How we did our research
Modern Healthcare analyzed the finances, charity care and other community benefits for 1,807 not-for-profits that operate hospitals with data provided by Guidestar, a not-for-profit that collects, analyzes and publishes information on the charitable sector.
Guidestar, based in Williamsburg, Va., receives data reported on the Internal Revenue Service Form 990, the yearly tax return for not-for-profits, from the federal tax agency. Jose Fernandez, director of the Guidestar Exchange, said data received from the IRS is checked for accuracy once by computer and twice by humans. Modern Healthcare also checked anomalous numbers against the actual tax forms.
Starting in tax year 2009, the IRS required hospitals to complete a separate questionnaire included in the Form 990, known as Schedule H. (The prior year, nearly all reporting on Schedule H was voluntary.) Schedule H asks for information on charity care, community benefits and other operating expenses.
The Form 990 Schedule H must be completed by any organization that operates a hospital, but not necessarily for each hospital. The disclosure must be completed for each not-for-profit with an employer identification number; more than one hospital can share a single employer ID number. That means that some Schedule H forms will include data for more than one hospital. It also means that Modern Healthcare’s analysis includes at least 1,802 hospitals, but potentially more.
Neither Guidestar nor the IRS was able to provide the total number of U.S. not-forprofits expected to file a Schedule H. It is unclear how many are missing from Modern Healthcare’s analysis.
Another discrepancy in the data underscores the confusion that comes with any new endeavor. IRS Schedule H instructions ask hospitals to subtract unpaid medical bills, known as bad debt, from equations as hospitals calculate community benefits, explained Keith Hearle, founder and president of Verite Healthcare Consulting. It appears that some hospitals did not. We chose to report the figures contained in the form, which are the public record of hospital community benefits.
Finally, some hospitals we contacted had simply made errors. For example, Lakeside Memorial Hospital in Brockport, N.Y., reported $133,351 of charity care in tax year 2009, which amounts to less than 1% of its total expenses.
Bridgett Reed, the hospital’s chief financial officer and chief information officer, said an outside consulting firm misstated the figure on the tax filing, and the hospital’s actual charity care for the year was $2.9 million, or 7.3% of total expenses. Reed said the hospital was establishing internal checks to confirm the accuracy of future disclosures.