Has Lee Health reached the threshold for return to the community?
Has Lee Health reached the threshold for return to the community?

For-profit hospitals are required to report welfare benefits. But IRS reviews can be weak

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Last year, Lee Health committed $179 million through charity care, health fair offerings and education to help the community.

That’s according to the most recent “community benefits” report the public health system submitted to the IRS to justify its tax-exempt status.

That’s an increase of $165 million in 2022 and $160 million in 2021, according to Lee Health, Lee’s dominant hospital system with four acute care hospitals, a children’s hospital and a long list of outpatient services.

Lee Health is one of the largest public hospital systems in the U.S. and in Florida with an operating budget of $3 billion, yet it receives no direct taxpayer support through a tax levy. This is despite being a “safety net” hospital that cares for all patients regardless of their ability to pay.

More ▼: Lee Health should become a private, not-for-profit hospital, consultants say

More ▼: The possibility of Lee Health going private has yet to gain public attention. will it happen

Public benefits reports under fire

The annual public benefit reports required of all tax-exempt not-for-profit hospitals have come under fire from members of Congress for a lack of oversight by the IRS.

In addition, the Lown Institute, a health think tank that studies hospital social responsibility, conducted a study on what for-profit hospitals give back as benefits to the community against their tax breaks.

Of 1,700 not-for-profit hospitals, Lown found in 2020 that 77% spent less on charity care and community investments than the value of their tax credits.

The American Hospital Association responded that Lown cherry-picked its data to “fit its preconceptions about hospitals.”

More ▼: For-profit HCA Florida steps up competition for public management of Lee Health

The AHA says that for every dollar in tax exemptions, nonprofit hospitals provide $9 in benefits. A 2022 analysis found that tax-exempt hospitals provided more than $110 billion in total benefits to their communities in fiscal year 2019, according to the AHA.

A report by the U.S. Government Accountability Office said the IRS does not have a well-defined process for reviewing the reports, even though the agency is required to do so for each hospital every three years.

NCH ​​of Collier County, a private, nonprofit system with two hospitals and a combined 713 beds, will soon complete its community benefits report for the past year, according to spokesman Sean McConnell.

Why should you care about community benefits?

The uptick in what Lee Health is giving back comes as the system explores converting from a public system to a private, not-for-profit system to gain leverage against rivals from for-profit hospitals and private equity firms that invest in health services.

Lee Health’s elected board of directors will decide by October whether or not to convert.

Even if Lee Health converts to nonprofit status, it will still have to report what it gives back to the community, and its board says its longtime mission is to be a safety-net institution that cares for all patients, regardless of their ability to pay, will remain intact.

With 1,865 beds in four acute care hospitals, Lee Health serves 1 million patients annually with 85,000 admissions last year and 276,000 emergency department visits, along with 2.6 million outpatient and physician visits. The system has 15,000 employees.

Lee Health has an unwavering commitment to the community for important health and wellness information, said Chris Simoneau, chief development officer, in a news release about the latest community benefits report.

“Our presence goes beyond medical care,” he said. “We contribute significantly through local partnerships with organizations that are also committed to the growth and well-being of Southwest Florida and by creating a variety of educational programs with the goal of optimal health for all.”

Details of charity care and other community support from Lee Health

Community benefits provide treatment and may promote health, but are not provided for marketing purposes, nor are they the costs of doing business.

Here are the main categories for Lee Health:

  • Charity care of $113 million and $88 million from uncompensated Medicaid for a total of $202 million.
  • Community scope of $71 million.
  • Total benefits to the community came to just under $273 million, and subtracting the $94 million in foregone taxes came to $179 million.

Some highlights of the community impact, according to Lee Health:

  • Golisano Children’s Hospital’s Children’s Advocacy Team, which includes Kids’ Minds Matter, has served 58,313 patients and contributed $660,812 in community service.
  • The Lee TeleHealth platform, which operated 24/7 after Hurricane Ian for free for more than half of the year, served 2,476 patients and contributed $170,844.
  • Lee Health Trauma Center’s Injury Prevention Team saw 7,832 patients and provided $75,213 to benefit the community.
  • Family medicine and internal medicine residency programs sponsored by the Florida State College of Medicine generated a total of $11.9 million in community benefits.

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