For-profit hospitals give back as much as nonprofits, study finds

California nonprofit hospitals, which receive tax breaks in exchange for the public benefit they’re supposed to provide, don’t necessarily offer any more free or “charity” care for poor patients than their for-profit counterparts, a new study shows.

The study by researchers from UCSF and Oakland’s Highland Hospital found that nonprofit hospitals tended to spend a little more to provide free care to low-income patients than the for-profits. But when it came to paying patients’ unpaid medical bills, both sides were even. Both sides spent less than 5 percent of their operating costs on uncompensated care.

Nationwide, nonprofit hospitals get more than $24 billion a year in federal, state and local taxes, exemptions that for-profit hospitals don’t receive. In exchange, nonprofits are supposed to give back in the form of providing medical care to the poor.

“We would expect nonprofits to give back a lot more in terms of providing community benefit and uncompensated care, but that’s not exactly the story we found,” said Dr. Renee Hsia, a UCSF professor of emergency medicine and senior author of the study.

The study was published Monday in the journal Health Affairs.

Tax breaks for nonprofit hospitals have nearly doubled over the past decade. A Health Affairs study published in June found nonprofit hospitals received $24.6 billion in 2011, up from just $12.6 billion in 2002.

The California researchers studied 264 acute-care hospitals statewide, 64 of which were for-profit and 200 of which were not-for-profit medical centers. No hospitals were specifically identified in the study, which focused on California because it’s the only state that requires both for-profit and nonprofit hospitals to report charity care spending.

The researchers looked at two ways hospitals provided uncompensated care from 2011 to 2013: offering care with no expectation of payment and writing off unpaid medical bills.

When it came to providing free medical care, nonprofit hospitals spent slightly more: 1.9 percent of their total operating costs compared with 1.4 percent for the for-profits. Accounting for bad debt, however, nonprofit and for-profit hospitals spent an average of 4.4 percent.

Eligibility criteria for tax-exempt status are largely ambiguous, with virtually no minimum requirements or clear definitions for charity care, the researchers found. They also found wide disparities among the hospitals, with some giving away as much as 11 percent of their operating expenses in direct medical services and others offering nothing.

The California Hospital Association, which represents the state’s hospitals, defended the nonprofit hospitals, saying providing free medical care is just one way the hospitals reinvest into their local communities.

“Nonprofit hospitals fund research, education, wellness services and a myriad of other programs that are determined based on the needs of local communities,” said association spokeswoman Jan Emerson-Shea.

Hsia said it’s up to state or federal policymakers to decide whether to make nonprofits more accountable for their tax-exempt status or clarify charity care requirements and definitions.

“We’re not making the policy decisions,” she said. “We want to provide the information and say, ‘You’ve granted these exemptions, and this is what’s happening.’”

Victoria Colliver is a San Francisco Chronicle staff writer. E-mail: vcolliver@sfchronicle.com Twitter: @vcolliver