May 20, 2018
North Shore Hospitals Spending Less on Community Programs

August 14, 2017 — Total spending on community benefit programs by nonprofit hospitals serving the North Shore dropped by about 25% over the last five years, although they are required to spend on such programs in order to maintain their nonprofit status, according to a recently completed review.

Spending on community benefits in fiscal 2016 by Beverly Hospital in Beverly and Addison Gilbert Hospital in Gloucester, both of which are part of Lahey Health and North Shore Medical Center (NSMC) in Salem, part of Partners HealthCare, dropped approximately 25% from 2012, according to a report in The Salem News.

Beverly and Addison Gilbert Hospitals spent $5.5 million in 2016, while NSMC spent $7.9 million, the report noted.

Federal law requires nonprofit hospitals to offer community benefit programs in exchange for their tax-exempt status. Those programs include spending on charity care for uninsured or under-insured patients, as well as for reaching out to the local community to improve health and reduce disparities.

"The Massachusetts attorney general’s office recommends that hospitals spend between 3 and 6 percent of their patient expenses on such programs, but hospitals are not compelled to meet that standard. Beverly and Addison Gilbert hospitals, which file a combined report under Northeast Hospital Corp., and North Shore Medical Center, which includes Salem and Union hospitals, both spent under 2 percent in fiscal year 2016, according to records filed with the attorney general’s office," according to The Salem News.

One reason behind the drop in charity care, according to the hospitals, has been less demand for it as more people charitable care, in part due to more people are insured under the Affordable Care Act, the paper reported, adding that the nonprofits have not made up for the reduced charity care with increased spending on outreach programs.

Community benefits spending at NSMC reached $12.1 million in 2013, before dropping to $7.9 million, last year, the paper reported. However, NSMC said its total community benefits spending is not reflected in official reports, noting, according to the paper, that it will "spend $9 million in community benefits under a separate program related to the organization’s expansion at Salem Hospital" in Salem.

However, the report noted, NSMC laid off 167 employees in March and is planning to close Union Hospital in Lynn.

A task force organized by the attorney general’s office is examining how hospitals spend their money on community benefits outside of charity care.

Nancy Kane, a professor at the Harvard School of Public Health who serves on the task force, quoted by The Salem News, said, “Guidelines are just that, so as far as I know, the hospitals are only obligated to disclose, not to meet the guideline suggested levels of spending."

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