COMMUNITY DEMOGRAPHICS, HOSPITAL SIZE AND HOSPITAL CHARITY CARE

Leonard Branson Mark Buxton Lisa Chen Joseph Smith

University of Illinois Springfield

ABSTRACT 

Nonprofit hospitals receive various tax breaks from the federal, state and local governments if they maintain their tax-exempt status. Tax breaks include exemption from federal and state income tax, property taxes, and sales tax. In exchange, nonprofit hospitals have to provide community benefits to offset the tax breaks. The tax-exempt status of nonprofit hospitals has come under increasing scrutiny in recent years, with governmental units claiming that nonprofit hospitals are not providing enough community benefits for the tax breaks they receive.

This research investigates the relationship between the charity care a hospital offers and the size of the hospital and demographic characteristics of the community the hospital serves. The dependent variable in this study is the criteria a hospital uses to determine free and discounted care. The independent variables are the size of the hospital, the median household income of the community served, the percent of population below the poverty line in community served by the hospital, the percent of minorities in the community served, and the per capita income of the community served. This paper presents the results of the empirical study, and discusses the implications of the findings. Results indicate size of the hospital is the only independent variable that significantly and systematically effect the income levels that hospitals set for determining eligibility for free or discounted care.