Not-for-profit hospitals' provision of community benefit: is there a trade-off between charity care and other benefits provided to the community?

Background: For decades, not-for-profit hospitals have been required to provide community benefit in exchange for tax exemption. To fulfill this requirement, hospitals engage in a variety of activities ranging from free and reduced cost care provided to individual patients to services aimed at improving the health of the community at large. Limited financial resources may restrict hospitals' ability to provide the full range of community benefits and force them to engage in trade-offs.

Objectives: We analyzed the composition of not-for-profit hospitals' community benefit expenditures and explored whether hospitals traded off between charity care and spending on other community benefit activities.

Methods: Data for this study came from Maryland hospitals' state-level community benefit reports for 2006-2010. Bivariate Spearman's rho correlation analysis was used to examine the relationships among various components of hospitals' community benefit activities.

Results: We found no evidence of trade-offs between charity care and activities targeted at the health and well-being of the community at large. Consistently, hospitals that provided more charity care did not offset these expenditures by reducing their spending on other community benefit activities, including mission-driven health services, community health services, and health professions education.

Conclusions: Hospitals' decisions about how to allocate community benefit dollars are made in the context of broader community health needs and resources. Concerns that hospitals serving a disproportionate number of charity patients might provide fewer benefits to the community at large appear to be unfounded.