1. Community Benefit during the Recession: An Analysis of Hospitals in Maryland
Simone Rauscher, PhD
Department of Health Systems Administration
School of Nursing and Health Studies
Georgetown University

2. Presenter Disclosures Simone Rauscher
The following personal financial relationships with commercial interests relevant to this presentation existed during the past 12 months:
No relationships to disclose.

3. Motivation
During the recent economic downturn, many not-for-profit hospitals saw their profits decline
Lower patient volumes and fewer elective procedures
Higher shares of publicly insured and uninsured patients
To weather the economic storm, many hospitals have cut costs by reducing staff and curtailing services, esp. money-losing services
Little is known currently about whether hospitals changed their provision of community benefits during the recession

4. Legal Background
Community benefits are unreimbursed or inadequately reimbursed services that not-for-profit hospitals provide to their communities
Charity care
Community health services
Education of health professionals
Health research
IRS and most states require not-for-profits to provide community benefits in exchange for tax subsidies
The IRS and most states, however, do not require that hospitals provide a minimum amount of community benefit
Hospitals might cut back on community benefit spending in difficult economic times to reduce costs and increase profits

5. Research Questions
Did hospitals reduce their provision of community benefit during the recession?
Did hospitals change the composition of their community benefits?
Which services did hospitals expand?
Which services did hospitals cut back?

6. Data and Sample
Study uses community benefit data for Maryland hospitals for 2006 (before recession) to 2009 (during recession)
Maryland introduced a state-level community benefit reporting requirement for not-for-profit hospitals in 2001
Hospitals are required to report detailed information on their community benefit activities including the unreimbursed cost of providing community benefits
Sample included all 47 not-for-profit hospitals

7. Composition of Community Benefits before the Recession (2006)
19.9%
9.1%
21.1%
38.5%
11.4%

8. Composition of Community Benefits during the Recession (2009)
39.8%
6.9%
18.9%
25.0%
9.5%
Increases

9. Median Community Benefit Expenditures as % of Hospitals’ Operating Expenses
2006
2007
2008
2009
% change
Charity care
2.0
2.1
2.2
2.5
+25% **
Community health services
0.5
0.6
+20%
Mission-driven services
1.4
1.7
1.8
1.9
+26% *
Health education
1.3
1.2
No change
Other community benefit
0.4
Total
5.7
6.1
6.2
6.8
Note: * Difference in means between 2006 and 2009 is statistically significant at the 5% level ** Difference in means between 2006 and 2009 is statistically significant at the 1% level.

10. Hospitals’ Profit Margins and Proportion of Profits spent on Community Benefits

11. Summary and Discussion
Maryland hospitals did not cut their community benefit spending during the recent recession
Total spending as % of operating expenses increased by 20%
Total spending as % of net income skyrocketed (by over 250%), mainly because of reduced profits
The composition of hospitals’ community benefits, however, changed during the recession
Higher spending on critically needed services, such as charity care and mission-driven services, likely because of increased need for these services

12. Thank You Any Questions or Comments?
Contact information:
Simone Rauscher, PhD
Phone: (202)