Readability of Hospital Patient Financial Policy Documents

ABSTRACT

Objectives: There are federal and state policies designed to enhance access to information about financial assistance and billing policies at hospitals, particularly nonprofit ones. This information is increasingly important as patients’ out-of-pocket costs and medical debt rise, and those with low literacy may struggle in particular. This study assesses the availability and readability of hospital financial assistance and payment policy documents.

Study Design: Cross-sectional study of online patient financial policy documents collected from a random 10% (N = 336) sample of general nongovernmental hospitals in the US, March to June 2025.

Methods: The Flesch-Kincaid Grade Level for readability was calculated for each financial assistance and payment policy document. Hospital characteristics associated with documents’ availability and readability were analyzed using multivariate regression models.

Results: The mean readability level of each policy document type was at least 10th grade. Nonprofit and system-affiliated hospitals were significantly more likely to provide patient financial policy documents in models adjusting for other hospital characteristics. Hospitals in states with expanded financial assistance requirements had more readable financial assistance policy documents than other hospitals. Teaching hospitals and hospitals receiving Disproportionate Share Hospital (DSH) payments had more readable billing and collections policies than their counterparts.

Conclusions: These findings suggest that existing federal requirements for nonprofit hospitals correspond with greater availability of patient financial policy documents. Additionally, state policy environments, system affiliation, and DSH status correspond with better readability. Yet considering that a slim majority of Americans read below a 6th-grade level, the mean readability at the 10th-grade level for “plain language” policy documents may challenge some patients.

Am J Manag Care. 2026;32(7):In Press

Takeaway Points

More than half of American adults read below the sixth-grade level. In this cross-sectional study of US hospitals, we find that patient financial assistance and billing policy documents averaged 10th-grade readability scores. Low-literacy patients may struggle to understand these policy documents.

• Patient financial policy documents were more available at nonprofit and system-affiliated hospitals.
• Readability scores were better at teaching hospitals and at hospitals receiving Disproportionate Share Hospital payments, as well as in states with more robust patient financial assistance requirements.
• The findings suggest that both hospital type and state-level policy environments shape the accessibility and readability of patient financial policy documents for those with low literacy levels.

The growth of health care costs and medical debt over the past decade and the consequences of this growth are well documented.^1,2 Previous research has shown that the majority of medical debt is owed to hospitals.³ As out-of-pocket spending rises for patients, many may need financial assistance and payment plans available from hospitals to help with large medical bills. Navigating this landscape hinges on both the availability of financial support and the accessibility of information about it among the population that would benefit. The complexity of written financial materials can be a barrier to patients seeking financial assistance and making affordable payment arrangements. This study evaluates the availability of documentation on patient financial assistance and billing policies on hospital websites, as well as the literacy level of these documents.

An estimated 54% of Americans aged 16 to 74 years, or approximately 130 million people, read at or below a sixth-grade level.⁴ Research by the Barbara Bush Foundation for Family Literacy has found a county-level association between low literacy and poor health, poverty, and low economic mobility.⁴ Low literacy has also been shown in numerous prior studies to be associated with worse health outcomes, less use of preventive care, and more hospitalizations.^5-7 Furthermore, prior research has found that literacy and financial capabilities are associated.⁸ Thus, the low-literacy population, a slim majority of Americans, may disproportionately struggle with navigating both health care and financial matters.

There are some policies in place that encourage financial support for hospital patients and promote accessibility of information about this support, but they do not apply universally to all hospitals. On the federal level, the Internal Revenue Service (IRS) requires nonprofit hospitals to provide community benefits, including financial assistance.⁹ As part of these requirements, nonprofit hospitals must make the hospital’s financial assistance policy, plain language financial assistance policy, and financial assistance application available on a hospital website. According to the IRS, plain language policies should be written in language that is “clear, concise, and easy to understand.”⁹ These explicit requirements for nonprofit hospitals align with the spirit of community benefit and service to vulnerable patient populations expected of tax-exempt institutions. In addition to federal requirements, many states have implemented supplemental regulations for hospitals.¹⁰ Some of these additional state requirements apply only to nonprofit hospitals, although several states have created financial assistance requirements that apply to both nonprofit and for-profit hospitals. Examples of state policy scope include standardizing the criteria considered in the patient financial assistance eligibility processes and standardizing forms related to financial assistance processes.

Health care billing and out-of-pocket costs are notoriously complicated, and the language used in these areas is often confusing even to those working in medicine.¹¹ Several previous studies within health care research have used the Flesch-Kincaid Grade Level readability score to assess the readability of patient educational materials and informed consent forms.^12-14 The grade level indicates the approximate reading grade level of a text; for instance, a reading grade level of 9 is equivalent to the capabilities expected in the first year of high school for US students.¹⁵ This study assesses the accessibility of patient financial policy documents at US hospitals by reporting and analyzing the Flesch-Kincaid Grade Level for common patient financial assistance and billing policy documents. We further explore hospital characteristics associated with document availability in more languages. We also compare the readability of full financial assistance policy documents and plain language financial assistance policy documents.

METHODS

We reviewed the websites of a 10% (N = 336) random sample of general, nongovernmental US hospitals, as listed in the American Hospital Association (AHA) annual survey.¹⁶ Multiple researchers searched these hospitals’ websites for 3 common patient financial policy documents: financial assistance policy (full-length), plain language financial assistance policy, and billing and collections policy (sometimes called bad debt policy). These documents describe the financing and assistance options for patients who cannot afford to pay their medical bills in full. Researchers navigated the hospital webpages using the homepage navigation menu and search functions to identify the patient financial policy documents. If a researcher was unable to locate the documents, a second researcher reviewed the hospital webpage to retrieve them or confirm that they were not available. Discrepancies were resolved through group discussion.

These policy documents were analyzed using Python to determine the Flesch-Kincaid Grade Level score for each document, and a detailed description of the methodology is provided in the eAppendix (available at ajmc.com). Flesch-Kincaid readability is calculated based on the number of syllables per word and the number of words per sentence.¹⁵ The formula is as follows:

As some hospitals offer a plain language financial assistance policy document along with their financial assistance policy document, we computed the “minimal readability for financial assistance policies” score of those 2 documents to represent each hospital’s minimal readability level for financial assistance. Within the sample of hospitals providing both a plain language financial assistance policy document and a full-length financial assistance policy document, we applied a paired t test to assess the difference in readability scores between these 2 documents. We visually evaluated the distributions of Flesch-Kincaid Grade Level scores for the minimal readability levels of financial assistance policies and billing and collections policies using histograms.

We fit 3 multivariate logistic regression models assessing the association between the existence (or absence) of each document type (financial assistance policy, plain language financial assistance policy, and billing and collections policy) and several hospital characteristics. We also fit 2 linear regression models to assess the association between hospital characteristics and the Flesch-Kincaid Grade Level outcomes for the minimal readability of financial assistance policies and the grade level of billing and collections documents. Model covariates, including hospital characteristics on system membership (yes, no), ownership type (nonprofit, for-profit), critical access designation (yes, no), graduate medical education (GME) status (yes, no), and bed count (≤ 200 beds, > 200 beds) were sourced from the AHA data set. Financial information on Disproportionate Share Hospital (DSH) payment status (yes, no) was sourced from the RAND Hospital Data.¹⁷ Information on expanded state policies for hospital financial assistance (yes, no) was gathered from a report by the Commonwealth Fund, and more information on states with such policies is provided in the eAppendix.¹⁰ Statistical analyses were conducted using Stata 16 (StataCorp LLC). The institutional review board of the University of Southern California determined that this study was not human participant research.

RESULTS

Sample Characteristics

There were 336 hospitals in our 10% random sample, comprising 286 (85.1%) nonprofit and 50 (14.9%) for-profit hospitals (Table 1). There were 260 (77.4%) hospitals affiliated with a system, 200 (59.5%) hospitals receiving DSH payments, 175 (52.1%) hospitals offering GME, and 64 (19.1%) critical access hospitals. Among the 336 hospitals in the sample, 246 (73.2%) were located in a state with expanded financial assistance requirements. There were 218 (64.9%) hospitals in the sample with 200 beds or fewer and 118 (35.1%) hospitals with more than 200 beds.

Availability of Documents

Among the 336 hospitals in this sample, 291 (86.6%) had at least 1 available patient financial policy document. We observed that 93.7% (268) of nonprofit hospitals had at least 1 available document compared with 46.0% (23) of for-profit hospitals. There were 286 (85.1%) hospitals in the study sample that had a full-length financial assistance policy, 221 (65.8%) that had a plain language financial assistance policy, and 135 (40.2%) that had a billing and collections policy available online.

Controlling for other hospital characteristics, nonprofit hospitals were significantly more likely than for-profit hospitals to offer full-length financial assistance policies (OR, 2.6; P < .01) (Table 2, model 1), plain language versions of financial assistance policies (OR, 2.6; P < .01) (Table 2, model 2), and billing and collections policy documents (OR, 2.0; P < .01) (Table 2, model 3). Again controlling for other hospital characteristics, system-affiliated hospitals were significantly more likely to offer full-length financial assistance policies (OR, 1.2; P < .001) (Table 2, model 1) and billing and collections policies (OR, 0.6; P < .05) (Table 2, model 3) on their websites than unaffiliated hospitals, but they were not more likely to offer plain language financial assistance documents (Table 2, model 2). Other hospital characteristics were not statistically significantly associated with observed availability of the patient financial policy documents at the P < .05 level.

Reading Grade Level Outcomes

The reading grade level is designed to align with elementary, secondary, and higher school grades, with lower levels indicating easier readability. The mean (SD) grade level of financial assistance policies was 11.2 (1.9), interpretable as an 11th-grade reading level (Table 1). The mean (SD) grade level of plain language financial assistance policies was 10.2 (1.5), which is interpretable as a 10th-grade reading level. For the minimum grade level across these 2 financial aid document types, the mean (SD) grade level was 10.2 (1.6). The billing and collections policy documents had a mean (SD) grade level of 10.8 (2.2).

The distribution of minimum financial assistance document grade levels was unimodal, with a skew toward higher values (Figure 1). The grade levels for this measure ranged from 6 to 20, with a 10th percentile of 9.4 and a 90th percentile of 11.4. This indicates that the majority of hospitals in this analytic sample provided financial assistance at high school grade reading levels. The distribution of billing and collections policy grade levels also had a unimodal distribution, skewing to the higher values (Figure 2). The grade levels for the billing and collections policies ranged from 4 to 17, with a 10th percentile of 9.2 and a 90th percentile of 13.7. This distribution indicates that the majority of hospitals in the analytic sample provided billing and collections policies at the high school or college reading level.

Full-length financial assistance policy documents had a significantly higher mean grade level than plain language documents (Table 3). From a 2-sided t test comparing the documents within hospitals that had both types, the mean (SD) grade level for full-length policy documents was 11.2 (1.8), and the mean (SD) grade level for plain language policy documents was 10.2 (1.5). This results in a statistically significant difference of 1.0 grade level (P < .001) between the 2 document types. Although the plain language documents have a statistically different readability from the full-length documents, the 1-year difference in grade level is small. Moreover, the mean plain language document readability at the 10th-grade level may be too high for many patients with limited literacy skills.

Expanded state-level requirements for financial assistance were associated with a small, statistically significant decrease of 0.639 in grade level (P < .001) for the minimal grade level financial assistance policy document (Table 2, model 4). Teaching (GME) hospitals also had a small, significant decrease in reading grade levels for billing and collections documents compared with nonteaching hospitals, a mean decrease of 1.225 in grade level (P < .05) (Table 2, Model 5). Hospitals receiving DSH payments had a small, significant decrease of 0.802 in grade level (P < .05) for billing and collections documents compared with hospitals that did not receive DSH payments (Table 2, model 5). Although statistically significant, the magnitudes of difference are quite small, rounding to a 1-year grade-level difference associated with each of these hospital attributes. Other hospital characteristics were not statistically significantly associated with readability scores for any document type.

DISCUSSION

As patients’ out-of-pocket costs and medical debt rise, more Americans may turn to hospital financial assistance programs. However, considering the high rate of nonproficient literacy in the US, the accessibility of these programs and related documents is important for ensuring that patients are effectively reached. IRS requirements for nonprofit hospitals may help increase the availability of patient financial policy documents online, as nonprofit hospitals in our sample were significantly more likely to offer all types of patient financial policy documents than for-profit hospitals. In addition, system-affiliated hospitals were more likely to offer both full-length financial assistance policy documents and billing and collections policy documents on their websites than unaffiliated hospitals. This may indicate that system-affiliated hospitals have more resources to invest in these programs and documents or have more efficiencies of scale, as documents could be shared across hospitals within a system.

State-level supplemental requirements for hospital financial assistance were associated with an improvement in the readability grade level of financial assistance documents. Several states, including Washington, Oregon, and Georgia, determine eligibility for financial assistance only in terms of income, potentially simplifying financial assistance documents.¹⁰ Other states, including New York, Colorado, and South Carolina, require hospitals to use a uniform financial assistance application form.¹⁰ These state policies do not directly regulate the readability of the documents studied in this article, although it is plausible that the standardization of certain aspects of the financial assistance process results in simpler documents that are easier to understand.

Teaching hospitals offering GME and hospitals receiving DSH payments both provided billing and collections policy documents with lower grade levels than their counterparts. Hospitals with these characteristics may be more responsive to accommodating patients with lower literacy levels, potentially due to certain hospitals’ mission to serve their communities and the demographics of the patients they receive. Notably, we were unable to observe the literacy levels of the patient populations at each hospital, so we do not know how well matched each hospital’s documents are to the needs of their specific patient population. The finding that DSH and teaching hospitals offer documents that are easier to read suggests that these hospital types are meeting the needs of a lower-income, less educated community. Hospitals could be encouraged to adopt language that is more accessible to their patient population through greater awareness or policy development.

Although the IRS requires nonprofit hospitals to post plain language financial assistance policies and says they should be “clear, concise, and easy to understand,” this analysis found that while plain language policies had significantly lower readability grade levels than full-length financial assistance policies, the mean grade level for plain language policies was still at the 10th-grade level. When considering that a slim majority of Americans read below a sixth-grade level, plain language policies may need to be made even more accessible to those with lower literacy. Put another way, 54% of American adults read at only the elementary school level, and the majority of documents on financial assistance and billing policies are at the high school level or higher. This finding demonstrates a potential need for guides or navigators to support patients with the financial aspects of hospital care. An example of this type of needed service is offered by Dollar For, a national organization that helps patients apply for hospital charity care programs at nonprofit hospitals.¹⁸ A second example is the Health Consumer Alliance, an organization that helps Californians navigate medical billing concerns.¹⁹ Such organizations offering free guidance may address a critical need among low-literacy and financially constrained patients.

Limitations

This study has several limitations. First, we assessed the available documents from a subset of US nongovernmental hospitals. Although this random sample is representative of the complete sample of US nongovernmental hospitals, hospitals outside our sample may have different outcomes. Second, we could access only documents that hospitals made available on their websites, and there is potential for selection biases in the hospitals that make these documents available. Some hospitals may offer more information about patient financial policies in person or by phone, and these services may be particularly beneficial to patients with limited literacy. Third, we collected the documents over a limited scope of time, and there may be temporal changes or policy modifications that could have impacted document availability during or after the data collection period of this study. Fourth, this was a cross-sectional study intended to observe associations between hospital characteristics and the financial documents available and their readability. It did not have a causal study design. Fifth, this study employs the Flesch-Kincaid readability score, but alternative readability measures could be considered in future studies, along with testing reading and comprehension with actual patients.

CONCLUSIONS

This study, to our knowledge, is the first to assess the readability of patient financial policy documents in the US. Nonprofit status and system affiliation were both associated with significantly higher rates of available patient financial policy documents. State-level supplemental financial assistance requirements, teaching hospital status, and receipt of DSH payments were associated with lower readability grade level scores for at least 1 document type. Across the sample, the mean readability grade level of each policy document type was at least at a 10th-grade level, with the majority of observed documents at high school or college reading levels. Considering that approximately half of American adults read below a sixth-grade level, additional efforts may be needed to aid patients in interpreting hospital financial documents and navigating processes such as applying for assistance or setting up payment plans. Alternatively, hospitals could be encouraged to enhance the readability of their documents. US leaders can also strive to improve population literacy levels to address the root of these reading level challenges.

Author Affiliations: University of Southern California (USC) Schaeffer Center for Health Policy & Economics (SaR, SuR, EC, NLN, ET, ELD), Los Angeles, CA; USC Alfred E. Mann School of Pharmacy and Pharmaceutical Sciences (ET), Los Angeles, CA; USC Sol Price School of Public Policy (ELD), Los Angeles, CA.

Source of Funding: This study was funded by the USC Schaeffer Center for Health Policy & Economics and a Student Empowerment Award from the USC Office of Research and Innovation.

Author Disclosures: Ms Nguyen is employed by KPMG and Advisory Associate Healthcare Solutions and has received a Student Empowerment Award from the USC Office of Research and Innovation. Dr Trish is a member of the editorial board of The American Journal of Managed Care and has served as a consultant and litigation expert on matters in the hospital, health insurance, health information technology, public health, and life sciences sectors. Dr Duffy reports providing expert testimony on matters in the health care industry and receiving grants from Arnold Ventures, California Health Care Foundation, and Gates Ventures. The remaining authors report no relationship or financial interest with any entity that would pose a conflict of interest with the subject matter of this article.

Authorship Information: Concept and design (SaR, NLN, ELD); acquisition of data (EC, NLN); analysis and interpretation of data (SuR, EC, NLN, ET, ELD); drafting of the manuscript (SuR, NLN, ELD); critical revision of the manuscript for important intellectual content (EC, NLN, ET, ELD); statistical analysis (SuR, NLN, ET); provision of patients or study materials (NLN); obtaining funding (NLN); administrative, technical, or logistic support (SaR, ET); and supervision (SaR, ELD).

Address Correspondence to: Erin L. Duffy, PhD, MPH, USC Schaeffer Center for Health Policy & Economics, 635 Downey Way, VPD 414F, Los Angeles, CA 90089-3333. Email: eld_805@usc.edu.

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