State-Level Community Benefit Regulation and Nonprofit Hospitals' Provision of Community Benefits.

Do nonprofit hospitals provide enough community benefits to justify their tax exemptions? States have sought to enhance nonprofit hospitals' accountability and oversight through regulation, including requirements to report community benefits, conduct community health needs assessments, provide minimum levels of community benefits, and adhere to minimum income eligibility standards for charity care. However, little research has assessed these regulations' impact on community benefits. Using 2009-11 Internal Revenue Service data on community benefit spending for more than eighteen hundred hospitals and the Hilltop Institute's data on community benefit regulation, we investigated the relationship between these four types of regulation and the level and types of hospital-provided community benefits. Our multivariate regression analyses showed that only community health needs assessments were consistently associated with greater community benefit spending. The results for reporting and minimum spending requirements were mixed, while minimum income eligibility standards for charity care were unrelated to community benefit spending. State adoption of multiple types of regulation was consistently associated with higher levels of hospital-provided community benefits, possibly because regulatory intensity conveys a strong signal to the hospital community that more spending is expected. This study can inform efforts to design regulations that will encourage hospitals to provide community benefits consistent with policy makers' goals.

The Progress of US Hospitals in Addressing Community Health Needs.

OBJECTIVES: To identify how US tax-exempt hospitals are progressing in regard to community health needs assessment (CHNA) implementation following the Patient Protection and Affordable Care Act. METHODS: We analyzed data on more than 1500 tax-exempt hospitals in 2013 to assess patterns in CHNA implementation and to determine whether a hospital's institutional and community characteristics are associated with greater progress. RESULTS: Our findings show wide variation among hospitals in CHNA implementation. Hospitals operating as part of a health system as well as hospitals participating in a Medicare accountable care organization showed greater progress in CHNA implementation whereas hospitals serving a greater proportion of uninsured showed less progress. We also found that hospitals reporting the highest level of CHNA implementation progress spent more on community health improvement. CONCLUSIONS: Hospitals widely embraced the regulations to perform a CHNA. Less is known about how hospitals are moving forward to improve population health through the implementation of programs to meet identified community needs.

Health and Taxes: Hospitals, Community Health and the IRS.

The Affordable Care Act created new conditions of federal tax exemption for nonprofit hospitals, including a requirement that hospitals conduct a community health needs assessment (CHNA) every three years to identify significant health needs in their communities and then develop and implement a strategy responding to those needs. As a result, hospitals must now do more than provide charity care to their patients in exchange for the benefits of tax exemption. The CHNA requirement has the potential both to prompt a radical change in hospitals' relationship to their communities and to enlist hospitals as meaningful contributors to community health improvement initiatives. Final regulations issued in December 2014 clarify hospitals' obligations under the CHNA requirement, but could do more to facilitate hospitals' engagement in collaborative community health projects. The Internal Revenue Service (IRS) has a rich opportunity, while hospitals are still learning to conduct CHNAs, to develop guidance establishing clear but flexible expectations for how providers should assess and address community needs. This Article urges the IRS to seize that opportunity by refining its regulatory framework for the CHNA requirement. Specifically, the IRS should more robustly promote transparency, accountability, community engagement, and collaboration while simultaneously leaving hospitals a good degree of flexibility. By promoting alignment between hospitals' regulatory compliance activities and broader community health improvement initiatives, the IRS could play a meaningful role in efforts to reorient our system towards promoting health and not simply treating illness.

Policy commercializing nonprofits in health: the history of a paradox from the 19th century to the ACA.

UNLABELLED: POLICY POINTS: Health policy in the United States has, for more than a century, simultaneously and paradoxically incentivized the growth as well as the commercialization of nonprofit organizations in the health sector. This policy paradox persists during the implementation of the Affordable Care Act of 2010. CONTEXT: For more than a century, policy in the United States has incentivized both expansion in the number and size of tax-exempt nonprofit organizations in the health sector and their commercialization. The implementation of the Affordable Care Act of 2010 (ACA) began yet another chapter in the history of this policy paradox. METHODS: This article explores the origin and persistence of the paradox using what many scholars call "interpretive social science." This methodology prioritizes history and contingency over formal theory and methods in order to present coherent and plausible narratives of events and explanations for them. These narratives are grounded in documents generated by participants in particular events, as well as conversations with them, observing them in action, and analysis of pertinent secondary sources. The methodology achieves validity and reliability by gathering information from multiple sources and making disciplined judgments about its coherence and correspondence with reality. FINDINGS: A paradox with deep historical roots persists as a result of consensus about its value for both population health and the revenue of individuals and organizations in the health sector. Participants in this consensus include leaders of governance who have disagreed about many other issues. The paradox persists because of assumptions about the burden of disease and how to address it, as well as about the effects of biomedical science that is translated into professional education, practice, and the organization of services for the prevention, diagnosis, treatment, and management of illness. CONCLUSIONS: The policy paradox that has incentivized the growth and commercialization of nonprofits in the health sector since the late 19th century remains influential in health policy, especially for the allocation of resources. However, aspects of the implementation of the ACA may constrain some of the effects of the paradox.

Nonprofit hospitals' approach to community health needs assessment.

OBJECTIVES: We sought a better understanding of how nonprofit hospitals are fulfilling the community health needs assessment (CHNA) provision of the 2010 Patient Protection and Affordable Care Act to conduct CHNAs and develop CHNA and implementation strategies reports. METHODS: Through an Internet search of an estimated 179 nonprofit hospitals in Texas conducted between December 1, 2013, and January 5, 2014, we identified and reviewed 95 CHNA and implementation strategies reports. We evaluated and scored reports with specific criteria. We analyzed hospital-related and other report characteristics to understand relationships with report quality. RESULTS: There was wide-ranging diversity in CHNA approaches and report quality. Consultant-led CHNA processes and collaboration with local health departments were associated with higher-quality reports. CONCLUSIONS: At the time of this study, the Internal Revenue Service had not yet issued the final regulations for the CHNA requirement. This provides an opportunity to strengthen the CHNA guidance for the final regulations, clarify the purpose of the assessment and planning process and reports, and better align assessment and planning activities through a public health framework.

Medicine as a Public Calling.

The debate over how to tame private medical spending tends to pit advocates of government-provided insurance--a single-payer scheme--against those who would prefer to harness market forces to hold down costs. When it is mentioned at all, the possibility of regulating the medical industry as a public utility is brusquely dismissed as anathema to the American regulatory tradition. This dismissiveness, however, rests on a failure to appreciate just how deeply the public utility model shaped health law in the twentieth century-- and how it continues to shape health law today. Closer economic regulation of the medical industry may or may not be prudent, but it is by no means incompatible with our governing institutions and political culture. Indeed, the durability of such regulation suggests that the modern embrace of market-based approaches in the medical industry may be more ephemeral than it seems.

Preparing for section 501(r).

Steps hospitals should take to prepare for Section 501(r) requirements include the following: Prepare the board for its role in approving updated financial assistance, billing and collections, and emergency medical care policies. Revisit financial assistance policy eligibility requirements. Conduct a policy gap analysis. Review how the current financial assistance policy is publicized and make adjustments where necessary.

The Affordable Care Act and community benefit: a mandate Catholic health care can (partly) embrace.

The 2010 Patient Protection and Affordable Care Act (ACA) requires not-for-profit hospitals, including Catholic hospitals, to engage in meaningful community assessment and collaboration efforts in order to maintain their tax-exempt status. Now that the ACA has been upheld by the U.S. Supreme Court, this paper argues that the requirements related to a more robust community engagement process should be embraced by Catholic not-for-profit hospitals and health systems. Apart from the legal requirements under ACA, an equally persuasive moral mandate to engage in community-level assessment and action exists in the ethical tradition of Catholic health care, particularly in the notions of the common good, preferential option for the poor, and subsidiarity. This paper examines the compelling nature of these moral norms in light of the dual goals of improving overall community health and reducing health disparities among vulnerable populations. It concludes with the examination of one model of community collaboration: Mobilizing for Action through Planning and Partnerships (MAPP).

Hospital ownership and community benefit: looking beyond uncompensated care.

Not-for-profit (NFP) hospitals have come under increased public scrutiny for management practices that are inconsistent with their charitable focus. Of particular concern is the amount of community benefit provided by NFP hospitals compared to for-profit (FP) hospitals given the substantial tax benefits afforded to NFP hospitals. This study examines hospital ownership and community benefit provision beyond the traditional uncompensated care comparison by using broader measures of community benefit that capture charitable services, community assessment and partnership, and community-oriented health services. The study sample includes 3,317 nongovernment, general, acute care, community hospitals that were in operation in 2006. Data for this study came from the 2006 American Hospital Association Hospital Survey and the 2006 Area Resource File. We used multivariate regression analyses to examine the relationship between hospital ownership and five indicators of community benefit, controlling for hospital characteristics, market demand, hospital competition, and state regulations for community benefit. We found that NFP hospitals report more community benefit activities than do FP hospitals that extend beyond uncompensated care. Our findings underscore the importance of defining and including activities beyond uncompensated care when evaluating community benefit provided by NFP hospitals.

Distinguishing community benefits: tax exemption versus organizational legitimacy.

US policymakers continue to call into question the tax-exempt status of hospitals. As nonprofit tax-exempt entities, hospitals are required by the Internal Revenue Service (IRS) to report the type and cost of community benefits they provide. Institutional theory indicates that organizations derive organizational legitimacy from conforming to the expectations of their environment. Expectations from the state and federal regulators (the IRS, state and local taxing authorities in particular) and the community require hospitals to provide community benefits to achieve legitimacy. This article examines community benefit through an institutional theory framework, which includes regulative (laws and regulation), normative (certification and accreditation), and cultural-cognitive (relationship with the community including the provision of community benefits) pillars. Considering a review of the results of a 2006 IRS study of tax-exempt hospitals, the authors propose a model of hospital community benefit behaviors that distinguishes community benefits between cost-quantifiable activities appropriate for justifying tax exemption and unquantifiable activities that only contribute to hospitals' legitimacy.

Do hospital chief executive officers extract rents from Certificate of Need laws?

Prior research suggests that Certificate of Need (CON) laws reduce competition in the hospital services industry. As a result, this study empirically investigates if not-for-profit hospital chief executive officers (CEOs) are able to extract rents from CON laws in the form of higher compensation. A sample of 256 not-for-profit hospital CEOs in states with and without CON laws and data for 2007 are used in the empirical analysis. The study considers the endogenous nature of a CON law and allows such a law to indirectly affect CEO compensation through its impact on the number of hospitals and beds. The multiple regression results indicate that special and public interests both motivate the decision of a state to maintain a CON law. CON laws are shown to reduce the number of beds at the typical hospital by 12 percent, on average, and the number of hospitals per 100,000 persons by 48 percent. These reductions ultimately lead urban hospital CEOs in states with CON laws to extract economic rents of $91,000 annually.

Is your property tax-exempt status at risk?

Healthcare reform includes specific requirements for hospitals and health systems related to property tax exemption. Some states impose their own requirements for hospitals to qualify as a charity. Hospitals should proactively address property tax exemption status.

The accountability of nonprofit hospitals: lessons from Maryland's community benefit reporting requirements.

Under Internal Revenue Service requirements, nonprofit hospitals will begin filing new community benefit reports in 2010. Maryland has had similar requirements since 2004. This paper, based on interviews at 20 hospitals, describes how Maryland's requirements affected hospitals and their activities. Increases in reported community benefit expenditures since the program began are due to both changes in activities and better data capture. Charity care accounts for one-third of community benefit dollars. A key distinction concerns whether hospitals take an accounting or managerial approach to community benefit. The Maryland experience suggests the issues that will arise when the national requirements are implemented.

Community benefit laws, hospital ownership, community orientation activities, and health promotion services.

BACKGROUND: The hospital industry has exhibited a pattern of isomorphic change with regard to business operations. Many states have enacted community benefit laws to compel hospitals to provide community benefits to improve their community orientation. PURPOSES: We seek to identify what kinds of isomorphic change might be associated with the enactment of these state community benefit laws. To do this, we conducted a longitudinal study of changes in community benefit provided by hospitals in both states with community benefit laws and states without community benefit laws. METHODOLOGY/APPROACH: This study used a quasi-experimental panel design with the passage of community benefit laws/guidelines as the treatment variable. Our sample was composed of 390 not-for-profit hospitals and 129 investor-owned hospitals in 9 treatment states and 1,493 not-for-profit and 714 investor-owned hospitals in 35 control states. Community benefit was measured by the (a) community orientation activities reported and the (b) health promotion services offered by hospitals. FINDINGS: The not-for-profit hospitals in the states without community benefit laws had increased their community orientation activities and health promotion services in a manner similar to that of the not-for-profit hospitals in the states with community benefit laws. There was no significant difference between the not-for-profit hospitals in the states without community benefit laws and those in the states with community benefit laws in 1994 or 2006 for either dependent variable. The changes in the community benefit for the not-for-profit hospitals in the states without community benefit laws and in the states with community benefit laws were significant and positive for both dependent variables. PRACTICE IMPLICATIONS: Managers of acute care hospitals should engage in community orientation activities to maintain their legitimacy, differentiate themselves from other hospitals, avoid regulation, and manage resource dependency on managed-care payers.

Unraveling the new Form 990: implications for hospitals.

This article examines the recent significant changes to the Form 990 information return for tax-exempt organizations. Specifically, we address those changes to the return that may impact the health care industry. The Internal Revenue Service (IRS) argues the redesign of the Form 990 is based on the following three principles: enhancing transparency, promoting tax compliance, and minimizing the burden on the filing organization. It has yet to be determined whether the significant reorganization of the informational return will benefit the stakeholders of the health care industry. We argue that these changes are a step in the right direction in providing necessary disclosure for policymakers and federal regulators.

IRS eyes nonprofits--EDs can play key role.

You might not realize it, but if you work in a not-for-profit hospital your department plays a key role in making sure it maintains that status, and increased scrutiny of nonprofits by the Internal Revenue Service makes that role even more important. Here are some things you can do to help make sure your hospital continues to receive the considerable benefits of not-for-profit status: If your department runs an ambulance or helicopter service, include those data in your regular reports. Be sure to focus on costs, not charges, when calculating uncompensated or charity care. If your hospital has a speakers' bureau, make yourself available for presentations about your services in the community.