The Association between Board Composition, Board Governance, and Charity Care Provided by Nonprofit Hospitals

Abstract

In this study, we examine the association between board composition, board governance, and charity care provided by nonprofit hospitals. Using tax return data, we first investigate whether the composition of nonprofit hospital boards is associated with governing decisions related to patients’ eligibility for charity care. Then, we examine whether these decisions are associated with the amount of charity care provided. These research questions are motivated by legislators’ and regulators’ interest in understanding how nonprofit hospitals behave in terms of charitable missions (Kennedy, Burney, Troyer, and Stroup 2010). Overall, we find percentage of doctors on the board is associated with decisions affecting patients’ eligibility for free care. Related, we find that percentage of healthcare administrators on the board is associated with decisions affecting patients’ eligibility for free and discounted care. We also find that governing decisions related to patients’ eligibility for free and discounted care are associated with charity care provided.