot to be desired) . Is this what we got for our $800B+ for the ACA? With all of the ACA “good will” I’m surprised we are chapping hospitals for not giving away enough free services?

    • Promises made are not necessarily kept or met in life. When dealing with government promises you can be assured of the fact that promises will not be met or kept. With the government all things are justified with statistical calculations that never pan out. Government has not, ever, produced any program that has met its predictions. Why should they start now. Many not-for-profit hospitals have hitched their wagon to those government programs. Then we get another program to bailout that program.

    • The ACA doesn’t pay all the costs for anyone who doesn’t have Medicaid. There are still copays, some of which can run well above $10,000. Rochester has the third-highest number of households living in poverty of all US cities with populations over 100,000. People shouldn’t need to choose between basic human needs and healthcare, which is a basic human need. Our hospital systems should respond to the reality many of our neighbors live with every day. They certainly bring in enough charitable contributions to make this work like it should. I’m glad the author is finally shining a light on this problem.

      • …and Marcia if the RCSD would teach the way kids learn and graduate them with a relevant diploma…..guess what? That poverty could be significantly less. But we refuse to overhaul the RCSD who has a track record consisting of educational failure for decades! That is the root cause for poverty, for crime, for car jackings, for drug abuse and all the other woes Urban Rochester is known for. That does NOT justify a lack of reaching out to those in need. We need to provide the education that will allow for living wage jobs. That would include trade school. Rochester had the most successful trade school ever….Edison Technical and Industrial High School which was systematically destroyed. It was thee crown jewel of education. The root cause is the RCSD education that will not educate. That trickles down to all our other problems, which includes healthcare.

      • I was under the impression that the ACA was a separate program from Medicaid (except of course expanded Medicaid coverage was included for States to opt in to, which was included in the ACA Legislation) . When they were looking for votes for the ACA it was spun as free (or as the name implies “Affordable”) health care. Ms. Pelosi (who said the bill had to be passed in order to know whats in it) implied people like “starving artists” would now have health care. When challenged on details by the media she admonished “Affordable-Affordable-Affordable”! NYS even put its taxpayers on the hook for expanded Medicaid, and per your analysis that STILL doesn’t meet the advertised deliverable. I just saw a headline that President Biden now advocates health care coverage for DACA people? I guess in their minds this thing is working so well we’ll make it available to non citizens (something else that they promised it would NOT do back when they were looking for votes)

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