Bai and her colleagues suggest that policy makers should do more to address these issues, including greater transparency about the magnitude of the subsidies received by nonprofit hospitals and establishing a more direct nexus between these subsidies and the performance of nonprofit hospitals in providing community benefit.
“Taxpayers subsidize nonprofit hospitals in exchange for their charitable actions that benefit the community. Nonprofit hospitals fall short of taxpayers’ expectations when they do no more to help Medicaid patients than for-profit hospitals, which pay taxes,” said Bai, the study’s lead author. Bai’s research focuses on pricing, policy, and management within the health care industry.
The study was based on data from the Centers for Medicare & Medicaid Services 2019 Hospital Cost reports, which contains information on self-reported unreimbursed Medicaid costs for a sample of 3,446 private U.S. hospitals (2,617 nonprofit and 829 for-profit hospitals). Unreimbursed Medicaid costs were calculated as the estimated cost for treating Medicaid patients, which included the charges for services multiplied by the hospital’s cost-to-charge ratio, and the net of all reimbursements and supplemental payments.
The research was supported by the Episcopal Health Foundation, the Commonwealth Fund, and Arnold Ventures.