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

In this study, we examine the association between board composition, board governance and charity care provided by nonprofit hospitals. Using nonprofit hospitals' 990 tax return data, we first investigate whether the composition of nonprofit hospital boards of directors is associated with board governing decisions related to patients' eligibility for charity care. Then, we examine whether these same board governing decisions are associated with the reported amount of charity care provided by hospital management. These research questions are motivated by legislators' and regulators' interest in understanding how nonprofit hospitals behave in terms of their charitable missions (Kennedy, Burney, Troyer and Stroup 2010). Overall, at the board governance level, we find the percentage of medical doctors on the board is positively associated with governing decisions affecting patients' eligibility for free charity care. Related, we find that percentage of healthcare administrators on the board is also positively associated with governing decisions affecting patients' eligibility for both free and discounted charity care. At the social performance level, we find that board governing decisions related to patients' eligibility for free and discounted charity care are both positively associated with the amount of charity care provided by hospital management.