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IRS filings tally Tampa Bay nonprofit hospitals' community benefits

When Bayfront Medical Center became a for-profit business this year, its executives promised to provide just as much care to the poor as ever — on top of paying $1 million in property taxes it avoided as a non-profit.

If that promise comes true, it raises a question that has come up all over the country: How do non-profit hospitals justify not paying taxes?

The federal government now requires non-profit hospitals to list their "community benefit'' in greater detail than ever.

The tally for the Tampa Bay area's 11 non-profit hospitals' most recent filing, covering their 2011 fiscal years:

• An average 4 percent of expenses went to free or reduced-price care for the poor and uninsured

• They posted total losses of $122 million a year on care for Medicaid patients

• They put $47 million a year toward training new physicians, research and community health fairs and education.

The IRS reforms came in the wake of congressional scrutiny over billing practices and chief executives' pay at non-profits.

Documents showing chief executive officer pay at Tampa Bay hospitals have not been updated after recent turnover. But in the last available filings, total compensation packages ranged from $845,645 for former Bayfront CEO Sue Brody to $3.1 million for BayCare Health Systems CEO Steve Mason, who presides over a network that is the area's largest provider.

Though hospitals have long reported their contributions in annual reports, the community benefit filings allow more consistent yearly comparisons among non-profit hospitals. For-profit hospitals do not file such reports.

In 2011, the region's largest hospital, Tampa General, provided the most free and reduced medical services to the poor and uninsured — $41.2 million. St. Anthony's in St. Petersburg spent the highest share of its expenses on charity care — nearly 6 percent — according to a Tampa Bay Times review of the IRS filings.

What the figures don't answer is whether the hospitals are doing enough. Neither the federal government nor the state of Florida requires non-profit hospitals to hit specific targets to maintain tax-exempt status.

"There's not a correct number," said David Kindig, a public health researcher and professor emeritus at the University of Wisconsin. "It's a question that needs to be asked community by community."

At BayCare, which owns St. Anthony's, officials do not set targets but meet whatever need arises, said chief financial officer Tommy Inzina, because "in some areas, the needs are greater than others."

Gerard Anderson, professor of health economics at Johns Hopkins Bloomberg School of Public Health, said non-profit hospitals should aim for a share close to the percentage of uninsured people in the region they serve.

In Tampa Bay, 15 to 23 percent of people under age 65 have no health insurance.

That's much higher than what most non-profit hospitals do.

Tampa General chief financial officer Steve Short said his hospital, where revenues exceed expenses by no more than 3 percent annually, could not hit such high levels.

"If you have percentages that high, I'm not even sure you could exist."

A handful of states have set minimum requirements, but those can backfire, said Martha Somerville of Hilltop Institute, a nonpartisan health research organization. When Texas required that at least 4 percent of net revenue go to charity care, hospitals that had been doing more cut back to the minimum.

"It becomes a ceiling as well as a floor," she said.

• • •

By the federal definition, community contributions are more than just charity care, which is defined as services given to people who prove they cannot afford to pay under each hospital's poverty guidelines.

Medicaid, the state-federal program for the poor, uses lower reimbursement rates than Medicare or private insurance, and hospitals can include the difference between its costs and the reimbursement in their community benefit figure. Research, medical residency training and free community health programs also are included.

Sometimes the Medicaid shortfall makes up the largest portion of community benefit. St. Joseph's Hospitals in Tampa, part of the BayCare system, reported $44.7 million in uncompensated Medicaid care, compared to $25.8 million in charity care.

The inclusion of a Medicaid shortfall can be controversial since for-profits lose on the program, too. When HMA was making the pitch to take over Bayfront, its executives pointed out that as a for-profit chain, it also provides uncompensated care, yet still pays taxes.

At HMA's two Hernando hospitals in 2011, 2 percent of charges met the state's definition of charity, which is uncompensated care provided to patients who earned 200 percent or less of the federal poverty level.

Alan Levine, senior vice president of HMA, includes both Medicaid and charity when he says that 27 percent of care at the firm's two Hernando County hospitals went to the poor in 2010. The two hospitals posted a hefty 21.5 percent profit margin last year.

"Ownership status doesn't matter as much as the characteristics of the community," Levine said. "We've always said what we do for charity and what we pay in taxes is community benefit."

But generally, non-profits serve more Medicaid patients than for-profits do, said Inzina, the BayCare CFO.

Even comparing among non-profits can be misleading, especially when it comes to specialty hospitals. All Children's Hospital's charity care looks low because in Florida, Medicaid is primarily for children, so more of their tab is government-funded. Around 70 percent of All Children's patients are on Medicaid.

And Moffitt Cancer Center's major research projects aren't included in its community benefit because the hospital operations file separately from the research program, said Moffitt chief financial officer Janene Culumber.

Short, the TGH executive, said non-profit hospitals also tend to run costly medical services, including burn units and Level 1 trauma centers. He said for-profit hospitals have less incentive to invest in such programs.

"They've got other people they're beholden to," he said.

Editor's note: HMA took over Bayfront Medical Center this year. An earlier version of this story referred to a different hospital at one point.

Jodie Tillman can be reached at or (813) 226-3374.

.Fast facts

What's the benefit?

Though charity care spending by local nonprofit hospitals averages about 4 percent, their community benefit is greater due to Medicaid losses and education programs. Here is each hospital's community benefit spending — comprising charity care, Medicaid shortfalls and other spending — and its share of total expenses:

Tampa General Hospital: $84.4 million; 8.4 percent

All Children's Hospital: $11.3 million; 4.5 percent

Morton Plant and North Bay Hospitals

(BayCare Health System): $28.1 million; 5.9 percent

St. Joseph's Hospital Inc. (BayCare): $81.1 million; 12 percent

Bayfront Medical Center (before takeover

by for-profit HMA): $26.4 million; 10.4 percent

St. Anthony's (BayCare): $14.8 million; 8.5 percent

Florida Hospital

(Adventist Health System): $40.6 million; 9.3 percent

H. Lee Moffitt Cancer Center: $44.3 million; 8.9 percent

Mease Countryside Hospital and Mease

Dunedin Hospital (BayCare): $20.3 million; 6.9 percent

Source: IRS 990 filings, 2011 fiscal year

IRS filings tally Tampa Bay nonprofit hospitals' community benefits 07/26/13 [Last modified: Monday, July 29, 2013 1:17pm]
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