Half of All Hospitals Have Charity Care Costs That Represent 1.4% or Less of Their Operating Expenses

Half of hospitals reported that the cost of providing charity care to patients represented 1.4% or less of their operating expenses in 2020, though the rates vary widely from hospital to hospital, a new KFF analysis finds.

Based on a review of hospital cost report data, the analysis finds some hospitals provide little or no charity care (0.1% or less of operating expenses at 8% of hospitals), while others provide far more charity care (at least 7% of operating expenses at 9% of hospitals).

The variation in charity care rates may reflect differences in individual hospitals’ mission and business practices; the need for charity care among their patients; and federal, state, and local policies and regulations.

The analysis is part of a new brief that examines the role of hospital charity care programs in helping patients who cannot afford their care. The brief answers frequently asked questions, including:

• How much charity care do hospitals provide?
• Which patients are eligible for charity care?
• What are the requirements related to charity care for nonprofit hospitals to receive federal tax-exempt status, and what additional requirements do states impose on hospitals?
• How do Medicaid and Medicare help hospitals afford charity care expenses?
• How did the COVID-19 pandemic affect charity care?

The brief also discusses policy proposals related to hospital charity care programs, such as creating or expanding requirements that hospitals provide charity care to patients below a specified income threshold, introducing requirements to increase the uptake of charity care, and strengthening oversight and enforcement of existing regulation. It is part of KFF’s expanding work examining the business practices of hospitals and other providers and their impact on costs and affordability.