Minnesota hospitals' spending on community health at risk

Minnesota hospitals sharply increased their spending in 2016 on health fairs and other community services that identify and prevent diseases, according to a report released Wednesday, but federal policy changes could make that tough to maintain.

Contributions to "targeted community services" rose from $354 million in 2011 to $567 million in 2016, partly because the federal Affordable Care Act (ACA) required hospitals, as of 2012, to assess and address local health problems.

Fairview Health funded training of mental health crisis volunteers, for example, while Granite Falls Health supported a community paramedic program to help people avoid costly emergency room visits.

"Our members have taken on more of a population health mission," said Lawrence Massa, president of the Minnesota Hospital Association, which published the report.

Spending on community health events was part of a broader $4.9 billion in benefits that the association attributed to its hospitals in 2016, a sum that included $205 million in charitable care to low-income patients and $374 million in bad debt write-offs.

Bad debt has declined since 2014, the first year the ACA mandated that all Americans carry health insurance. That helped Minnesota hospitals raise their community benefit spending, Massa said, but it could go away because the mandate goes away in 2019.

President Donald Trump and Republican lawmakers eliminated the mandate late last year in their massive tax bill, arguing that it was intrusive and increased costs on individuals and small businesses. The change is projected to increase the number of uninsured Americans, though, which could create new charity care costs that force hospitals to cut spending elsewhere.

A study in the journal Health Affairs this month found that hospitals with higher charity care amounts tend to spend less on community health programs. So an increase in uninsured patients might create "financial pressures" for hospitals to spend even less on them, said Gary Young, the study's lead author and a health policy researcher at Northeastern University in Boston.

"It perpetuates this unfortunate cycle, because these are areas where you'd like to see more community investments to keep people well," he said.

The ACA created an incentive toward community spending by tying hospitals' tax-exempt status to their ability to identify and address health needs in their communities.

The impact hasn't been significant so far, according to Young's study. Hospitals in the United States as of 2014 were committing less than 1 percent of their operating expenses to community health programs.

"Hospital CEOs will say, 'This is not what we're getting paid to do,' " Young said. "We gotta meet payroll. We get paid largely for treating people" rather than preventing illness.

Massa agreed that a resurgence in uninsured patients could affect community benefit spending, but he said he remains confident that Minnesota hospital leaders see the benefits of these investments.

"There's also been a move to more value-based kinds of payments" from health insurance companies, he said, "so you're rewarded for keeping people out of the hospital."

Jeremy Olson • 612-673-7