After seven years of increases, the level of charity care provided by area hospitals dipped slightly in 2013, according to a new report by the St. Louis Area Business Health Coalition.
While the reason for the slight decline remains unclear, it came at a time when hospital profits were on the rise and when the state had yet to expand Medicaid to cover more uninsured individuals throughout the state, the report found.
Overall, in the St. Louis area charity care as a percentage of revenue slipped to 2.93 percent in 2013 from 3.02 the year prior.
“We’re not exactly sure why there was this blip,” said Karen Roth, the report’s author and director of research for the business coalition. She called the results surprising.
Charity care is defined as health care services offered to low-income individuals by a hospital for free or at a reduced cost. Typically, the beneficiaries of charity care do not have any kind of insurance coverage.
Nonprofit hospitals, which dominate the St. Louis market, are exempt from federal, state and local taxes. In return, they’re expected to provide charity care for low-income individuals. In Missouri, there is no requirement for how much charity care a nonprofit hospital should provide.
BJC HealthCare, the area’s largest hospital provider, disputes the details of the report that show charity care decreased overall at its hospitals in 2013.
“The Business Health Coalition reports charity care as a percentage of operating revenues. BJC’s operating revenues increased in 2013, as did our overall charity care. The slight decrease you question is likely a function of a math calculation rather than a decrease in actual charity care/assistance provided,” said June Fowler, BJC spokeswoman.
SSM Health, which also experienced a minor decrease in charity care as a percentage of operating revenue, said it was normal to see “minor fluctuations” each year due to economic conditions.
Hospital operating income in the region increased 20 percent during 2013, according to the report.
“From a consumer’s perspective, especially for low- to middle-income consumers, the data are concerning,” said Ryan Barker, vice president of health policy at the Missouri Foundation for Health.
Without Medicaid expansion, there are about 300,000 Missourians stuck in a coverage gap. Their income is too high to qualify for Medicaid, the state-run insurance for the poor, and their income is too low to qualify for financial help for coverage through HealthCare.gov. Those individuals typically rely on the area’s emergency rooms, said Sidney Watson, health law professor at St. Louis University School of Law.
“We don’t want them to be bankrupted if they get hit by a car or get in a farm accident and end up in the emergency room,” Watson said.
But Watson cautions that the decline in 2013 was small. And the overall numbers are good compared with the level of charity care provided locally six years earlier, when charity care represented less than 2 percent of area hospitals’ operating revenues.
As for why there was a small decline, Watson and Barker point to the fear and uncertainty in the hospital industry in 2013.
Barker theorizes that the hospitals were “tightening” their belts as they were preparing for funding cuts and the uncertainty of what the marketplace would bring in 2014.
During the later part of 2013, consumers began to purchase insurance coverage via HealthCare.gov that went into effect Jan. 1, 2014. In 2012, the U.S. Supreme Court upheld the Affordable Care Act, but made it optional for states to expand Medicaid.
Watson wonders if the industry’s fears affected their charitable efforts.
“Did the financial uncertainty that hospitals were facing in 2013, going into 2014, cause them to simply be less generous in promoting their charity care policies and making sure that patients knew that they were available and knew that they had the option?” Watson asked.