Critics want more evidence of charity care

CLEVELAND (AP) — Some lawmakers and advocates for the uninsured want nonprofit hospitals such as the Cleveland Clinic to offer better proof that they’re giving enough charity care to justify their tax-exempt status.

Eighty percent of Ohio’s 171 hospitals are nonprofit, a status that allows them to save millions of dollars in taxes every year, according to the American Hospital Association.

The hospitals say they provide millions in community benefits through free care, education, research, jobs and outreach programs, but there are no formal guidelines in place that define a minimum standard of giving.

Critics want them to detail their acts toward public good, such as the amount of charity care. Others want requirements in place for the amount of charity care.

At a U.S. Senate hearing in October, Cleveland’s Dr. Ashwini Sehgal urged lawmakers to create legislation requiring nonprofit hospitals to provide a certain level of free care. He said Cleveland hospitals are too focused on both the bottom line and “the skyline,” or construction of new medical complexes.

“We need to get them to pay more attention to another line, which is the line with all the uninsured people in Cleveland who can’t afford health care,” he said.

Cleveland Clinic spokeswoman Eileen Sheil says the clinic does much for the community, and uses the community benefit-reporting standards supported by the Catholic Health Association. The standards include providing information on community outreach, research, education and community building.

“Because that transparency hasn’t existed across the board, there’s a lack of real understanding of the benefit we bring to the community,” Sheil said.

The Internal Revenue Service wants to require more specific reporting for the nonprofit sector. After an investigation of nonprofits, the IRS is issuing a new form that will demand more details about how the hospitals spend money. It could be in use as early as the 2008 tax year.

The American Hospital Association and its supporters, including Cleveland’s nonprofits and U.S. Rep. Stephanie Tubbs Jones, have asked that the form be delayed until 2010.

Tubbs Jones, a Democrat from Cleveland, wrote a letter asking that the final form allow various ways for the hospitals to define how they provide.

“Truly, one standard would be the easiest way for someone to review the work that they do,” Tubbs Jones said. “However the type of work hospitals do may not be as easily shown in one way.”

Cleveland’s big nonprofit hospitals all use different calculations and standards for reporting the free care they provide, making it difficult to compare their services, said Matt Carroll, director of Cleveland Department of Public Health.

Two years ago, Republican Sen. Chuck Grassley of Iowa proposed that nonprofit hospitals spend at least 5 percent of annual patient operating expenses or revenues, whichever is greater, on charity care.

“Unfortunately, the answer all too often is that nonprofit hospitals often do little to help low-income individuals, charge top rates to the uninsured, and provide little charity care,” Grassley said in a statement to The Plain Dealer.

If Grassley’s proposal were law, the Cleveland Clinic, which reported $4.3 billion in net patient revenue in 2006, would have needed to spend $214.3 million in charity care to qualify for tax exemption. According to the clinic’s community benefit report, it spent $110.4 million.