Rural-Urban Differences in Nonprofit Hospital Financial Assistance Spending in Minnesota and Wisconsin: A Call for Greater Transparency

Background and Purpose:

U.S. nonprofit hospitals must provide community benefits including financial assistance to maintain their tax-exempt status. Rural residents could particularly benefit from financial assistance because they have worse health outcomes and more medical debt on average compared to their urban counterparts. However, recent studies have criticized nonprofit hospitals for spending less than what is expected on financial assistance. In addition, The Internal Revenue Service currently allows nonprofit hospitals that are members of health systems to report spending for their entire system rather than for individual hospitals. We posited that this current reporting structure renders cross-hospital comparison inaccurate and sought to answer the research question: How is rurality associated with financial assistance spending for all nonprofit hospitals in Wisconsin and Minnesota and how do these associations differ when examining only nonprofit hospitals that reported spending at the individual hospital level?

Methods:

We used publicly available 2021 tax data extracted from Community Benefit Insight merged with American Hospital Association data for Wisconsin and Minnesota. We examined rural-urban differences in total community benefit spending and total financial assistance spending for the full sample (n=192) and after excluding nonprofit hospitals who filed taxes as a health system (n=137) using two tailed t-tests.

Results:

Among all nonprofit hospitals, there were no significant rural-urban differences in total community benefit spending or total financial assistance spending. However, after excluding hospitals who filed taxes as a health system, urban hospitals had significantly higher total community benefit spending (urban= $2,688,330,000.00; rural= $572,750,000.00; p<.001) and total financial assistance spending (urban= $1,918,129.00; rural= $445,778.30; p<.001) as compared to rural nonprofit hospitals.

Conclusion:

Nonprofit hospitals have been criticized for suboptimal financial assistance spending. To build trust, and reduce rural-urban disparities, our research suggests nonprofit hospitals should be required to report spending on community benefits, including financial assistance, at the individual hospital level rather than obscuring data through reporting at the health system level. By providing this granularity, researchers and policy makers can ensure nonprofit hospitals are providing sufficient financial assistance, which could lessen medical debt. Social workers should advocate for policy changes that holds nonprofit hospitals accountable to the communities who subsidize them to promote affordable, accessible health care across geographic location.