Low-income patients billed despite hospital tax breaks

Editor's Note

Nonprofit hospitals, which are legally required to provide free or discounted care to qualifying patients, attempt to collect hundreds of millions of dollars from low-income patients annually while receiving significant tax breaks meant to ensure affordable care, according to a May 12 article from CBS News.  

As an example, the article cites a patient at Jefferson Hospital in Philadelphia who continues making payments on bills from a 2022 knee surgery that led to complications and a two-week medically induced coma. Despite receiving social security disability and having Medicare coverage, the patient found herself facing unexpectedly high bills, the outlet reports. She eventually established monthly payment plans with collection agencies to manage her debt.

Jefferson reportedly disputed some findings regarding the case. Nonetheless, 2022 tax forms reveal the hospital sent nearly $8.5 million in bills to patients who were "eligible under the organization's financial assistance policy," according to the CBS Data Team's analysis. As detailed in the article, federal law requires nonprofit hospitals to provide "sufficient" community benefits and maintain financial assistance policies, but fails to specifically define what constitutes sufficient benefits.

CBS quotes Dr. Vikas Saini, president of healthcare research organization Lown Institute, criticizing this practice. "When nonprofit hospitals behave like for-profits, the community is not really getting their side of that bargain," he says. The article notes Jefferson's financial assistance policy indicates patients may qualify for discounts when lacking insurance or when coverage doesn't fully address medical needs.

For broader context, the outlet turned to UCLA Law Professor Jill R. Horwitz, who explained that nonprofit hospitals provide essential but unprofitable services like emergency departments, psychiatric wards and drug rehabilitation programs. According to the article, Horwitz believes the entire healthcare system requires reform at the federal level, noting that "the ordinary nonprofit hospital in America, in a given year, operates at a negative operating margin."