Current State of Community Benefit: What are we getting and what are the factors affecting it?

In exchange for exemption from federal, and from many state, and local taxes, as well as for the ability to utilize tax-exempt bonds for major capital projects, non-profit (NP) hospitals are expected to provide charity care and other health-related benefits to their respective communities. Accounting for over 50% of hospitals, NP facilities supply between $13 and $20 billion annually in the form of community benefits to justify their tax exemptions.

A component of a larger, hospital-provided community benefit (CB) examination, the study described here uses the new, mandated CB reporting from the Internal Revenue Service (IRS) Form 990 Schedule H to document the range of community activities in which hospitals are engaged. Demographic details (income, education, age, etc.) of the respective communities are then paired to IRS filings to determine if there are relationships between community characteristics and the amount and type of CB provided by hospitals. Further examination will include the effect hospital characteristics (size, teaching/non-teaching, profitability, etc.) and state regulatory characteristics have on the provision of community benefit.

Under the recently passed federal health care reform legislation, it is projected that the amount of charity care provided will decline significantly. If, and under what conditions, hospitals will be able to retain their tax-exempt status is less than clear. It is possible that these hospitals may be able of provide adequate community benefits through their active involvement in public health interventions in coordination with local public health departments Based on a large, national sample, study results are intended to inform IRS refinement of CB reporting and identify policies warranting advocacy.