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.