Local Hospitals Give Little Charity Care

Aurora Sinai Medical Center. Photo by Jeramey Jannene.

At first glance, it sounds like hospitals in the state provide a lot of charity care. In 2021, the most recent year for which statistics are available, Wisconsin’s hospitals provided nearly $536 million in charity care.

“Charity services are an important indicator of a hospital’s fulfillment of its charitable obligations,” declares the report on this by the Wisconsin Hospital Association (WHA).

But that $536 million looks minuscule compared to how much total revenue hospitals made that year: $74.3 billion. That remarkable figure is up from just $6.8 billion in 1993, a ten-fold increase in total revenue. Those figures were given little play in another annual report by the WHA.

The reality is that Wisconsin’s hospitals provide little charity care, including those in Milwaukee County. Wisconsin’s hospitals spent just 0.7% of their gross patient revenue on charity care in 2021, 1% in 2020 and 1% in 2019, annual reports by the WHA show.

Milwaukee County hospitals didn’t diverge much from the state average, with the percent of charity care ranging from a low of 0.1% for Orthopedic Hospital of Wisconsin in Glendale to 1.7% for Aurora Sinai Medical Center in Milwaukee in 2021. The one notable exception to this was Ascension St. Francis Hospital on Milwaukee’s South Side, where the percentage of revenue going to charity care was 3.1%, well above the local and state average.

But Ascension has moved since then to cut back services at St. Francis, which is likely to increase its net income at the hospital.

Nationally the provision of charity care by nonprofit hospitals is also very stingy. A recent study by Kaiser Family Foundation found that hospitals nationally provided $16 billion in charity care in 2020, which was far less than the estimated $28 million value of their federal, state and local tax exemptions. “This has raised questions about whether nonprofit facilities provide sufficient benefit to their communities to justify this tax benefit,” the study noted.

The Foundation has also looked at the percent of charity care provided by hospitals nationally, but unfortunately uses a different method of measuring it — as a percent of total expenses. The study found that “half of all hospitals reported that charity care costs represented 1.4% or less of their operating expenses in 2020.”

Victoria Schmidt, public relations officer for Ascension Wisconsin, pointed to this study to argue that “Ascension has a generous charity care policy. As a system, our traditional charity care has averaged roughly 2.3% of total operating expenses,” she told Urban Milwaukee.

But the Kaiser study also found that the average amount of charity care given by hospitals nationally was 2.6% of operating expenses, and Ascension is below this. The average level is higher because about 9% of hospitals spend more than 7% of their operating expenses on the provision of charity care.

Ascension is nowhere near that level of charity care, and judging by the fact its hospitals in Wisconsin look to be in the mainstream for the provision of charity care, it’s likely that Wisconsin’s hospitals don’t rank much different than the national average, which raises the question for them that the Kaiser study asked: whether they provide sufficient benefit to their communities to justify their tax exemptions.

Ascension, by the way, also runs the Orthopedic Hospital of Wisconsin, which ranked the lowest among metro hospitals in the percent of charitable care. The hospital’s CEO, Brandon Goldbeck, told Urban Milwaukee via email that “We cover the cost of medical care to people who are unable to pay for services and we are proud to have a 100% approval rate for uninsured persons who apply for charity care at OHOW.”

Children’s Hospital of Wisconsin, which also has a very low of charity care, as measured by the WHA reports, has also noted that most children are covered by private insurance or Medicaid, so there is much less need for charity care.

However, it’s worth asking whether Children’s, which once was located on the city’s Near West Side, made itself less accessible to needy families by moving to Wauwatosa. And the Orthopedic Hospital is located in Glendale. Ascension’s recent decision to close its labor and delivery unit at St. Francis, which has left the city’s entire South Side without such service, has also meant less poor families in the city will rely on that service. Ascension has also been pushing to reduce services at another city institution, St. Joseph.

The WHA’s 2020 annual report may shed some light on this. It shows that both St. Francis and St. Joseph had a higher rate of “uncompensated health care” than the average state hospital in 2020 at 6.6% of total gross patient revenue for St. Francis and 6.5% for St. Joseph. That compares to the statewide average of 2.1%.

It’s worth noting that the figure for uncompensated health care adds up both charity care and bad debt to come up with a composite percentage. Of course, that bad debt is typically something the hospitals did their best to collect so it’s not exactly the same as charity care. But by using this approach the WHA makes the hospitals look more generous.

But in fact Wisconsin’s hospitals, with perhaps only a few exceptions, are all providing less charity care than the value of their tax exemptions. Meanwhile Ascension is building vast wealth, as Urban Milwaukee has reported, even as it collects charitable dollars. So is Children’s Hospital, we’ve reported.

Can anything be done about this? Some states have passed standards that require hospitals to be more proactive about charity care and/or community benefits. Nine states, including Indiana, the only one in the Midwest, have a “community benefit requirement” for hospitals, as a report by the Hilltop Institute found. Five states, including Illinois, have a “minimum community benefit requirement.” And “several states have implemented regulations intended to increase the uptake of charity care among eligible patients,” the Kaiser foundation has noted.

“There is little information about the effectiveness of these regulations,” the foundation noted. But one thing is clear: Wisconsin is behind many states in passing such regulations.