HELENA - The "community benefits" provided by Montana's major hospitals were at or above the value of their nonprofit tax exemptions for 2007, a new report says - sometimes, quite a bit above.
The annual report issued this week by the Montana attorney general's office also looked at the net financial returns of the state's 11 largest hospitals, as well as the amount of "uncompensated care" at each facility.
All of these nonprofit hospitals posted net financial gains, or profits, in 2007 and several had returns above the national average, including St. Vincent Healthcare in Billings, St. Peter's Hospital in Helena and Bozeman Deaconess Hospital.
"Profits" generated by nonprofit hospitals are invested back into the facility and services, rather than paid out to shareholders.
At the same time, uncompensated care at the 11 hospitals increased nearly $10 million from 2006, a 13 percent increase. Uncompensated care is the sum of the hospitals' bad debt and health care provided for free.
"It's just more of the same that's been going on for a decade or more, that fewer people have complete health coverage, people are responsible for greater portions of their medical bills, and costs are higher," said Larry White, the chief author of the report. "As a consequence, more people are applying for and are eligible for charity care considerations."
White, research assistant professor at the University of Montana's School of Public and Community Health Sciences, compiled the report at the behest of former Attorney General Mike McGrath. The report was released this week by current Attorney General Steve Bullock.
McGrath's office initiated the annual report for the first time last year, to examine whether the hospitals justify their nonprofit status by providing community benefits equal to or greater than their tax breaks.
Nonprofit hospitals pay no property taxes or state or federal income taxes. The 11 hospitals examined by the report - in Billings, Missoula, Helena, Butte, Bozeman, Kalispell, Great Falls, Havre and Miles City - had total operating expenses of $1.65 billion in 2007 and tax exemptions valued at $60 million.
The report said a majority of the 11 hospitals provided community benefits at two to three times the value of their tax exemptions.
"There is no model or standard against which to compare that with, that I know of," White said. "But that's pretty impressive, that's pretty darn good."
Community benefits include charity care; financial losses on Medicaid, which covers the poor; health education and improvement services for the community; training of health professionals; and "subsidized health services," which are unreimbursed costs of clinical services that meet a community need, such as burn units, mental health treatment or addiction treatment.
Highlights of the report include:
n Northern Montana Hospital in Havre provided community benefits worth six times its tax exemption, the highest level. The high level is partly attributable to the hospital's low profit level, which translates into a low tax exemption value.
St. Patrick Hospital in Missoula, Missoula Community Medical Center and Billings Clinic ranked next, in order, with community benefits ranging from 267 percent to 323 percent of their respective tax exemptions.
In total, the hospitals reported $120 million in community benefits, compared to $60 million in tax-exemption values.
• St. Vincent Healthcare in Billings had the highest profit margin, when considering total income, at 13.5 percent. Its $38.6 million of income for 2007 included $21 million of nonoperating income, which is from investments and other sources.
The national average profit margin for U.S. hospitals is 6.9 percent, when including all income.
Bozeman Deaconess Hospital and St. Peter's Hospital in Helena had the next-highest profit margins, at 12.6 percent and 11.8 percent, respectively.
Northern Montana Hospital had the lowest profit margin at 2.7 percent.
• Billings Clinic, the state's largest hospital, provided the most charity care at $14 million. When charity care and other uncompensated care were measured against a hospital's expenses, Bozeman Deaconess had the highest level, at 7.1 percent.
• The hospitals turned over 103,300 unpaid-bill accounts for collection, averaging just under $1,000 per account. The report said that amount is low when compared to the $18,000 cost of an average inpatient stay at a Montana hospital.
This year's report contains much more detail than the first such report in 2006. However, White said the data will become more complete and standardized in the next two years, and that it's probably still too early to identify any trends.
This year, the Internal Revenue Service is requiring nonprofit hospitals to report community benefits on a standardized form.
That means the Montana report looking at 2009 - due out in early 2011 - will offer a consistent, reliable comparison of the value of hospitals' community benefits, White said.
"The information this year is a lot more reliable (than last year), and next year it will be a lot more reliable than last year," White said. "If the same pattern is there two years from now, maybe we could draw some conclusions from that information."