The New Jersey Hospital Association (“NJHA”) recently released its “Community Benefit Report 2013” (“Report”) which contains information pertaining to the programs, services and economic benefit New Jersey hospitals provided to the community for the 2012 year. The Report indicates that New Jersey hospitals provided nearly $2.6 billion in added benefits to their communities in 2012, excluding the healthcare services provided to their patients.
The Report includes information obtained from 57 hospitals, including 53 acute care hospitals, in New Jersey. Wherever possible, NJHA utilized the standard reporting categories recommended by the Catholic Healthcare Association and the Veterans Health Administration when analyzing the data. The programs and services discussed in the Report are combined into four main categories as follows: (1) Unpaid Costs of Patient Care, (2) Community Health Improvement Services, (3) Health Professions Education, and (4) Other Community Benefit Services and Programs. For each of the categories the amounts included in the Report were extrapolated by taking the total for each category and dividing it by the total number of beds represented; 17,438, and multiplying this amount by the total number of beds statewide; 23,471.
Unpaid Costs of Patient Care
“Unpaid costs of patient care include charity care services for the uninsured, the unpaid costs of treating Medicare and Medicaid patients and bad debts hospitals absorb through uncollectible patient care costs.” The Report notes that in 2012, the estimated amount for unpaid costs of patient care for New Jersey hospitals was $2 billion. As part of their community pledge, New Jersey hospitals receive rates that are well below actual costs from government healthcare programs, such as charity care, Medicare and Medicaid. On average, New Jersey hospitals received 50, 70 and 94 percent; respectively for the costs of services that are provided under these government healthcare programs. This amounts to $623 million, $290 million and $111 million; respectively in uncollected service costs. In addition to the amounts noted above, NJ hospitals incurred charges of approximately $1 billion for patient bad debts at cost.
The calculation of unpaid costs of patient care is similar to the American Hospital Association calculation of community benefit whereby Medicare shortfall and bad debts are included as community benefit. This is in direct opposition to the Catholic Health Association model which was adopted by the Internal Revenue Service (“IRS”) for the calculation of community benefit in the Form 990, Schedule H, Part I; whereby Medicare shortfall and bad debt are not included as community benefit.
Community Health Improvement Services
“Community health improvement services include the range of healthcare services hospitals provide to their communities, including clinics, screenings and health education programming.” Each year New Jersey hospitals find ways to reach out to their communities to raise awareness and help improve health education. During 2012, New Jersey hospitals provided over 14 million individual encounters at an approximate value of $66 million through different types of community health improvement programs that they offered.
The report contains information discussing some specific programs which various organizations have undertaken in their respective communities. It highlights areas where needs were identified and organizations are engaging the community to meet those needs.
Health Professions Education
“Health professions education includes scholarships and on-site clinical training and residency programs for future physicians, nurses and other healthcare professionals.” New Jersey hospitals recognize the importance of providing education and training as vital to the future of the healthcare workforce. According to the Report, New Jersey has 39 teaching hospitals which spent almost $124 million in 2012 on healthcare professions education. Additionally, during 2012, $348,555 in scholarships to 152 aspiring healthcare professionals were provided by New Jersey hospitals.
Other Community Programs
“Other community benefit programs include initiatives that identify a unique community need – such as local safety partnerships, literacy programs and contributions toward municipal services.” Along with all of the programs and services that New Jersey hospitals provide to the community, some of the other programs that they provide include subsidized health services, other means-tested government programs, community-building activities and community benefit operations. It is important to note that the information contained in the category for government-sponsored means-tested programs was based on only 41 hospitals. The extrapolation for this particular calculation used a total of 12,953 beds from the 41 hospitals. During 2012, the total value of all additional community programs provided by New Jersey hospitals was $366 million.
Indirect Economic Benefit
In addition to the direct benefits which New Jersey hospitals provide to the community, they also provide a substantial amount of indirect benefit to both the state and local economies. In 2012, New Jersey hospitals provided approximately $20.4 billion in total benefits to the New Jersey economy. This included employing 144,000 people with total compensation of $8 billion. In addition, these employees paid $450 million in state income taxes and spent $2.6 billion in purchased services that supported other New Jersey businesses. As outlined in the Report, it is evident that New Jersey hospitals provide not only healthcare services to the community, but are an essential part of the state’s economy.
State Community Benefit Initiatives
NJHA, similar to other states, began tracking and reporting on community benefit since the IRS included the Schedule H and community benefit reporting beginning with the 2008 Form 990. We recommend that hospitals review both the NJHA report and the state reports for neighboring states or for those states with similar demographic or geographic locales. Listed below are some state websites where these various reports may be accessed:
A copy of the New Jersey Hospitals Community Benefit Report 2013 can be accessed on our Resource Center.
Please contact a member of WS+B's Healthcare Services Group for further questions or assistance.