WASHINGTON, June 21 (UPI) -- Non-profit healthcare providers -- which generally provide better care than their for-profit counterparts -- have a lot more to offer than just charity care, a new study says.
And, despite recent criticism to the contrary, those additional benefits justify the tax exemptions that non-profit providers receive, the authors say.
"Typically what people do is think of non-profit hospitals in the context of charity care," said lead study author Mark Schlesinger, a professor of health policy at Yale University. "And the truth is, if we simply compare the value of that with the value of the tax exemption, a high percentage of hospitals just don't do enough."
"But charity care is not the only way hospitals can benefit a community," Schlesinger told United Press International.
Non-profit hospitals and other healthcare providers have come under fire from local officials recently for not providing enough charity care to justify the expense of their tax-free status, and the IRS is reportedly looking into their adherence to rules governing non-profits. Sen. Chuck Grassley, R-Iowa, is also reportedly questioning the tax-exempt status of hospitals at the federal level.
However charity care accounts for only about one-third of what hospitals do for their communities, according to the analysis of 162 previous studies published Tuesday on the Web site of the journal Health Affairs.
Aside from providing free services to the poor, they perform research and identify health problems in their communities, educate the public about health issues, and "a whole range of things we know really affect overall health and well-being."
Non-profit providers also tend to provide better service than for-profit providers, which tends also to raise the overall level of service in a community, Schlesinger said.
A non-profit nursing home, for example, probably does not provide very much free care, but it still improves the health of a community by causing everyone in long-term care in the community to receive better service.
"Having a non-profit in the community seems to set a standard of better service that spills over to other providers. But how do you put a value on that? If we look at only stuff we can measure, we're missing a lot of the value of non-profit providers," he said.
More accountability for hospitals benefiting from tax-exempt status is needed, Schlesinger said, as long as the criteria for community service established by policymakers "doesn't lock them in a straightjacket."
But other health-policy experts were still skeptical.
"If we want providers to perform services for the community, we could be better off just paying them to do so, said Gregg Bloche, Georgetown University law professor and visiting fellow at the Brookings Institution.
"If a hospital doesn't have to pay a given amount of tax, someone else has to pay that tax," Bloche told UPI. "If we're going to use that tax-exemption on providers' behalf, let's pay them to do stuff in the public interest they would not otherwise do," he said. "If what we're getting is health fairs or other things hospitals are going to do anyway, we're getting no value for that tax exemption."
An ideal system, he said, would be one where hospitals -- regardless of their for-profit or not-for-profit status -- would be paid for socially desirable outcomes like adopting healthcare IT or providing care for the poor.
However, since hospitals rely so heavily on tax exemptions, a more realistic policy could be to establish national benchmarks that hospitals must achieve to earn their tax-free status, he said. Even better would be to create a stepwise exemption to give providers incentives for continuous progress.
"Non-profits are not much greater in virtue than the rest of industry," he said.
