The Gap in Care: Why Minnesota’s Nonprofit Hospitals Are Falling Short on Charity Aid
For many patients, a diagnosis of a serious illness is stressful enough. But for those in Minnesota, the financial aftermath of treatment can be just as devastating. A recent collaborative investigation by KFF Health News and the Minnesota Star Tribune has revealed a troubling trend: Minnesota’s hospitals and health systems are among the least charitable in the United States, providing significantly less financial aid as a percentage of their operating budgets than hospitals in nearly every other state.
While many of these institutions operate as nonprofits—receiving millions of dollars in federal, state, and local tax breaks—the investigation suggests that these benefits are not always trickling down to the patients who need them most.
The Human Toll of Medical Debt
The systemic failure of charity care programs is best illustrated by the experience of Cori Roberts of St. Cloud, Minnesota. After being diagnosed with early-stage cervical cancer, Roberts was hit with more than $8,000 in medical bills despite having insurance. At the time, she was working a human resources job earning approximately $41,000 a year.
When Roberts sought financial assistance from CentraCare, the St. Cloud-based health system that treated her, she was told she earned too much to qualify for aid. For two years, Roberts scrimped on basic necessities, including groceries and gifts for her children, to pay off more than $6,000 of the debt. Despite these efforts, CentraCare sued her last year over the remaining balance. Roberts eventually resolved the lawsuit only after taking out a loan against her retirement plan.
“They’re supposed to be a nonprofit,” Roberts said. “It’s like, ‘Come on!'”
A Stark Contrast in Spending
The disparity between Minnesota’s hospitals and national trends is significant. According to federal hospital data compiled by Hossein Zare, a researcher at Johns Hopkins University, hospitals nationwide spend an average of about 2.4% of their operating budgets on charity care. In contrast, Minnesota hospitals spend roughly a third of that average.
The investigation found a widespread lack of financial commitment to patient aid across the state:
- Widespread Underfunding: Of Minnesota’s 123 general hospitals, 62 devoted less than 0.5% of their operating budgets to charity care between 2020 and 2024.
- The CentraCare Example: CentraCare’s flagship St. Cloud Hospital spent less than 0.25% on charity care. This equates to just $25 in patient aid for every $10,000 spent on hospital operations.
Barriers to Access: The “Burdensome” Application
Even for patients who might qualify for aid, the process of obtaining it is often designed to discourage applicants. The investigation highlighted inconsistent eligibility standards and exhaustive application requirements.
Inconsistent Eligibility
Because Minnesota lacks standardized criteria for charity care, the “poverty line” for aid varies wildly between institutions. Some hospitals provide free care to patients with annual household incomes up to $47,000, while others cap eligibility at approximately $15,000.
Intrusive Documentation
Most Minnesota hospitals require more than just income verification. More than two-thirds demand detailed information on assets, including:
- Bank statements and retirement accounts.
- Life insurance policies.
- The value of vehicles, homes, and even livestock or farm equipment.
At Hendricks Community Hospital, the application includes 53 questions regarding finances, including the make, model, and value of vehicles. Jared Walker, founder of the nonprofit Dollar For, notes that hospitals have “optimized to get payment,” making it simple to set up a credit card or payment plan while creating high “drop-off rates” for financial aid applications due to the excessive documentation required.
The Nonprofit Paradox: Tax Breaks vs. Community Benefit
The debate over hospital charity care centers on the trade-off between tax exemptions and community service. Minnesota Attorney General Keith Ellison argues that hospitals have a duty to increase aid in exchange for the tax breaks they receive. “There is a benefit you get from being a nonprofit hospital in the state of Minnesota,” Ellison stated. “But do the people get the benefit?”
Hospital executives, however, point to other forms of community contribution and financial pressures:
- Operational Strain: Tim Nelson, spokesperson for the Minnesota Hospital Association, stated that the need is “simply too great” for hospitals to fully meet the needs of the uninsured or underinsured.
- Rural Challenges: Robert Pastor, CEO of Rainy Lake Medical Center, highlighted that rural hospitals operate on “razor-thin margins” while facing escalating labor and supply costs.
- Alternative Benefits: Other leaders argue they serve the community by training medical staff and maintaining money-losing but essential services, such as mental health care and obstetrics.
Key Takeaways
- Low Spending: Minnesota hospitals spend about one-third of the national average (2.4%) of their budgets on charity care.
- Limited Access: Over half of the state’s general hospitals spend less than 0.5% of their budget on patient aid.
- High Barriers: Intrusive applications requiring asset valuations (cars, livestock) discourage patients from seeking help.
- Lack of Standards: Eligibility caps vary drastically, from $15,000 to $47,000, depending on the facility.
Frequently Asked Questions
What is charity care?
Charity care is financial assistance provided by hospitals to patients who cannot afford their medical bills. Nonprofit hospitals are generally obligated to provide this care in exchange for their tax-exempt status.
Why are some people denied charity care even if they have insurance?
As deductibles and copays rise, many “underinsured” patients cannot afford their out-of-pocket costs. However, some hospitals set income caps so low that patients earning modest wages—such as the $41,000 earned by Cori Roberts—are deemed ineligible.
How can patients apply for financial aid?
Patients can request a financial assistance application from their hospital’s billing department. However, be prepared to provide extensive documentation, including tax returns, W-2s, and bank statements.
As the nation’s uninsured rate ticks upward and Medicaid programs face potential budget cuts, the role of charity care is becoming increasingly critical. For the residents of Minnesota, the gap between the “nonprofit” label and the reality of patient aid remains a significant hurdle to healthcare affordability.