Most of Montana’s major hospitals provide charity care and other “community benefits” that exceed the value of their tax exemptions, but some may be overstating the amount of the fastest-growing category of these benefits, says a report released Thursday by the attorney general.
The report, authored by University of Montana professor and former hospital CEO Larry White, noted a big increase in the reporting by many hospitals of “subsidized health services,” which lose money but provide health care unavailable elsewhere in the community.
The $22.6 million increase in fiscal 2010 of subsidized health services accounted for almost 80 percent of the entire increase in community benefits that year, as reported by Montana’s 22 largest hospitals.
Subsidized health services also have become the largest community benefit category, surpassing charity care, the report said.
Yet White said some hospitals are overstating their amount of subsidized services, and that it’s “questionable” whether some of amounts claimed as subsidized services “are properly considered community benefits.”
Still, most of Montana’s larger and mid-sized hospitals generally provided community benefits beyond the value of their exemption from income and property taxes, the report said.
All but three of Montana’s 60 hospitals are nonprofit organizations and are required under state law to operate for the “benefit of the public as a whole.”
The Internal Revenue Service also requires them to provide a “community benefit” in return for their tax exemption. It’s generally expected that the value of the benefits should exceed the value of their tax exemptions, but it’s not required.
In releasing the report, Attorney General Steve Bullock commended Montana’s hospitals for providing increased charity care. The report, begun in 2008, is financed by a contract through the attorney general’s office.
Highlights of this year’s report include:
— Montana’s 10 largest hospitals reported $166 million in community benefits for 2010, a 17 percent increase over the previous year.
— Charity care accounted for $61 million of that total, while subsidized health services totaled $65 million.
— Montana’s 12 mid-sized hospitals reported $28 million in community benefits for 2010, a 19 percent increase over 2009. Their charity care, however, actually decreased slightly to $7.4 million, while they reported $16 million in subsidized health services.
— The only hospitals in the report that listed community benefits valued at less than their tax exemption were Marcus Daly Memorial Hospital in Hamilton and St. Luke’s Community Hospital
— The two Billings hospitals — Billings Clinic and St. Vincent Healthcare — reported the highest level of charity care for 2010, at $13.6 million and $12.3 million, respectively. They also reported substantial levels of bad debt, which is in addition to charity care, but is not included in the “community benefit” amount.
White noted broad discrepancies among hospitals in how and what they report as “subsidized health services.”
For example, St. Patrick Hospital of Missoula listed its “emergency and trauma services” as subsidized care at $5.4 million, while major hospitals like St. Vincent, Billings Clinic and Benefis in Great Falls listed zero or very little amounts in the same category.
“My personal opinion … is that IRS regulations about (these services) are sufficiently vague, so that it’s hard for hospitals to do much standardization (in reporting),” White said Wednesday. “It would benefit hospitals if it were not so vague.”
Hospital-owned physician clinics also had wildly different treatment, when reported as a subsidized services.
Bozeman Deaconess, St. Peter’s Hospital in Helena and Community Medical Center in Missoula reported the cost of their clinics, at anywhere from $4.3 million to $5.7 million, as a community benefit — while Benefis, Kalispell Regional Hospital, St. Patrick and St. James Healthcare in Butte, which have such clinics, didn’t report those costs.