Comparing the Community Benefit Spending of CAHs, Other Rural, and Urban Hospitals (FMT Policy Brief #45)

Publication Date: Nov 2016
Author(s): Gale J, Croll ZT, Coburn AF, Croom J
Research Center(s): Maine
Project: Understanding the Community Benefit and Safety Net Activities of Critical Access and Other Rural Hospitals
Topic(s): Community Benefit

There is increasing focus on the safety net role of tax-exempt hospitals, including Critical Access Hospitals (CAHs), and specifically on their charity care and other community benefit policies and activities. This attention was reflected in the Patient Protection and Affordable Care Act’s (ACA) amendments to the Internal Revenue Service (IRS) tax code which clarified and expanded hospital charity care obligations and community benefit reporting requirements. In a previous paper, we reported on the charity care, uncompensated care, and bad debt activities of CAHs. This policy brief expands on that work by examining variations in the types and levels of hospital charity care, other community benefit spending, and community-building activities across Critical Access (CAH), other rural, and urban hospitals.

Key Findings:

  • Spending for direct patient care (including charity care, subsidized care, and unreimbursed costs of government-sponsored programs) represents a larger portion of CAH community benefit expenses than for other rural and urban hospitals.
  • CAHs report a higher rate of community benefit spending on subsidized health services (1.6 percent) compared to other rural (1.1 percent) and urban (0.9 percent) hospitals.
  • Despite interest in counting community building activities as a community benefit, these activities represent less than one percent of all nonprofit hospitals’ total expenditures.
  • CAHs in areas with high unemployment and/or lower competition have higher rates of community benefit spending for direct patient care services compared to CAHs in areas with lower unemployment and greater competition.

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