Why Should Academic Health Care Defend Nonprofit Hospitals?
The University of California San Francisco Health Center
Why should an academic health care association resist the notion that “community benefit” ought to require more charity care? The question occurred to me as I read a press release from the American Association of Medical Colleges earlier this month. There are about 160 “allopathic” medical schools in the United States and almost two thirds are part of public universities. The rest are private. Allopathic means science-based and implies research and teaching. Research and teaching are what distinguish academic medical centers from nonprofit hospitals. So even if Congress drastically redefined “community benefit” or eliminated tax exemption for nonprofit hospitals altogether, academic medical centers would still have nothing to worry about. They would remain exempt either as educational or scientific organizations, or under IRC 115.
AAMC is concerned that efforts to better define “community benefit” focus too much on health care for the poor. Academic health centers undoubtedly generate invaluable community benefits. But “community benefit,” as a strict legal requirement for tax exemption, has little to do with academic health centers. So AAMC’s advocacy about the “community benefit” standard is somewhat surprising. Here is part of the press release:
Nonprofit hospitals are under fire, with policymakers and special interest groups questioning whether these institutions provide enough “charity care” to justify the $28 billion they receive in annual tax exemptions. This narrow focus is misguided and ignores the bigger picture: Nonprofit hospitals, in particular academic health systems, provide much more than charity care.
Research and training, without which our nation’s health care system would quickly decline, are a vital part of the IRS-defined “community benefit,” beyond charity care, that nonprofit hospitals provide. Academic health systems also deliver critical services — like Level I trauma centers, burn units, and psychiatric care — that for-profit hospitals and health systems largely avoid. At the AAMC, we have been relentless in our advocacy to uphold the tax-exempt status of the nation’s nonprofit teaching hospitals. “We strive every day to meet not just the letter of the law, but the intent of the law, and that goes far beyond providing care for the uninsured,” says Atul Grover, MD, PhD, executive director of the AAMC Research and Action Institute.
In fact, the institute recently published research into the little-understood benefits of nonprofit hospitals. “Clinical Benefits of Not-for-Profit Health Systems Beyond Charity Care” found that not-for-profit teaching hospitals are much more likely than for-profit hospitals to offer a range of complex, essential services, including birthing centers, psychiatric services, transplant centers, substance use disorder clinics, Level I trauma centers, and burn units.
What AAMC says in defense of academic health care is absolutely true, of course. Academic health care takes on the most expensive and complicated cases, in addition to teaching and scientific research along with whatever charity care teaching hospitals provide. Mayo Clinic recently rebuilt nearly every bone and nerve fiber in some guy’s face. The resources it took to do that probably could have treated thousands of poor or uninsured patients with less desperate or expensive health needs. But charity care is not why academic health care is tax exempt. The knowledge Mayo and the health profession gained generates much more public good than treating thousands of poor patients with regular ailments, I’m sure. I just don’t know why AAMC thinks it necessary to resist the notion that “community benefit” ought to force nonprofit hospitals to provide much more charity care.
Why push back on the notion that nonprofit hospitals must be more about charity care, when academic medicine is about so much more that justifies tax exemption? Why give unnecessary refuge and solace to wolves in sheep’s clothing – non-academic specialty clinics or hospitals that maintain an emergency room, or maybe not even that, but spend hardly nothing on charity care?
Academic medical centers provide charity care, don’t misunderstand me. But they would be much more efficient about their unquestionably tax-exempt education and research purposes if nonprofit hospitals were required to treat more poor patients than they currently treat.
It shouldn’t take a brain surgeon to figure that out.
darryll k. jones