Earlier this month, The Indianapolis Star published ran articles and an editorial about the percentage of annual revenue local hospitals spend on charity care, and how that compares to the tax breaks they receive as not-for-profit organizations. In 2006, Community Health Network reported charity care at $9.2 million and revenue at $995 million. That same year, the network received tax exemptions worth $33.75 million. The big question: is this fair, based on the percentage of charity care provided?

So what do we mean when we say charity care? Charity care is care provided for which hospitals expect no payment. But this doesn’t take into account unreimbursed costs for Medicaid, bills that non-charity patients are unable to pay, the gap between what some services cost to provide vs. what patients are actually billed, and education and research services that are provided as a service to the community. When these items are quantified along with charity care, the total figure is referred to as community benefit.

Community benefit is reported annually by each hospital/health network to the Indiana State Department of Health. For 2006, Community Health Network reported $69.5 million worth of community benefit, a figure that far exceeds the amount of charity care provided and the value of the tax exemptions.

According to Bill Corley, president and CEO of Community Health Network, “Our community’s health care needs are great, and the price that we and central Indiana’s other not-for-profit organizations pay to meet those needs, above and beyond our reimbursements, is in the hundreds of millions of dollars–far greater than the tax benefits we receive.”

Perhaps the question now should be: is charity care alone a fair benchmark for assessing whether not-for-profit health care organizations deserve the tax breaks they receive?