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Nonprofit, for-Profit, and Government Hospitals Uncompensated Care and Other Community Benefits

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United States Government Accountability Office

GAO
For Release on Delivery Expected at 10:00 a.m. EDT Thursday, May 26, 2005

Testimony Before the Committee on Ways and Means, House of Representatives

NONPROFIT, FOR-PROFIT, AND GOVERNMENT HOSPITALS Uncompensated Care and Other Community Benefits
Statement of David M. Walker Comptroller General of the United States

GAO-05-743T

May 26, 2005

Highlights
Highlights of GAO-05-743T, a testimony before the Committee on Ways and Means, House of Representatives

Accountability Integrity Reliability

NONPROFIT, FOR-PROFIT, AND GOVERNMENT HOSPITALS Uncompensated Care and Other Community Benefits

Why GAO Did This Study
Before 1969, IRS required hospitals to provide charity care to qualify for tax-exempt status. Since then, however, IRS has not specifically required such care, as long as the hospital provides benefits to the community in other ways. Seeking a better understanding of the benefits provided by nonprofit hospitals, this Committee requested that GAO examine whether nonprofit hospitals provide levels of uncompensated care and other community benefits that are different from other hospitals. This statement focuses on, by ownership group, hospitals’ (1) provision of uncompensated care, which consists of charity care and bad debt, and (2) reporting of other community benefits. The hospital ownership groups were (nonfederal) government, nonprofit, and for-profit. To compare the three hospital ownership groups, GAO obtained 2003 data from five geographically diverse states with substantial representation of the three ownership groups in each state. GAO analyzed cost data from two perspectives—each hospital group’s percentage of (1) total uncompensated care costs in a state and (2) patient operating expenses devoted to uncompensated care.

What GAO Found
Government hospitals generally devoted

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