Hospitals and Community Benefit

We were discussing community benefit in class the other day. If you don’t know what community benefit is the Catholic Health Association’s website is a good place to start. This website goes more in depth. Basically (says Senator Grassley’s website) (it is my understanding that he started the look into community benefit in 2005) “providing community benefit is required for hospitals seeking and retaining tax-exempt status as charities.”

The CHA says community benefit includes the following:
-Charity care
-Government-sponsored indigent health care—unpaid costs of public programs (Medicaid, SCHIP, medically indigent programs)
-Community Benefit Services (I guess this is the extensive “other” category–dw)

And does not include the following:
-Bad debt
-Contractual allowances or quick-pay discounts
-Any portion of charity care costs already included in the subsidized health care services category
-Medicare shortfall (this can be included in other financial reports but not in a community benefit report)

But as far as I understand community benefit is not limited to just these broad categories…one of the issues is that exactly how to define community benefit is a matter of contention.

In 2005 there was a big uproar concerning the tax-exempt status of not-for-profit hospitals and whether or not they provide enough benefits to the communities they serve. Hospital associations around the country with the help of the aforementioned CHA quickly put together a reporting system to outline provided benefits. Some associations seem to be reporting an extensive amount of community benefit (I’m using CB from here on out).

The American Hospital Association deems the tax-exempt status of not-for-profit hospitals an “issue” but you have to be a member in order to access any releases (sorry, I’m on a student income and unable to afford such a luxury at this time so I can’t even summarize).

Since then, it has been rather quiet on the CB front. However, in July the IRS released an interim report (pdf) that apparently outlined a not-so-good effort by not-for-profit hospitals to provide CB. And most recently the IRS updated its Form 990 that not-for-profits use to claim their CB (side note: kind of ironic that a non-taxed entity submits forms to the government agency responsible for taxation. I guess someone has to watch over us…).

I’m sure this story hasn’t ended quite yet. CB is a very important function hospitals provide to the communities they serve. Hopefully the amount of CB provided won’t have to be mandated by the federal government…stay tuned.

Do you think hospitals currently provide sufficient community benefit (any examples)? What do you think is an appropriate policy for providing community benefit at our own system?

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