Michigan’s Nonprofit Hospitals Get Big Tax Breaks. They Don’t Give Much In Return.

Long form story posted at MLive this morning about the tax breaks that Michigan hospitals receive and their concomitant charity expenditures.  Too long to copy in total, so go to the hyperlink for the full story:

https://www.mlive.com/news/2023/06/michigans-nonprofit-hospitals-get-big-tax-breaks-they-dont-always-give-much-in-return.html

Michigan’s nonprofit hospitals get big tax breaks. They don’t always give much in return.
By Matthew Miller | June 06, 2023

Butterworth Hospital in downtown Grand Rapids was recently named one of the least generous nonprofit hospitals in America.

That’s according to the Lown Institute, a nonpartisan think tank that advocates for health system reforms, which compared the tax breaks that nonprofit hospitals get to their spending on charity care and community investments.

Butterworth fell $134 million short in 2020, the institute said in a report released earlier this month, enough to pay off medical debts for 110,000 Michiganders.

Only five hospitals in the country had larger gaps.

Corewell Health, the hospital’s parent company, doesn’t agree with the assessment.

The Lown Institute’s calculations intentionally exclude three categories of what hospitals call community benefit spending: research, training for new doctors and Medicaid shortfall, which is the difference between what Medicaid will pay for a procedure and what a hospital says it costs.

The rationale, Lown says, is that they don’t make a direct difference for community health.

Corewell said the omissions paint a false picture. The report “fails to accurately depict the community benefit of nonprofit hospitals, including ours,” the company said in a statement.

But the ranking points to something larger.

Michigan is among the minority of states that ask for nothing from nonprofit hospitals beyond the minimal requirements set by the federal government, and, on average, the state’s nonprofit hospitals aren’t as generous as hospitals elsewhere.

In aggregate, they spent less on community benefit than hospitals in any of the other Great Lakes states in 2019, according to data compiled by Community Benefit Insight, an organization that works to improve public awareness of hospitals’ charitable spending. That year, Michigan’s nonprofit hospitals ranked 35th on spending per capita nationwide.

Farhan Bhatti is the CEO of Care Free Medical, a free clinic in Lansing that gets support from Sparrow Health System and McLaren Health Care. He’s also the state lead in Michigan for the Committee to Protect Health Care, a national Michigan-based organization that works to increase health care access and lower prices for patients.

“While there are community-based hospitals that do contribute to the health and wellness of the communities that they are located in, there’s definitely more that hospitals in Michigan could do to serve the communities where they are located…” he said. “As long as they’re going continue to benefit from not paying taxes, those dollars should be reinvested in communities.”

Do nonprofits earn their tax breaks?

Under federal rules, hospitals have to do just a few things to keep their nonprofit status.

They have to have a financial assistance policy, do a formal assessment of their communities’ health needs every three years and have a plan for meeting those needs, among other things. The government says nothing about how much they need to spend on such programs.

In some cases, they don’t spend much......