The four hospitals that make up St. Charles Health System spent about $5 million less on community benefits that include subsidized health services, charity care and coverage of unreimbursed medicaid costs in 2023, according to data provided by the Oregon Health Authority.

The health system is not the only one in the state that spent less. Oregon hospitals and health systems reduced their spending on charity care for low-income patients, free health screenings, vaccine clinics and other “community benefit activities” in 2023, the first decline in nearly a decade.

In 2023, St. Charles Redmond, Bend, Prineville and Madras hospitals community benefit spent $79 million on unreimbursed Medicaid costs, $311,000 on community building and $10.4 million on charity care, according to the data.

By comparison, in 2022 the four St. Charles hospitals spent $78.2 million on unreimbursed Medicaid costs, $317,000 on community building and $13.2 million on charity care, according to the data.

The hospital is reporting a lower community benefit investment because of a 2019 change in the way the health systems can report the loss of revenue from Medicare and Medicaid patients, said Kayley Mendenhall, St. Charles Health System vice president of strategic communications.

“Both programs reimburse less than the cost of providing care,” Mendenhall said. “After 2019, regulations changed and the loss from Medicare could no longer be reported. That is why you see the difference in the years.”

St. Charles Health System’s community benefit numbers decreased from 2022 to 2023 in part because of limited increases to Medicaid reimbursements and fewer patients utilizing programs with eligibility that is based on an individual’s or family’s income, Mendenhall said.

In the coming 2024 community benefit report, the health system anticipates that the amount spent to benefit the community would exceed 2022 numbers, she said.

“As a local, nonprofit health system, St. Charles is dedicated to being a good community partner and gives back in many ways,” Mendenhall said. “We supported more than 60 different nonprofit organizations through financial donations in 2024 and exceeded our community benefit spending floor that is set by the state by more than $15 million in 2023.”

Statewide, according to data reported by the Oregon Health Authority, total community benefit spending in Oregon fell to $2 billion in 2023 — nearly $192 million less than in 2022, an 8.7% decline. Community benefit spending had been rising since 2015.

Oregon’s nonprofit hospitals, which make up nearly all of the state’s health systems, except for two that are for-profit, are required to provide these benefits to maintain their tax-exempt status.

Community services such as free or discounted medical care, health education, research and donations to community organizations are intended to improve public health and well-being.

The largest portion of community benefit spending — 80% or $1.6 billion in 2023 statewide — went toward unreimbursed care, including charity care, waived Medicaid shortfalls and subsidized health services.

Spending on charity care — free or discounted services for low-income patients — declined by 17.3% from its peak in 2020, despite a state law expanding eligibility in 2023. Hospitals statewide spent approximately $231 million on charity care in 2023.

The decline is in part because Medicaid temporarily boosted reimbursements to larger hospitals in 2023, reducing the need for subsidies and charity care for patients with little or no income. As a result, total community benefit spending dropped by $139 million in 2023, the state reported.

However, some experts argue that reported charity care figures have long been inflated due to the way hospitals calculate those costs.

“Historically, a lot of hospitals padded their bad debt and charity care numbers by comparing what they collected to their highly inflated charge master prices instead of actual costs,” said Eli Rushbank, director of policy for Dollar For, a Portland-based health care consumer advocacy nonprofit group. This, he said, made it appear as though some hospitals were providing significantly more charity care or absorbing more bad debt than others, when in reality, the differences often stemmed from price markups rather than the actual amount of free care provided.

The Hospital Association of Oregon noted that hospitals’ community benefit spending increased by 29% in the five years leading up to 2023. The hospital lobby group said this increase came “at a time when more than half of the state’s hospitals were operating in the red” because of rising costs and payments from health insurers that didn’t rise commensurately.

“Oregon’s hospitals remain committed to their communities, providing services and support beyond direct patient care,” Becky Hultberg, president and CEO of the Hospital Association of Oregon, said in a statement. “But these investments should not be a substitute for improved payment for care to improve health outcomes and make care accessible to those who need it most.”

Nonprofit hospitals are required to perform community benefit activities to maintain their tax-exempt status.

The state reported that direct spending on community programs such as health screenings, vaccine clinics and research also dropped to $400 million in 2023, a decline of about $40 million.

Most of Oregon’s nonprofit hospitals still exceeded their required minimum community benefit spending, set in state law, by an average of 40% in 2023. But this was down from 58% in 2022, the state reported.

Oregon began tracking hospital spending requirements in 2022, establishing individualized spending floors based on each hospital’s financial health and community needs. In 2023, 97.4% of tax-exempt hospitals met or exceeded these requirements — an improvement from 92% the previous year, the state reported.

“Hospitals are essential partners in ensuring that every person in Oregon has access to affordable, equitable health care,” Clare Pierce-Wrobel, the head of the Oregon Health Authority’s health policy and analytics division, said in a statement. “Their investments in programs like vaccine clinics, health education, and workforce training directly impact community well-being.”