The Virginia Hospital & Healthcare Association takes pride in publishing the annual Community Benefit Report. This publication is an important opportunity to highlight the substantial community contributions Virginia’s local hospitals and health systems make each day. These contributions include essential health services to support community well-being, free care provided to patients without insurance, and many other programs that support health care access and promote quality of life for citizens throughout the Commonwealth.
That community benefit support includes financial assistance, Medicaid losses, subsidized health services provided, and community programs supported by Virginia hospitals. Community benefit, as defined by the IRS, totaled $1.53 billion in 2016. With other forms of community support including Medicare losses, taxes paid, and bad debt expenses absorbed by Virginia hospitals, the total benefit to Virginia communities in 2016 was more than $3.25 billion.
Local hospitals and health systems are economic cornerstones in their communities. They employ nearly 126,000 people, generate roughly $40 billion in economic activity, and support local businesses and vendors, according to 2015 data. Yet those benefits are imperiled. Data on 2016 hospital operating margins from Virginia Health Information (VHI) shows that 23 percent of Virginia’s acute care hospitals, and 40 percent of rural acute care hospitals, had negative operating margins in 2016. Those numbers aren’t a one-year anomaly. From 2008-2016, the annual rate of Virginia acute care hospitals with negative operating margins has ranged from 38 percent to 23 percent. Among rural acute care hospitals, the range is 63 percent to 40 percent. Two rural Virginia hospitals have closed since 2013. Mean-while, as this report illustrates, funding cuts from the Affordable Care Act continue to grow, as does the strain of uncompensated care. From 2015-2016, the Medicare shortfall hospitals face — the shortfall is the difference between Medicare reimbursements and actual costs — rose from $668 million to $909 million. That is a 36 percent increase in one year.
Despite such challenges, which can negatively impact health care access and the economy, Virginia hospitals remain committed to serving community medical needs and providing quality care. In 2016, Virginia was rated a top 10 state for health care quality by the federal government, and dozens of community hospitals across the Commonwealth were recognized by respected rating agencies for delivering high-quality care and achieving patient experience excellence. Virginia hospitals treat the uninsured, under-insured, those with commercial insurance, and other patients regardless of ability to pay. Hospitals support free clinics, mobile treatment programs, and free health screenings. They provide prescription drug assistance, transportation, and many other programs and initiatives beneficial to the community. Hospitals provide substantial subsidies to clinical services such as trauma centers and neonatal units. And they support the education of future nurses, doctors, and other health care providers. These are just some of the reasons it is vitally important to find long-term policy solutions that protect health care access for the good of all Virginians.