Montana’s richest nonprofit hospitals obtain hundreds of thousands of {dollars} in tax exemptions annually to function as charities, however some fall brief of different medical services in what they offer again to their communities to get these breaks.

Total, Montana’s practically 50 nonprofit hospitals directed, on common, roughly 8% of their complete annual bills towards group advantages, reminiscent of overlaying the therapy prices of individuals who can’t afford care. That’s in accordance with a KHN evaluation of the hospitals’ IRS filings ending in 2019, which give a snapshot of hospitals’ monetary image from earlier than the pandemic. The nationwide common as of 2018 was 10%, in accordance with the American Hospital Association.

Hospitals self-report how a lot they offer in group advantages, and their reporting processes are opaque. Even so, KHN’s evaluation discovered that some of Montana’s wealthiest hospitals had been spending nicely beneath the state and nationwide averages.

Billings Clinic, the state’s largest supplier, spent roughly 5% of its working prices on group advantages, whereas St. Peter’s Health in Helena and Benefis Health System in Nice Falls every reported lower than 2%. In contrast, St. Luke Hospital in Ronan reported 22%.

Federal legislation doesn’t dictate how a lot nonprofit hospitals should spend on such advantages, and the definition of what counts is obscure. How nonprofits document their giving varies, and hospitals say that makes it an unfair measuring stick. Nonetheless, it’s what hospitals themselves report back to the IRS.

Montana nonprofit hospitals face little to no oversight of their group profit spending ― as is the case for much of the nation’s nonprofit health systems. That may permit nonprofit hospitals to behave extra like companies than charities. In the meantime, hospitals are typically among the many greatest financial engines in their communities, giving massive salaries to their executives whereas Individuals are caught with at least $141 billion in medical payments they will’t afford.

“There are hundreds of thousands of Individuals that don’t have medical health insurance, they usually want well being care,” stated Gerard Anderson, a well being coverage professor at Johns Hopkins College who studies hospital giving. “Hospitals are locations which were given tax benefits to assist.”

Sued for Medical Debt at Benefis

Final 12 months, Taruha Kirkaldie, 33, of Havre received a letter from a debt collector — she was being sued over a virtually $19,000 Benefis Well being invoice.

Kirkaldie didn’t have medical health insurance in 2018 when a lower on her hand become a severe staph an infection. She wanted to journey to Nice Falls for intravenous antibiotics and surgical procedure. She stated a hospital staffer helped her apply for Medicaid, the federal-state insurance coverage program for these with low incomes, however her household of 5 made about $50,000 a 12 months, an excessive amount of to qualify.

Kirkaldie recalled being informed that she wouldn’t qualify for the hospital’s help program both as a result of she owned a house in Harlem, Montana, that wasn’t her main residence.

Now Kirkaldie pays about $350 a month to repay her hospital debt. “We nonetheless stay paycheck to paycheck,” Kirkaldie stated.

Benefis Well being reported making $49.6 million greater than it spent in 2019. Of the $21.5 million it put towards group advantages, $1.4 million went to monetary help. In contrast, Bozeman Deaconess Hospital, a smaller hospital, spent $4.8 million on its monetary help.

Nonetheless, Benefis spends extra on group advantages than it will get in tax breaks, spokesperson Kaci Husted stated. The most important chunk, in accordance with the IRS submitting, was practically $17 million the hospital absorbed to supply providers reminiscent of palliative care. The hospital additionally spent roughly $106,000 for well being skilled schooling.

Husted stated she couldn’t present particulars about Kirkaldie’s case however added that every one the hospital’s normal billing notices say sufferers can apply for monetary help. She stated its denial charge was low however didn’t present specifics. Husted attributed the hospital’s restricted monetary help to an absence of purposes. “Maybe, at instances, folks simply don’t need to undergo the work of finishing the applying,” Husted stated.

She stated a giant half of the hospital’s monetary help effort helps folks join public well being protection and that few want monetary help now that many sufferers qualify for Medicaid in consequence of the growth of the state’s program in 2016.

That doesn’t assist individuals who don’t qualify, like Kirkaldie.

What Counts as a Group Profit

Montana hospitals use native wants assessments to assist them resolve how you can spend their group profit cash.

Billings’ regional assessments discovered residents wanted higher entry to wholesome meals. Melissa Henderson, a supervisor for Healthy by Designs, a group well being coalition, stated Billings Clinic, St. Vincent Healthcare and the native well being division pay for its two full-time staff, who arrange a farmers market and advocate for creating bike paths, amongst different issues.

She stated it’s highly effective to have the world’s largest employers advocating for enhancements like bike lanes even when no cash is given.

“What I see is the hospitals are actually doing their finest to have an effect on their group,” Henderson stated.

Within the Billings Clinic tax paperwork that KHN examined, the hospital reported making $73.9 million above its working prices from July 2018 by means of June 2019. In that report, the hospital stated it doesn’t have the sources to deal with each group want, together with the shortage of transportation to well being care services. Nonetheless, it paid for rides to assist sufferers who in any other case struggled to get to appointments until 2018. It stopped after it as an alternative backed a profitable initiative to extend taxes to bolster native transportation applications, amongst different providers.

Mike Larson, govt director of Billings’ nonprofit Grownup Useful resource Alliance, stated he noticed the necessity for medical rides improve after the hospital stopped selecting up sufferers. Larson stated that his experience program for older adults had bother assembly demand, regardless of receiving some of the brand new tax proceeds, and that his greatest concern was whether or not the partnership with the town would have sufficient staffers and automobiles to maintain up.

Larson stated Billings Clinic’s enterprise mannequin causes it to behave like a for-profit. “They’re very cautious in phrases of how they strategy group help,” he stated.

The clinic’s transportation service was troublesome to supply, hospital spokesperson Zach Benoit stated, as a result of many sufferers wanted particular help reminiscent of mechanical raise techniques to place wheelchairs right into a automobile. The hospital is contemplating getting an ambulance, however Benoit stated that might be expensive and require particular staffing.

JJ Carmody, Billings Clinic’s director of reimbursement, stated the well being system spent greater than $36 million in 2019 on group advantages, together with $12.7 million on monetary help and $3.6 million on applications to coach well being professionals.

“That’s important, and I additionally consider that’s truthful,” Carmody stated. “That’s a big portion of our revenue that’s devoted to group profit.”

In 2019, Billings Clinic paid its then-CEO Dr. Randall Gibb greater than $1.2 million, in accordance with the tax submitting.

‘Very Little Motivation to Change’

Hospitals, business watchdogs and policymakers alike debate what ought to rely as a charitable profit. And when questioned, hospitals usually level to completely different classes that change the image of how they carry out.

St. Peter’s Well being reported spending $3.1 million on group advantages from July 2018 by means of June 2019. That’s in contrast with the estimated $10 million it obtained in tax exemptions in 2016, in accordance with a state audit offered to lawmakers final 12 months.

Nate Coburn, the hospital’s chief monetary officer, stated advantages could be a lot greater if the hospital counted providers that deliver in much less cash than they price, reminiscent of working a behavioral well being unit. The hospital used to rely them: A 2016 tax doc reveals it spent greater than $16 million on group advantages. Coburn stated St. Peter’s is contemplating correcting its kinds so as to add these numbers.

St. Peter’s Well being in Helena, Montana, is one of the state’s nonprofit hospitals which have fallen behind the nationwide common in self-reported charitable giving. Nonprofit hospitals are required to contribute “group advantages” as half of their tax-exempt standing.(Matt Volz / KHN)

Montana leaders have identified hospitals have a transparency drawback. The state audit estimated hospitals mixed had $146 million in tax exemptions in 2016. That’s cash that didn’t go towards native tax bases that assist fund colleges and restore roads.

In trade, the audit stated, hospitals reported spending $257 million on group advantages. However that quantity got here with an enormous caveat: The audit discovered hospitals report advantages vaguely and inconsistently, making it onerous to find out if they will justify their charity standing.

Opaque hospital filings are a problem nationwide. Some states have created minimal group profit requirements, with Oregon among the latest. There, well being techniques depend on a method that units a minimal for a way a lot charity care hospitals give. However such onerous strains are uncommon.

“There’s actually no enforcement, with little or no motivation to alter issues,” stated Dr. Vikas Saini, president of the Lown Institute well being care assume tank in Massachusetts.

Rich Rasmussen, president of the Montana Hospital Affiliation, stated hospitals are working together with his group to provide you with extra constant methods to rely advantages and plan to share these outcomes on-line subsequent 12 months. However, he added, tax experiences don’t seize all the pieces hospitals supply.

“We now have hospitals which might be nonetheless exhibiting unimaginable outcomes in their high quality, and that’s a profit to the group,” Rasmussen stated. “If we will keep away from someone being readmitted, if we will be certain that someone could be discharged residence, these are items which you can inform in the narrative of what you’re doing exterior of what you may fill out.”

However hospital pricing specialists, together with Anderson, stated the tax experiences can paint hospitals in too good a light-weight for carrying out targets any enterprise ought to have. One instance, Anderson stated, is counting the fee of employees coaching as a group profit.

“Walmart trains their staff, for-profit hospitals practice their staff, so it is mindless to me why a nonprofit hospital ought to have the ability to name this ‘group profit,’” Anderson stated.

Montana policymakers have voiced frustration, doubting whether or not all hospitals pay their justifiable share. However little has modified.

The state audit really helpful that lawmakers outline how hospitals report their spending, however no such legal guidelines made it out of the legislative session this 12 months. A bill proposed by Republican state Sen. Bob Keenan would have required the state’s largest hospitals to collectively hand over $4.3 million for the state to resolve the way it’s spent on group advantages. Hospital lobbyists known as the transfer a “sick tax” and argued it was the unsuitable time to burden the techniques preventing the pandemic. The invoice died in committee.

Many of Montana’s massive hospitals did nicely financially after the state’s growth of Medicaid, which now supplies closely backed medical health insurance to about 1 in 10 Montanans. And whereas hospitals have been strained whereas caring for covid sufferers, they’ve additionally obtained hundreds of thousands of {dollars} in federal aid. Nationally, many wealthy hospitals got richer during the pandemic.

The audit really helpful the Montana Division of Public Well being and Human Providers outline charity care and create a evaluation course of to make sure hospital insurance policies match business requirements. Division spokesperson Jon Ebelt stated that the pandemic delayed that work however that it plans to renew it in the approaching months.

Saini, of the Lown Institute, stated hospitals which might be placing lots towards group advantages have an curiosity in wanting extra transparency — however they’re too busy caring for sufferers to foyer for change. So holding hospitals accountable will probably have to come back from political strain, he stated.

“I don’t assume all of it’s simply this knowledge difficulty,” Saini stated. “There are some hospitals that do extra, full cease.”


Hospitals need to report how a lot they spend to assist their communities. However hospitals, business watchdogs and politicians debate how helpful the knowledge is and what spending ought to rely as group help.

Nonprofits should report monetary data to the IRS annually utilizing Kind 990. For hospitals, that type features a part on group profit spending the place they report the quantity they spent on monetary help for sufferers with low incomes by means of decreased or waived payments, broader efforts to enhance group well being, coaching and schooling for medical professionals, and analysis.

For this story, KHN collected these experiences for hospitals throughout Montana and located the general common that hospitals spent on group advantages as a share of their complete bills after which checked out hospitals whose spending was beneath common. This story relied on monetary paperwork ending in 2019 to supply a snapshot of every hospital’s monetary image earlier than the pandemic. Some hospitals’ paperwork cowl completely different time intervals — some experiences are from July by means of June, whereas others are from January by means of December.

You will discover the documents for the largest hospitals here.

Katheryn Houghton: [email protected], @K_Hought