Maryland hospitals spend billions on ‘community benefits.’ Lawmakers want more oversight.

Maryland hospitals spend more than $2 billion a year to help low-income patients pay their bills and others living in their communities get health screenings, drug treatment and nutritious food.

At least that’s what they say in their reports about their “community benefits.”

The spending on these benefits is required of nonprofit hospitals in Maryland and around the country in exchange for state and federal tax breaks. But advocates and researchers increasingly find there are few checks and balances on how hospitals dole out these massive sums.

“The hospitals are kind of all over the map, and I don’t think there’s a lot of accountability,” said Marceline White, executive director of the advocacy group Economic Action Maryland. “It’s all hard to track and analyze.”

Hospitals, for their part, disagree, saying they “exist to care for their communities” and the state has an effective process for reporting on their substantial investments.

Still, state lawmakers argue there needs to be new legislation to add more consistent definitions and oversight of community benefits, which include an array of spending on health-related programs in their ZIP codes and financial aid commonly called charity care.

Del. Dana Jones, an Anne Arundel County Democrat and a bill sponsor, said Maryland does better than many states, with more extensive reporting requirements and higher spending.

But hospitals are largely left to decide for themselves how much to spend, what to spend it on and how to assess the impact.

In lengthy narrative reports to the state, hospitals describe their programs to boost breast cancer screenings for Hispanic women, reduce cesarean section rates for Black women and increase access to primary care for people with hypertension, diabetes and obesity.

They promoted community health and wellness events including a 5K run and made direct financial contributions to community groups.

Jones believes they need to do more.

“As Marylanders struggle to make ends meet and the cost of health care continues to soar, it is vital that we are maximizing services and supports that our most vulnerable Marylanders should have access to,” she said. “The transparency and clarity in this bill is designed to do just that.”

She and others said it’s not a reflection of the doctors and other medical and hospital staff who often take extensive steps to care for patients inside and outside their walls.

Several studies have found Maryland outperforms the nation when looking at how much hospitals spend compared with how much they receive in tax breaks. In Maryland, more than 80% of hospitals meet that threshold, compared with a national rate of about 50%.

The proposed state legislation would require all hospitals in Maryland to spend at least as much as they get in tax breaks and file more uniform reports. If they don’t, they could lose their tax-exempt status.

There is no enforcement mechanism now. Once when state regulators discovered hospitals were overcharging poor patients entitled to free or discounted care, violating the community benefit obligations, lawmakers had to step in to require them to repay the money, an effort that ultimately failed.

Hospitals say they are making large investments.

“Each year, our hospitals are proud to invest about $2.3 billion in community benefit programs that support access to healthy food, safe housing, education, and other critical needs across our state,” the Maryland Hospital Association said in a statement.

Jane Krienke, an assistant vice president for the group, opposed the legislation during a General Assembly hearing Wednesday because she said the existing process is “effective and transparent” and tied to assessments hospitals conduct in the community. She said proposed changes are rigid and could jeopardize programming.

Those who have studied the benefits say there should be more emphasis on the programs’ effectiveness.

Among them is Hossein Zare, an associate research professor in the Johns Hopkins Department of Health Policy and Management, who said better coordination among hospitals, health departments and community groups could lead to broader impacts.

“We need literally everyone talking to each other,” he said.

“Without it, there is a lot of spending but not much health improvement; it’s the missing piece,” Zare said. ”Imagine spending $200 million a year on housing in Baltimore. It would really address a major problem.”

Those advocating new requirements for hospitals’ community benefit spending foresee a huge upside.

If every hospital spent as much in community benefits as it got in tax breaks, such spending would grow nationwide by at least $11.5 billion, according to an assessment of 20 states from 2020 to 2022 by the Lown Institute, a nonpartisan health care research group. In Maryland, the study found that change could yield an additional $82 million.

Peter J. Pitts, president of the Center for Medicine in the Public Interest, said Maryland’s proposed legislation is a good step to understanding how money is spent.

“This is public money, tax money, and the rules are just so vague when it comes to what charity care and community benefits means,” said Pitts, a former top official with the U.S. Food and Drug Administration. “Where are they spending money, and is it of value?”