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Top Hospitals Got Richer Under Obamacare, But Didn't Pass It On

A Politico investigation found the top seven hospitals spent 35 percent less on charity care in 2015 than in 2013.
Posted at 8:31 PM, Jul 17, 2017

More Americans having health insurance over the last few years has meant hospitals are giving away less so-called "direct charity care." And that's meant higher profits for hospitals nationwide.

An investigation by Politico found that in 2015, the nation's top seven hospitals spent 35 percent less on charity care, which is free treatment for low-income patients, while their total operating revenues equaled $33.9 billion, which is a 15 percent jump since 2013.

The biggest change between those years? The Affordable Care Act, aka Obamacare, didn't fully take effect until 2014.  

That doesn't necessarily mean low-income Americans received less care. Actually, the hospitals defend their lack of spending on charity care by pointing to the drastic drop in uninsured people thanks to Obamacare. They also point out their "community benefit spending," which includes things like free screenings, lectures and sponsored races where hospital staff hand out water bottles.

But hospitals bristle at the idea that Obamacare is the main reason their profits are up. The Mayo Clinic told Politico, "It's a result of a fiscal discipline, focus on creating efficiencies, generous philanthropic donations, as well as research funding from NIH and revenue created through our commercialization efforts."

They also say they are putting a lot of that money back in the community via jobs. Hospitals are, after all, the largest employers in many urban areas.

But critics say that's just not enough. A lot of the most profitable hospitals in the country are in struggling neighborhoods. Those community benefits don't always have a direct impact on the communities themselves. And as those profits roll in, critics say most of that money goes to raises for top executives or huge renovations for the hospitals. 

One health care economist put it this way: "The hospitals ... aren't contributing to the financial reserves of that community. They are obviously employing people, but they are earning substantial profits and not paying any of those profits to the communities."

Critics would rather see some of those profits go toward improving the "population health" — they say pumping money into fixing the social needs of those communities might mean the residents won't have to go to the hospital in the first place. But currently, no one is forcing them.