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Medical bills can be crippling. Mayo Clinic's charity care? Arguably lacking

Every nonprofit hospital, including Mayo, is required to provide free or discounted care, also known as "charity care," to maintain its nonprofit status with the IRS and reap the benefits of tax exemption. Experts say that financially strong nonprofit hospitals need to be doing more to make it a fair exchange.

Megan Bass
“It’s not the most responsible thing to do, but I would hide my mail because I was too scared to look at it,” said Megan Bass, a New Prague patient who received a $3,110 bill after surgery at Mayo Clinic. “I avoided my problems until the collection notice arrived.” Little did she know but Bass qualified for free care, also known as "charity care" or "financial assistance."
Traci Westcott / Post Bulletin
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ROCHESTER — The bills from Mayo Clinic were piling up, and Megan Bass felt hopeless.

Bass visited Mayo Clinic in October 2021 to get a medical device inserted to resolve her chronic bladder issues. After the surgery, she received a $3,110 bill. Just the cost of meeting her $3,000 health insurance deductible would deplete her savings.

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“It’s not the most responsible thing to do, but I would hide my mail because I was too scared to look at it,” said Bass, 22, who works two jobs, as a school paraprofessional and a Kwik Trip cashier in New Prague, Minnesota. “I avoided my problems until the collection notice arrived.”

Fortunately, as she scrolled through TikTok one day she discovered charity care.

Every nonprofit hospital, including Mayo Clinic, is required by the Affordable Care Act to establish free or discounted care policies, known as “charity care” or “financial assistance,” for eligible, often low-income patients in order to maintain and justify the hospital's tax-exempt status.

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With support from Dollar For , a nonprofit that works with patients to relieve medical debt, Bass applied for charity care through Mayo Clinic and was approved. However, only half of her bill was covered, so Bass submitted an appeal and awaits Mayo Clinic’s decision. Mayo Clinic responded that it cannot comment on an appeal in process.

“It would be incredible if it was completely covered,” Bass said. “It would be a big lift off my shoulders.”


Few patients know charity care exists. When they do, few complete the application. Learn more


Ge Bai, an accounting and health policy professor who researches charity care at Johns Hopkins University, said what hospitals currently allocate each year toward charity care is insufficient, especially considering the tax subsidies nonprofit hospitals enjoy, and the prevalence of medical debt.

This is true for Mayo Clinic, where charity care spending, Bai noted, is on the “lower end” compared to other nonprofit hospitals.

U.S. News & World Report , which has ranked Mayo Clinic as the top hospital in the U.S. seven years in a row, described Mayo Clinic’s charity care contributions as “significantly lower than other hospitals” in its 2022 rankings.

In 2021, Mayo Clinic spent 0.34% of its expenses on charity care. That percentage is a standard way of measuring how much free care hospitals provide . By this measurement, Mayo Clinic spent less as a percentage on charity care in 2021 than Olmsted Medical Center. In fact, every hospital with available data in the top 10 of U.S. News’ rankings, with the exception of Stanford Hospital, ranked above Mayo Clinic for charity care.

Bai said Mayo Clinic is probably not a “bad actor” like the hospital exposed in a recent charity care investigation by the New York Times . It’s also not alone in its insufficient spending. In recent years, none of the nonprofit hospitals ranked in the top 10 nor any in southeastern Minnesota meets the national average of 2.3%, according to Bai’s 2021 research report . Bai said a quarter of nonprofit hospitals spend less than 0.7%.

“Taxpayers are putting their faith in nonprofit hospitals and subsidizing them with the expectation that they’re benefiting the community and helping vulnerable patients avoid medical debt,” Bai said. “Financially strong nonprofit hospitals need to be doing more to make it a fair exchange.”

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Insufficient contributions

Until 2021, Mayo Clinic was contributing almost twice as large a portion of its expenses on charity care — between 0.6% and 0.8% since 2015.

In 2021, Mayo Clinic spent $49 million on charity care, $40 million less than in 2020, and less than every year for the past 15 years. This drop came despite the fact that its 1.4 million patient volume was consistent with the previous year and its revenue grew by $1.8 billion.

Kelley Luckstein, Mayo Clinic spokeswoman, said the “significant reduction” in 2021 was due to a decreased need for charity care since more patients were covered by Medicaid and recipients of financial assistance through national COVID-19 pandemic relief measures. The Post Bulletin asked for data to determine if fewer people applied for charity care in 2021 compared to 2020, but Mayo Clinic declined to respond, saying it couldn’t get into that level of detail.

“Mayo Clinic is committed to providing high-quality, high-value care for all its patients, and to ensuring that financial considerations are not an obstacle between patients and the care they need,” Luckstein said.

Bai called it a “red flag” that Mayo Clinic decreased its charity care spending at such a rapid pace given the fact that more people struggled financially during the pandemic and Mayo Clinic had more financial leverage with $15.7 billion in revenue — a 13% growth in revenue from 2020. Although most of the top 10 hospitals with available data spent less in 2021 than in 2020, Mayo Clinic showed the sharpest decrease.

Minnesota Hospital Association said that it didn't have complete 2021 data, but that its member hospitals collectively increased charity care spending by 7% from 2019 to 2020. Meanwhile, Mayo Clinic, which is not a member of MHA, decreased its spending by 8%, or $7 million.

While Luckstein said Mayo Clinic’s spending will likely return to pre-pandemic levels this year, Bai said that’s still not enough.

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All financially-strong nonprofit hospitals, not just Mayo Clinic, should be spending more and making charity care more accessible, Bai said. They should be spreading awareness, providing application support and expanding eligibility criteria. Few patients know about charity care now, and those who do know struggle because of the burdensome application process.

Ruth Lande, vice president of hospital relations at RIP Medical Debt, agreed that what hospitals spend is insufficient, but she said it’s unfair to expect hospital charity care to solve a broken medical financial system.

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Ruth Lande, vice president of hospital relations at RIP Medical Debt, a national organization that works to alleviate medical debt.
Contributed / Ruth Lande

“I think hospitals are unfairly blamed for contributing to medical debt,” said Lande, whose organization works to alleviate medical debt. “Financial assistance is one aspect, but it’s a multifaceted issue. We need to advocate for a new system where people don’t have high deductible plans and where people have affordable health insurance that actually covers everything.”

Erica Dowden, patient advocate lead with Dollar For, said that while she agrees that medical debt is a systemic issue, she doesn't want to cut hospitals the same slack.

“These nonprofit hospitals receive billions of dollars in tax breaks and are supposed to be a benefit to the community,” Dowden said. “But when you have patients who are thousands of dollars in debt after going to your facility, and they can’t pay it, and they can’t afford to go back for more services because of debt owed, you are no longer a benefit to the community.”

Community benefit

“Community benefit” is an Internal Revenue Service standard for all nonprofit hospitals. Mayo Clinic meets this standard in a number of ways besides charity care, such as advancing medical education and operating an emergency room open to all regardless of ability to pay, but Bai said that charity care spending is the only quantifiable factor that the IRS uses to determine if the community benefit standard is being met.

The IRS does not specify a minimum amount that hospitals need to spend towards charity care to maintain their nonprofit status, but Bai said nonprofit hospitals, at a minimum, should contribute to the community at a dollar amount equal to the taxpayer subsidy.

Many nonprofit hospitals miss the mark.

According to the Lown Institute, a nonpartisan think tank that recently published its 2022 hospital fair share spending rankings , 83% of hospital systems evaluated spent less on charity care and community investment than the estimated value of their tax breaks — what Lown Institute calls a “fair share deficit.” Mayo Clinic’s fair share deficit is $328 million, the 11th worst in the country.

Mayo Clinic disagrees with Lown Institute’s methodology, which does not account for the research and education missions of academic medical centers such as Mayo, and omits other categories of community investment and assistance.

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Ge Bai, an accounting and health policy professor at Johns Hopkins University, who published research reports on charity care in 2021 and 2022.
Contributed / Ge Bai

“Charity care is just one of many ways Mayo contributes to patients and communities we serve," said Justin Furst, a Mayo Clinic spokesman. “In 2021, we provided more than $601 million in unpaid portions of Medicaid and indigent care. We contributed over $11 million in 2021 in the communities we serve to support hundreds of nonprofit organizations, address health needs and assist those in need. In 2020, Mayo committed to spending $100 million within 10 years to end racism, address health disparities, and advance equity and inclusion, and that work continues.”

While Mayo Clinic and other nonprofit hospitals may tout other public benefit spending as proof that they are meeting the “community benefit standard,” Bai said these amounts should not be lumped in with charity care and that charity care alone is the most important factor in determining whether a hospital is fulfilling its obligation to give back to the vulnerable in the community.

“Charity care spending is the most direct reflection of a nonprofit hospital’s charitable actions,” Bai said.

In fact, Bai's research found nonprofit hospitals, on average, direct a smaller percentage of their expenses towards charity care than for-profit hospitals do, even though for-profit hospitals do not receive favorable tax benefits. She said this is a sign that high-revenue nonprofit hospitals, like Mayo Clinic, could and should be spending more.

“Nonprofit hospitals are always balancing between their financial objectives and their social objectives,” Bai said, “but in many cases, they prioritize their financial goals.”

Impact of medical debt

The impact of medical debt and unpaid medical bills can have long-term health and financial consequences.

First, unpaid medical bills can force patients – many of whom are already triaging other bills – to forgo basic necessities such as rent, heat and food, said Anna Odegaard, director of Minnesota Asset Building Coalition, a state-wide nonprofit coalition committed to offering asset building opportunities to low-income Minnesotans.

In the long term, medical debt can affect credit scores, economic stability and mobility, she said, sometimes leading patients to file for bankruptcy.

“Unlike other forms of debt, medical debt is almost always unchosen and many people struggle for years to pay off debts incurred during a medical crisis,” Odegaard said.

Second, medical debt itself may affect health outcomes, according to a research report by the Sycamore Institute, which found that people with unpaid medical bills are more likely to have higher blood pressure, poorer mental health and shorter life expectancy.

Odegaard said medical debt can also cause patients to delay care or skip prescribed medicine due to worries that they could incur additional debt or that providers will refuse service due to unpaid bills.

“Patients may even end up sicker or not get the care that they need because of that debt,” she said.

Part of the solution

After falling out of her bed one morning, Brittany Leary’s knee swelled to four times its normal size. Leary, a child care provider at the Wisconsin Falls YMCA, headed to her local hospital, Aspirus Riverview in Wisconsin Rapids, Wisconsin, and was diagnosed with a torn meniscus.

A few weeks later, the hospital served her with a lab work and MRI bill for $3,340. Her health insurance deductible was $6,500, so she was expected to pay the full cost out of pocket.

Leary and her boyfriend had been saving to buy a house, and she was planning to go back to school to get her bachelor’s degree, but her hospital put her on a $700 per month payment plan — more than her rent payment. Once the bill arrived, she said, she saw her dreams start to fade.

“With that payment plan, a house or school wouldn’t be an option,” Leary said. “It would mean not even being able to go out for a night at a restaurant. It would literally be all the money that I had.”

Unaffordable bills like the ones Leary and Bass received are often unavoidable, and hospital charity care is one of the few options available to alleviate the impact of high medical costs.

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Brittany Leary, 27, applied for charity care after receiving an unaffordable MRI bill for her torn meniscus.
Contributed / Brittany Leary

Caitlin Donovan, senior director at the Patient Advocate Foundation, said it is especially important given the current landscape of medical debt.

The Kaiser Family Foundation reported in 2022 that four in 10 adults in the U.S. have some form of health care debt. In Minnesota, nearly 750,000 adult residents, or 17%, have medical bills in collection, according to the 2018 U.S. Financial Capability Study.

Donovan, whose nonprofit provides free case management to anyone diagnosed with a serious or chronic health condition, said that although charity care alone won’t solve medical debt, it’s a crucial component.

“Every hospital should expand its charity care program," said Donovan. “You can go to a hospital for four hours and come out with a $40,000 bill. It’s life-changing and there's no protection against that. Charity care offers some relief.”

This was true for Leary, who, with help from Dollar For, applied for and received hospital financial assistance to cover her bill in full.

“It meant the world to me,” Leary said. “I had all these things planned that I didn’t think I could do anymore and once I was approved, I got hope back. I was like, OK, I can do this.”

Megan Bass
Megan Bass on Monday, Sept. 26, 2022, in New Prague.
Traci Westcott / Post Bulletin

With reporting assistance by Jeff Kiger, business reporter and columnist for the Post Bulletin.

Related Topics: ROCHESTERMAYO CLINIC
Molly Castle Work is an award-winning investigative journalist. She has investigated a range of topics such as OSHA and worker safety during COVID-19, racially-disproportionate juries and white-owned newspapers' role in promoting lynchings. Readers can reach Molly at 507-285-7771 or mwork@postbulletin.com.
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