237549 Hospitals' provision of community benefits during the economic recession: An analysis of hospitals in Maryland

Wednesday, November 2, 2011: 8:30 AM

Simone Rauscher, PhD , Department of Health Systems Administration, Georgetown University, Washington, DC
During the recent economic recession, not-for-profit (NFP) hospitals saw their profit margins decline as a result of lower patient volumes, higher shares of uninsured and publicly insured patients, and reduced investment income. To weather the economic storm, most hospitals implemented significant changes including cutting administrative costs, reducing staff, and curtailing services. Little is known currently, however, about whether NFP hospitals altered their provision of community benefit services during these difficult economic times. This study uses data from community benefit reports for Maryland hospitals for 2007–2009 to describe how hospitals' provision of community benefits changed during the recession. The findings show that hospitals' expenditures on community benefits as a proportion of total operating expenses increased from 6.1 percent in 2007 to 6.7 percent in 2009 (+10 percent). Most of this increase was driven by increases in charity care (+25 percent) and money-losing health services (+36 percent). At the same time, hospitals' spending on community benefits as a proportion of net income skyrocketed. While hospitals spent roughly the equivalent of their net income on community benefits in 2007, spending as a proportion of net income rose to over 570 percent in 2009. These findings are among the first to demonstrate that NFP hospitals did not cut their community benefit spending during the recession. Instead—likely as a result of increased need in the community—spending on critically needed services, such as outpatient mental health and hospice programs, increased despite the substantial reductions in income that many hospitals experienced during the recession.

Learning Areas:
Administration, management, leadership
Provision of health care to the public

Learning Objectives:
Describe how not-for-profit hospitals changed their provision of community benefit services during the recent recession of 2007 to 2009

Presenting author's disclosure statement:

Qualified on the content I am responsible for because: I hold a Ph.D. in health care accounting and finance and conduct research on not-for-profit hospitals' provision of community benefits.
Any relevant financial relationships? No

I agree to comply with the American Public Health Association Conflict of Interest and Commercial Support Guidelines, and to disclose to the participants any off-label or experimental uses of a commercial product or service discussed in my presentation.