Poster #83 - Oregon’s Community Benefit Spending Floor: How Are Non-Profit Hospitals Responding?

• In Event: Saturday Poster Luncheon

Abstract

Objective:
This study examines how nonprofit (NP) hospitals in Oregon adjusted their community benefit (CB) spending in response to minimum spending floor legislation. Oregon House Bill 3076, passed in 2019, required Oregon’s nonprofit hospitals to meet hospital-specific minimum CB spending floors starting in 2022. We compare CB provision before (2010–2019) and after (2022–2023) the implementation of the policy to evaluate both spending levels and allocation patterns.

Methods:
This study utilized Oregon’s CB dataset, which includes hospital-reported spending from 2010 to 2023 across 10 CB categories for the state’s 58 NP hospitals. Random effects regression models were applied to assess pre- and post-policy differences, incorporating hospital-level controls for type (based on size, geography, and Medicare reimbursement method), critical access designation, operating expenses, and patient revenue. 

Results:
Oregon’s minimum spending floor policy was associated with an overall increase in CB spending as a percentage of operating expenses (+1.88%; p=0.003). The largest growth occurred in unreimbursed care categories (+2.07%; p=0.001), driven by increases in subsidized health services (+1.42%; p=0.001), Medicaid shortfall (+0.98%; p=0.004), and other public programs (+0.29%; p=0.001). However, spending on direct community investment categories remained flat or declined. There was no significant change in overall direct CB spending (–0.77%; p=0.504), and community building activities declined significantly (–0.09%; p=0.013). These results suggest that hospitals fulfilled the spending floor requirements through shortfall from public insurance programs rather than proactive community-targeted investments.

Policy Recommendation:
To strengthen the impact of Oregon’s policy, we propose revising HB 3076 to establish category-specific minimums and caps. At least 25% of CB spending should go to charity care, at least 25% to direct community investments, and no more than 50% to Medicaid shortfall, subsidized health services and other public programs. These thresholds should be adjusted by hospital type to account for differences in size and capacity. This approach would ensure Oregon’s nonprofit hospitals deliver measurable value in return for their tax-exempt status.

Policy Impact:
To assess the implications of this proposal, we evaluated four hypothetical threshold-based scenarios and their effect on hospital compliance with the minimum spending floor. In Scenario A, which required at least 25% of CB spending to go toward charity care, 43% of hospitals would have met the floor in 2022 and 30% in 2023. In Scenario B, which capped unreimbursed care at 50% of total CB spending, compliance dropped to 16% in 2022 and 13% in 2023. In Scenario C, requiring at least 25% of spending on direct community investments, only 23% of hospitals met the threshold in 2022 and 30% in 2023. These findings indicate that hospitals are most likely to meet a charity care minimum, but face greater difficulty complying when limits are placed on unreimbursed care. This underscores the extent to which hospitals rely on Medicaid shortfall and similar categories to meet their community benefit obligations.

Author

• Danielle Bargo, Johns Hopkins University
  Presenting Author