Preliminary JLARC report shows hospital charity care vastly exceeds property tax benefit

July 28, 2022

The Washington State Joint Audit and Review Committee (JLARC)’s preliminary report on 2022 tax preferences highlight the extensive hospital contributions to charity care for their patients. JLARC determined that in 2019, public hospitals, private nonprofit hospitals and cancer clinics provided more than $336 million in charity care for patients, representing 99% of all Washington State charity care.

JLARC also compared the community benefits of nonprofit hospitals and cancer clinics to the value of the property tax exemption they receive, finding that the benefit to the state and community in terms of charity care provided alone is more than three times the value of the property tax exemption, not including other community benefits such as unreimbursed Medicaid.

JLARC staff acknowledged that there are additional community benefits provided by nonprofit hospitals in addition to charity care, such as covering the difference between the cost to provide health care services for patients using Medicaid and the Medicaid reimbursement, which is often only a portion of total cost. In 2019, the Medicaid cost shortfall taken on by Washington hospitals was estimated at $1.4 billion.

The preliminary report was presented to JLARC members on July 20 and will be presented to the Citizen Commission for the Evaluation of Tax Preferences on Aug. 2. WSHA plans to provide written comments and testimony at the Citizen Commission meeting on Sept. 8. JLARC staff will present the proposed final report to JLARC members on Nov. 30.

Raising awareness of insights from the JLARC report is key to building legislative and public understanding of health care finances, including the ongoing financial distress felt by hospitals across the state. We will continue our active work to improve the financial stability of the hospital system and encourage our members to share this information with your communities.


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