Nonprofit Hospitals and Charity Care

The provision of "charity care" or reduced-fee services, to those who cannot afford to pay for them is an important issue in the sale of a nonprofit hospital. Generally speaking, the provision of charity care is one of the biggest differences between a nonprofit and for-profit hospital. Although the provision of charity care should not be the sole benefit a nonprofit hospital extends to the community, it is one of the most important features, at least in terms of making health care accessible to the uninsured and underinsured population. That is why, when a hospital converts, large questions loom about whether the facility will continue to provide charity care as it has in the past. You can investigate the buyer's intentions by looking into both the amount of charity care historically provided and the policies and practices related to charity care. Click here for more on Protecting and Promoting Charity Care.

It's All in the Numbers: A Beginner's Guide to Charity Care Analysis (PDF)

During 2006-2007 Senator Charles Grassley (R-IA) and the U.S. Senate Finance Committee investigated non-profit hospitals' provision of charity care to determine whether they are providing uncompensated care commensurate with the value of their tax exemptions. The Committee requested detailed information from non-profit hospitals about this issue and held public hearings on this topic.

After months of investigation, the Senate Finance Committee released a discussion draft prepared by Senator Grassley's staff. The document contains proposed recommendations for legal standards that would define what non-profit hospitals must do to maintain their tax-exempt status. Consumers Union commented on this letter in September of 2007.

Senate Finance Committee Discussion Draft (PDF)
Consumers Union's letter to Senate Finance Committee 2007 (PDF)

Hospital Policy

Consumers Union’s Model Free Accessible Individual Rate (FAIR) Care Hospital Policy (PDF)

Legislation

Consumers Union's Model Free Accessible Individual Rate (FAIR) Care Bill (PDF)
Community Catalyst’s Compendium of Free Care Laws (PDF)

Sample Local Charity Care Laws

San Francisco (PDF)
Nassau (PDF)
Suffolk (PDF)

Also in this section:

• Protecting and Promoting Charity Care