CHA and the American Hospital Association have released an analysis of the many and varied ways that nonprofit hospitals benefit their communities, as reported to the Internal Revenue Service in Form 990 Schedule H. The organizations' report is "Nonprofit Hospital Community Benefits: Addressing Each Community's Unique Needs."
According to community benefit experts with CHA and AHA, it is important for policymakers, researchers and others to have a full understanding of hospitals' community benefit activity. Those experts, Nancy Zuech Lim and Aaron Wesolowski, say people should recognize that hospitals' community benefit work includes a wide-ranging spectrum of activities — not just one or two. The characteristics of different hospitals' community benefit work vary greatly from facility to facility because communities have different characteristics and needs. The 12-page report examines these concepts as they relate to community benefits reported on IRS Form 990 Schedule H. Lim, CHA director of community health improvement, and Wesolowski, AHA vice president of research strategy and policy communications, helped develop the report.
Wesolowski says the report illustrates why "it's really important to focus on the whole array of benefits. It's important for policymakers and others to understand that one size does not fit all."
Lim adds that the report highlights "the good work of hospitals and their critical role in communities — they are seeking to improve how well and how long people live."
Eight categories
Most U.S. community hospitals are nonprofit. To qualify for tax-exempt status under the Internal Revenue Service's code, these hospitals must demonstrate that they provide broad community benefits. They report these benefits on IRS Form 990 Schedule H. In Part I of Schedule H, hospitals report how they benefit their community across eight different categories. For each category, community benefit is reported at cost to the hospital, net of off-setting revenue.
The categories are:
- Financial assistance or charity care
- Medicaid shortfall
- Other means-tested government programs
- Community health improvement services
- Health professions education
- Subsidized health services
- Research
- Cash and in-kind contributions to community groups
The CHA and AHA analysis explains the meaning of the reports and how Schedule H tells a broad story about hospitals' impact on their communities. CHA and AHA played pivotal roles in the IRS' development of Schedule H.
The recently released analysis notes, "recent discussions of nonprofit hospitals and their tax-exempt status have focused on concerns regarding specific measures of benefits while ignoring others in a way that misrepresents the extent of the community benefits provided."
The analysis says there are numerous ways nonprofit hospitals positively impact their communities and that hospitals tailor their community benefit work to the communities' evolving needs. The analysis also says that the characteristics of benefit work vary by hospitals' function and patient profile. For instance, teaching hospitals, children's hospitals, rural sites, urban sites and sole provider facilities each provide distinct types of community benefit programming.
Nonprofit hospitals develop their community benefit programming through thorough assessments of their communities' health needs. These learnings are documented in their community health needs assessment reports, and their plans for addressing those needs are documented in their implementation strategies. The hospitals make these documents available to the public.
Rich data
Lim and Wesolowski say the CHA and AHA analysis shows that Schedule H can provide a great deal of valuable information and insights about how hospitals serve their communities and the context of their community benefit work.
For instance, says Wesolowski, "what struck us was how closely related the financial assistance and Medicaid shortfall categories were." The analysis showed that hospitals in states that expanded Medicaid had higher levels of Medicaid shortfall to claim, whereas hospitals in states that did not expand Medicaid had higher levels of financial assistance or charity care to claim. That is likely because those hospitals treated more uninsured people, and those people likely had difficulty paying for their care and required charity assistance.
Wesolowski says that the IRS database of information that nonprofit hospitals report on Schedule H is a trove of rich data. CHA and AHA likely will continue to delve into the data and release additional reports to help people better understand nonprofit hospital community benefit.
Sr. Mary Haddad, RSM, CHA president and CEO, says that hospitals are more than places of healing. "They are lifelines to their communities. The care we provide for our patients and our neighbors extends beyond the walls of our facilities as we seek to meet people where they are."
She says through their community benefit work, nonprofit hospitals "address pressing individual needs, advance community health, and expand access to programs that promote human flourishing — all contributing to the greater good."