Northeast Ohio health systems increase community benefit values in 2019

Northeast Ohio’s health systems reported a growth in the community benefit they provided to the region in 2019 and expect that number to have grown again in 2020 due to the pandemic and economic fallout.

An IRS requirement for nonprofit hospitals, annual community benefit reports provide a snapshot of the value they deliver as tax-exempt institutions.

“The citizens of our community are the shareholders of Summa Health,” said Dr. Cliff Deveny, Summa president and CEO. “So this is a shareholder report in that not only do we show our clinical operational and financial performance, but we also show our shareholders how we improve the health of our community.”

In 2019, Cleveland Clinic and University Hospitals each grew their respective community benefit totals by roughly 12%. The Clinic reported a record $1.16 billion in community benefit, surpassing a historic record it set in 2018, and UH reported $429 million. Summa Health’s grew by 25% to a benefit of $138.5 million. Remaining relatively flat were Lake Health (with $30.2 million) and Sisters of Charity Health System with its family of ministries ($55 million). Because it is a public health system, MetroHealth is not required to report its community benefit totals, as the other nonprofit health systems are.

Northeast Ohio hospitals face an aging patient population, cost inflation and a challenging payor mix with Medicaid reimbursement falling short of what it costs to care for those patients. The health systems have also been expanding (such as the Clinic acquiring a hospital and a health system in Florida in 2019).

All of these factors and more have contributed to the growth in health systems’ community benefit reports for the past several years. The past year has exacerbated many of those challenges, and the 2020 community benefit values, which will be reported later this year, are likely to reflect that.

“We do expect that we will see an increase in both bad debt and charity care in 2020, related to the pandemic,” said Steven Glass, the Clinic’s chief financial officer. “Certainly any time you have an economic impact like this, where so many people in our community have lost their jobs, they’ve lost their employee benefits, that translates into increased bad debt for the health care provider and increased charity care. So we’re experiencing that in 2020.”

Community benefit reports include several categories. As has been the case for several years, the largest piece is Medicaid shortfall — the gap between the cost of caring for Medicaid patients and the reimbursements hospitals receive. The reports also include charity care or financial assistance, research, education, community health improvement efforts and subsidized health services (programs the hospitals offer at a loss, such as behavioral health or obstetrics).

Compared to 2018, UH and Summa had increases in all reported categories. The Clinic grew in all except subsidized health services, which dropped by a few percentage points. Glass notes that this number ebbs and flows a bit, and he expects to see it increase in 2020.

Whereas charity care totals really depend on the needs of the community, research, education and community health improvement efforts are more actionable areas of investment. Though advocacy work and pushing for higher reimbursement can help address the Medicaid shortfall, hospitals have less control over that piece.

Heidi Gartland, chief government and community relations officer for UH, said the system plans to be much more proactive in how it focuses its community benefit going forward. Rather than just financial support for community organizations, UH plans to partner more closely with them.

“We’ve never done that before. I mean, we have had people on boards, but we’ve never really strategically said we really want to partner with this (organization), not just with sponsorship dollars,” she said. “Right now, we’ve had more unidirectional (engagement). We send dollars out but we don’t really partner. I think you’re going to see a change in how we put our community benefit report together.”

The events of 2020 will impact the community benefit calculations in many ways that are difficult to predict, according to a statement from Melissa Rogers, chief financial officer of the Sisters of Charity Health System. She noted high unemployment levels with COVID-19 mean charity care will be higher and Medicaid volumes and shortfall will also look different.

Dr. Lydia Cook, president of Summa Health Medical Group, said she expects Summa’s community benefit efforts to be more expansive through 2020 and 2021, given the impact of COVID-19 and the light the past year has shone on systemic and structural racism. Summa is focusing on how its outreach will play a role in making sure people are healthy, safe and educated around COVID-19, which has disproportionately impacted communities of color.

“We’re looking to really help people understand that it’s not just the hospital care and the face-to-face encounter you receive with your physician or a practice,” she said. “But it is much more important for us to extend out into the community and partner with our community and some of our community organizations to really help us understand what are the needs and how are they impacting health? And then how do we work together in order to meet those needs?”


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