Overall, average total charity care was $4.3 million for for-profit hospitals and $7.1 million for nonprofit hospitals, with the mean for charity care as percent of total expenses being 2.6 percent for for-profit hospitals and 2.9 percent for nonprofit hospitals.
How much do hospitals spend on community benefit?
The most frequently cited article on community benefit is an analysis using 2009 data of 1,800 non-profit hospitals from across the country. In it, Young and colleagues found that on average hospitals spent 7.5% of their operating expenses on community benefit, with 0.4% allocated to community health improvement.
Do non-profit hospitals provide community benefits?
1 Leonard Davis Institute of Health Economics, University of Pennsylvania, Philadelphia, USA. The rise of the for-profit hospital industry has opened a debate about the level of community benefits provided by non-profit hospitals.
What is the hospital community benefit program?
The Hospital Community Benefit Program is a central resource created specifically for state and local policy makers who seek to ensure that tax-exempt hospital community benefit activities are responsive to pressing community health needs.
Should nonprofit hospitals spend CB resources community specificly?
The goal with regulatory changes should not be to dictate exactly how nonprofit hospitals spend CB resources. Those decisions should be community specific. Rather, the goal of regulation should be to encourage hospitals to identify and respond to the community’s most significant health needs.
What are the benefits of for-profit hospitals?
On the other hand, for-profit hospitals enjoy financial stability and most are not only debt-free but also able to purchase the needed advanced medical technologies. For-profit hospitals, therefore, are better equipped and provide better surgical services and diagnostic procedures than nonprofit hospitals.
What is the community benefit standard?
Community Benefit Standard. The community benefit standard, as outlined in Rev. Rul. 69-545, is a test the IRS uses to determine whether a hospital is organized and operated for the charitable purpose of promoting health.
How do hospitals benefit the community in which they are located?
Hospitals provide benefit to their communities in many ways, such as donating resources to community organizations, assisting in food banks, providing financial assistance to low income patients, linking patients to related care (such as dental, vision or mental facilities) and more.
Are for-profit hospitals more efficient?
It's important for patients and administrators alike to understand that there is no indication of any difference in the environment, operational efficiency, or standard of care between nonprofit and for-profit hospitals. Both exist on lists of the best hospitals in the country, and among the worst.
Do nonprofit hospitals evaluate their community benefit activities?
Community Health Needs Assessment California requires nonprofit hospitals to conduct assessments to evaluate the health needs of the communities they serve.
What is a hospital's biggest expense?
The greatest expense of hospitals in the United States is paying wages and benefits. Wages and benefits account for around 56 percent of all hospital expenses.
Why hospital is important to the community?
Hospitals. Hospitals complement and amplify the effectiveness of many other parts of the health system, providing continuous availability of services for acute and complex conditions. They concentrate scarce resources within well-planned referral networks to respond efficiently to population health needs.
What level or kind of community benefit that you believe that hospitals should be required to demonstrate in order to retain their tax-exempt status?
To justify their federal tax-exempt status, nonprofit hospitals must demonstrate, under the current Community Benefit Standard adopted by the Internal Revenue Service (IRS), that they “operate to promote the health of a class of persons that is broad enough to benefit the community.” The standard does not include any ...
What is the impact of a hospital to society?
With increased focus on value-based care today, hospitals tremendously impact in improving community health standards through the quality of services rendered, preventive healthcare, post–discharge support and interventions for addressing social determinants including poor nutrition, hygiene and housing for reducing ...
What are the major criticisms of the for-profit hospital?
Critics of for-profits predict that access to care will suffer in two ways: fewer nonpaying patients will be able to get care and some paying patients, i.e., some who are covered by public or private insurance, will be unable to find providers who will treat them for certain "unprofitable" conditions.
What's the difference between a for-profit and not-for-profit hospital?
What's the difference between nonprofit and for-profit hospitals? Hospital officials say there are only two major differences. For-profit hospitals pay property and income taxes while nonprofit hospitals don't. And for-profit hospitals have avenues for raising capital that nonprofits don't have.
What are four differences between private nonprofit and for-profit hospitals?
There are five primary differences between for-profit and nonprofit hospitals.Tax Status. ... Operational Discipline. ... Financial Pressure. ... Scale. ... Competitive Edge.
What is a hospital community benefit?
The Hospital Community Benefit Program is a central resource created specifically for state and local policy makers who seek to ensure that tax-exempt hospital community benefit activities are responsive to pressing community health needs.
Why do we need to report community benefits?
The allowable purposes of community benefits are to improve access to services, enhance the health of the community, advance medical knowledge, and reduce government burden.
Abstract
Nonprofit hospitals are expected to provide benefits to their community in return for being exempt from most taxes. In this paper we develop a new method of identifying activities that should qualify as community benefits and of determining a benchmark for the amount of community benefits a nonprofit hospital should be expected to provide.
ABSTRACT
Nonprofit hospitals are expected to provide benefits to their community in return for being exempt from most taxes. In this paper we develop a new method of identifying activities that should qualify as community benefits and of determining a benchmark for the amount of community benefits a nonprofit hospital should be expected to provide.
Introduction and summary
Hospitals, critical providers of essential care throughout the pandemic, can serve an influential role in bolstering health equity and population health; and health systems around the nation are increasingly recognizing this responsibility. 1 Nonprofit hospitals have a unique obligation to advance community health.
Nonprofit hospitals are uniquely positioned to address community health
Nearly 6 in 10 U.S. hospitals are nonprofit.
Innovative approaches to community benefit
The COVID-19 pandemic and the national reckoning with racial health and economic disparities provides hospitals with an opportunity to reassess how they are serving the health needs of the community and advancing public health.
Hospital best practices for population health
As hospitals and health systems increasingly recognize their responsibility to advance community health, they should build these programs using lessons learned from other health systems.
Conclusion
As anchor institutions in their communities, nonprofit hospitals and health systems are in a unique position to meaningfully improve population health; they have both the resources and legal obligation to serve the public good.
About the authors
Nicole Rapfogel is a research assistant for Health Policy at the Center for American Progress.
Acknowledgments
This publication was made possible in part by a grant from the Peter G. Peterson Foundation. The statements and the views expressed are solely the responsibility of the Center for American Progress.
What is community benefit?
In 1956, the Internal Revenue Service created the expectation that nonprofit hospitals would offer uncompensated care for those unable to pay; this was the beginning of Community Benefit (CB). CB efforts tend to prioritize inpatient medical care over developing community-based health improvements, and few CB resources are directed toward responding to health disparities. Changes to federal policy should address these concerns by (1) requiring community partners’ involvement in CB implementation strategies, (2) requiring that community health needs assessments (CHNAs) be completed every 5 years instead of every 3 years, (3) changing the Internal Revenue Code to recognize organizations’ work on social determinants as CB, and (4) requiring CHNAs to describe a community’s health disparities and clarify how their implementation strategies address them. These changes would likely promote hospitals’ engagement with public health departments, collaboration with community-based nonprofit organizations, and greater focus on health equity.
What is shift toward community health improvement?
Four Policy Proposals. A shift toward community health improvement requires hospitals to view themselves as part of the larger community health ecosystem. Local schools, law enforcement, religious congregations, government agencies, and other nonprofits working in health, housing, and employment are part of that ecosystem and can ...
Why do hospitals lean toward clinical care?
Additionally, because of the way hospital accounting systems are designed, spending in clinical areas is easier to calculate and report than spending on other community health efforts.
Is health equity a goal of CB?
Likewise, although a fair and just health care system requires equitable access to care and treatment, health equity requires more than medical treatment. Community health and health equity could become more central goals of CB—but only if we consider how to encourage nonprofit hospitals to advance these objectives.
Is a hospital a non-profit?
Just over half of all hospitals in the United States are nongovernmental, nonprofit community hospitals. 1 Due to their tax-exempt status, these hospitals have long had an obligation to the communities they serve. This obligation was formalized at the federal level by the Internal Revenue Service ...
Can a hospital include CB on 990?
When calculating their annual spending on CB, nonprofit hospitals can only include spending in certain categories of activity. Current regulations clearly explain the kind of spending related to charity or subsidized care that hospitals can include as part of their CB on their IRS Form 990 Schedule H.
What's The Issue?
- The majority of hospitals in the United States operate as nonprofit organizations and, as such, are exempt from most federal, state, and local taxes. This favored tax status is intended to be an acknowledgement of the "community benefit" provided by these institutions. Public controversy over whether nonprofit hospitals provided community benefits ...
What's The background?
- According to the American Hospital Association (AHA), in 2014 about 78 percent of the 4,974 US community hospitals were nonprofit entities (58 percent private nonprofit and 20 percent operated by state or local governments). The remaining 22 percent are for-profit, investor-owned institutions. Nonprofit hospitals may qualify for favored tax treatment under federal--as well as …
What's The Law?
- The ACA added Section 501(r) to the Internal Revenue Code, which contains four new requirements related to community benefits that nonprofit hospitals must meet to qualify for 501(c)(3) tax-exempt status. They are as follows: 1. Conducting a community health needs assessment with an accompanying implementation strategy; 2. Establishing a written financial a…
What's The Debate?
- As Congress considers major tax reforms, nonprofit hospitals in general vigorously advocate to retain their tax-exempt status, as well as their ability to obtain tax-exempt financing and to accept tax-deductible charitable contributions. However, there are disagreements over what should count as a community benefit and to what extent hospitals should be held accountable. There are als…
What's Next?
- Transformation of the health care system as a result of all of the provisions in the ACA, including increased insurance coverage, new models of health delivery, and new payment systems, is just in the beginning stages. All of these changes have an impact on hospitals and the amount and types of community benefits they provide. Data from new community benefit reporting requirements …
Resources
- Janet Corrigan, Elliott Fisher, and Scott Heiser, "Hospital Community Benefit Programs: Increasing Benefits to Communities," Journal of the American Medical Association313, no. 12 (2015):1211-12. Internal Revenue Service, Report to Congress on Private Tax-Exempt, Taxable, and Government-Owned Hospitals(Washington, DC: Department of the Treasury, January 2015). Sar…
About Health Policy Briefs
- Written by Julia James Health Policy Consultant Editorial review by Sayeh Nikpay Postdoctoral Fellow Institute for Healthcare Policy and Innovation University of Michigan School of Medicine Sara Rosenbaum Harold and Jane Hirsh Professor Milken Institute School of Public Health, The George Washington University Department of Health Policy and Management Rob Lott Deputy E…