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California nurses call out state’s major nonprofit hospitals for charity cutbacks

Despite billions in net income, California hospitals with non-profit status have been scaling back charity care

Photo (c) takasuu - Getty Images
A new report by the California Nurses Association shows that the state’s 170 major nonprofit hospitals are cutting back on charity care. The hospitals provided $651 million worth of charity care to uninsured or underinsured patients in 2016, a significant drop from the $985 million they provided in 2011.

Over the same time period, the hospitals reported net income of more than $3 billion.

“Charity care” is defined by the IRS as subsidized hospital care provided to people who meet certain income guidelines. Federal law requires hospitals with nonprofit status to provide charity care to low-income patients, but the law doesn’t specify the exact amount of charity care that hospitals must provide.

In statements to the Los Angeles Times, the hospitals defended their charity care cutbacks by pointing to the Affordable Care Act, claiming that Obama’s signature law helped the uninsured so well that charity care is not needed as much.

“We absolutely celebrate the fact that less charity care is required in the community,” an executive with the California Hospitals Association told the Times.

Cutting back on charity care

Cedars-Sinai, often characterized as the hospital-of-choice for Hollywood’s elite, told the paper that the nursing group’s report “is not reflective of the true picture of our charitable mission .”

However, the charity care donated by Cedars-Sinai dropped 76 percent between 2011 and 2016 even as the hospital’s total net income, or the amount of money that a nonprofit has left after costs are paid out, reached $1.8 billion.

The California Nurses Association, which is often in the crosshairs of the healthcare industry and is currently lobbying for legislation to bring free, socialized healthcare to California, says that the troubling health coverage statistics in the state tell a different story than what the hospitals claim.

According to a 2016 report by the Commonwealth Fund, 21 percent of Californians remained underinsured, or unable to afford adequate insurance plans.

In April, just as taxes were due, three California hospitals asked the state’s Attorney General to exempt them from IRS charity care obligations. But their proposals were rejected, and the hospitals were ordered to pay millions to other nonprofits to make up for charity care that they had failed to provide patients the previous year.  

Nursing unions at the state and federal level have long called out hospitals for trying to cut back on charity care.

In 2012, National Nurses United reported that California’s non-profit hospitals received more than $1.8 billion in government subsidies and benefits from their tax exempt status. But three-fourths of those hospitals simply “harvested” the government subsidies rather than putting them back into charity care, the nurses said.

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