Why Should People Who Care About Our Country's Health Contact the IRS Before July 22nd?

By David A. Kindig, MD, PhD

There is a looming deadline that those of us who care about health should know about.

For more than 55 years, nonprofit hospitals have had to justify their tax exempt status by providing benefits to the communities they serve. This is a big deal, since having this status amounts to a collective tax savings for the nonprofit hospitals of about $20 billion annually.

Until recently, nonprofit hospitals have mostly contributed this “community benefit” by providing care to people who can’t afford it and by offering screenings, health education, and other outreach activities. Hospitals were neither required to engage in certain activities nor document or evaluate their efforts.

Over the past couple of years, however, reporting requirements have increased.

One of the newer reporting requirements is IRS Form 990 Schedule H, where nonprofit hospitals report their community benefit activities. Unfortunately, Schedule H doesn’t give credit where credit is due.

The form does give credit for contributions made in the areas of charity care, health professions education, research, health education, and some types of community outreach. But it gives no credit for contributions beyond health care in areas such as housing, the environment, economic development, community coalition building, advocacy, and community workforce development. Of course, these are exactly the kind of investments we need more of to improve health outcomes and reduce disparities.

Although the IRS has not yet specified community benefit financial requirements (such as a fixed dollar amount or a revenue percentage), some are advocating that this happen sooner rather than later. Experts believe that charity care currently makes up a large part of community benefit spending, but the need for that should change with fewer uninsured as health care reform gets underway. Dollars currently used to provide healthcare for the uninsured could and should become available for other activities.

In addition, the new Patient Protection and Affordable Care Act (PPACA, PL 111-148) requires hospitals to conduct community health assessments every three years. What has not yet been decided is whether hospitals will be required to conduct these assessments independently or whether they will be allowed to collaborate with other community agencies.

The IRS is currently seeking public comment on how to best align Schedule H with the PPACA.

I urge you to submit your opinions by the July 22 deadline. Here are the points I’ll be including in my own message:

• Hospitals should carry out the required community health assessments in partnership with local public agencies and other community organizations and not be forced to conduct a separate, independent needs assessment.
  
• The new rules should explicitly allow public health and community health improvement activities to count as community benefit
  
• The IRS should call for more research to recommend whether an overall dollar or revenue percentage should be required--and if so, how funds should be allocated among charity care, public health programs, and other activities.
  

Let’s help create a permanent mechanism for making community health expenditures count—and keep coming—for population health improvement.

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I appreciate the assistance of Connie Evashwick, ScD at St Louis University and Pamela Russo, MD, MPH at the Robert Wood Johnson Foundation in providing background on this issue.

David A. Kindig, MD, PhD, is Emeritus Professor of Population Health Sciences and Emeritus Vice-Chancellor for Health Sciences at the University of Wisconsin School of Medicine and Public Health.

Comments

[Donna Friedsam]

The Wisconsin Hospital Association maintains a web site called ServePoint (http://www.wiservepoint.org/Default.aspx_
) the reports hospital community benefit. ONe of the pages (http://www.wiservepoint.org/ViewStories.aspx) allows you to view hospital reporting of activities in the arena of "social and economic factors that affect health. You can also view other activities in a broad range of areas, in a pull down menu.
The annual report that WHA produces is at http://www.wiservepoint.org/Documents/2009CBreport.pdf.
One of the sticky issues with this report is that is includes what it terms "Medicaid shortfalls" ($755M in 2009)and other debatable items in the total sum of community benefits.
But an interesting report, nonetheless.

[Helene Nelson]

I agree completely that hospital assessments of community health needs should be done collaboratively with local public health agencies and others in the community. I would go further to suggest that individual hospitals should be required to select priorities which are included within a comprehensive community public health assessment and plan, if one is available. We do not need multiple assessments, but rather collaborative and aligned action on key community priorities developed in a credible public health planning process. In Wisconsin the Hospital Association has encouraged members to rely on the priorities of the State Public Health Plan as a framework, for example. State laws call for public health agencies to lead community health assessments and planning periodically. These processes and plans can become increasingly meaningful if they are a framework for aligned action by multiple actors.

[Carmen Mandic]

I agree wholeheartedly with the suggestion that hospital community assessments should be done in collaboration with local agencies and community members. I would also argue that a community-based participatory approach should be required by hospitals in order to accurately identify community problems as well as assets/strengths; these may or may not be related to health care, as pointed out. (See 2008 book edited by Meredith Minkler & Nina Wallerstein: Community-Based Participatory Research for Health: From Process to Outcomes). In one of the chapters of this book, Meredith Minkler & Trevor Hancock state that “We get the kinds of answers we are comfortable dealing with because we ask the kinds of questions that will give us those answers” (p.154). It can be scary—but also potentially liberating—for researchers, health care providers, and hospital administrators to think about the kinds of answers we might get if we truly allow communities to shape and determine what “community benefit” might mean for their lives, their neighborhoods, their families, their schools, their places of work. We know that these are the things that matter for maintaining health, managing chronic disease, fostering aspirations, and enriching quality of life.