Decline due to temporary Medicaid payment boost, reduced charity care
SALEM, Ore. — Oregon hospitals and health systems spent 8.7% less on activities such as providing free or reduced-cost care, conducting health education and research, and donating to community groups during the 2023 fiscal year compared to the year before, according to a new Oregon Health Authority (OHA) data brief.
This marks the first time that annual hospital community benefit spending has declined since 2014. Collectively, the state’s hospitals spent a total of $2.0 billion — or $200 million less — on community benefit activities during 2023.
“Hospitals are essential partners in helping every person in Oregon access affordable, equitable health care,” said Clare Pierce-Wrobel, Director of OHA’s Health Policy and Analytics Division. “Among the many ways that hospitals contribute to this objective are investing in services and programs that improve the health and well-being for their local community, such as organizing vaccine clinics, supporting local organizations’ health programs and educating the next generation of health professionals.”
Nonprofit hospitals are required to perform community benefit activities to maintain their tax-exempt status. Just two Oregon hospitals — or about 3% of the state’s hospitals — are for-profit, while about 20% of U.S. hospitals are for-profit.
The vast majority of statewide hospital community benefit spending continues to be on unreimbursed care, or health care for which hospitals are not reimbursed enough to cover costs. This includes charity care, Medicaid unreimbursed costs and subsidized health services. In 2023, 80% of total hospital community benefit spending — $1.6 billion — was unreimbursed care. This category has gradually increased since 2019, when it was 75% of total community benefit spending.
Most of the recent community benefit spending decline — $139 million — is due to a temporary increase in Medicaid reimbursements for Oregon’s large hospitals during the 2023 calendar year. Medicaid payments returned to normal the following year.
Spending on charity care — free or discounted health care for low-income patients — has also declined statewide by 17.3% since its peak in 2020. In 2023, Oregon hospitals spent a total of $230.9 million on charity care. This shrinkage has occurred despite a new law that expanded charity care eligibility starting in 2020.
Hospitals also decreased their direct spending on community benefit activities such as organizing community health screenings and vaccine clinics, conducting health research and making donations to community groups, among other activities. Oregon hospitals had $400 million of direct spending — or $40 million less — in 2023. The largest portion of direct spending is educating health professionals, on which hospitals spent $269.4 million in 2023.
At the same time, tax-exempt hospitals collectively exceeded their total minimum community benefit spending floor by 39.8% in 2023. In comparison, they exceeded minimum spending floors by 58.3% in fiscal year 2022.
This is the second year that OHA has tracked whether tax-exempt hospitals are meeting their unique minimum community benefit spending target, each of which is based on revenues, expenditures, financial health and population needs. The first spending floors were established for fiscal year 2022. While a handful of other states also have minimum community benefit spending levels, Oregon was the first to create a specific, individualized spending floor for each hospital.
In 2023, 97.4% of Oregon’s tax-exempt hospitals or health systems met or exceeded their minimum community benefit spending floors. That’s more than the year before, when 92% met or exceeded their spending floor.
More information about 2023 hospital community benefit spending is available in OHA’s data brief, which summarizes more detailed information that is also available in an interactive dashboard.
