Declining Investment in Community-Building Activities by Nonprofit Hospitals Highlights the Need for Policy Alignment

This entry is part 4 of 17 in the series July 2023

Declining Investment in Community-building Activities by Nonprofit Hospitals Highlights the Need for Policy Alignment

This article highlights the decreasing investment of nonprofit hospitals in community-building activities despite the recognition of social determinants of health (SDOH) as important community health needs, emphasizing the need for policy alignment and effective evaluation metrics.

In our article “Trends in the Provision of Community-Building Activities by Nonprofit Hospitals, 2010-2019,” my colleagues and I explored the extent to which nonprofit hospitals go beyond clinical care provision and allocate resources towards activities and strategies aimed at improving the overall of their communities. Our primary focus was on analyzing the expenditures of these hospitals on so-called community-building activities (CBAs). CBAs encompass a range of initiatives that safeguard or enhance community health by addressing the upstream factors and social determinants that impact health. Examples of such activities include housing, economic development, environmental improvements, workforce and leadership development, coalition building, and advocacy efforts.

To analyze the trends in hospital spending on CBAs, we used data from nonprofit hospitals’ Internal Revenue Service (IRS) Form 990 Schedule H for 2010 to 2019, which represents the most recent ten years of available data. Our primary focus was assessing spending on CBAs as a percentage of a hospital’s total operating expenditures. We used descriptive statistics to examine patterns and changes in the provision of CBAs by nonprofit hospitals during the specified timeframe (2010-2019).

What did we find?

Overall, nonprofit hospitals’ investment in CBAs was relatively modest. In 2010, the median CBA spending by nonprofit hospitals was $86,677 (equivalent to $101,624 in 2019 dollars), and it increased to $123,789 in 2019. However, during the period of 2010 to 2019, there was a continuous decline in spending on CBAs by nonprofit hospitals in the United States. In 2010, the median CBA spending represented only 0.04% of a hospital’s total operating expenditures. By 2019, this spending had decreased by half to a mere 0.02% of operating expenditures. Interestingly, smaller hospitals initially allocated a larger proportion of their operating expenditures to CBAs compared to larger hospitals. However, over time, this disparity in spending diminished (see Figure). By 2019, regardless of hospital bed size, the median spending on CBAs was approximately 0.02% of a hospital’s total operating expenditures.

Implications for policy and practice

The Affordable Care Act (ACA) of 2010 mandated that nonprofit hospitals collaborate with local health departments and community-based organizations to identify crucial health needs and make targeted investments in their communities’ well-being. In our previous research, we discovered that in the most recent community health needs assessments, approximately 70 percent of nonprofit hospitals recognized upstream social determinants of health (SDOH) as a significant community health need. Moreover, 67 percent of these hospitals implemented at least one program to address SDOH in their implementation strategies. Yet despite hospitals’ efforts to develop SDOH-related programs in response to community needs, they do not appear to be shifting investments toward these activities. Between 2010 and 2019, hospital spending on CBAs decreased, suggesting a lack of sustained investment in such activities among nonprofit hospitals.

Future policy efforts should prioritize enhancing the alignment between hospitals’ community-building investments and the most critical needs within their communities, particularly emphasizing upstream SDOH. It is crucial to establish policy initiatives that establish quality metrics, enabling the assessment of the impact of hospitals’ investments in CBAs. Furthermore, policy efforts should encourage collaboration and knowledge sharing among hospitals and community-based organizations. By fostering partnerships and facilitating the exchange of best practices, successful strategies for improving community health can be identified and replicated more effectively. This collaborative approach ensures that valuable insights and lessons learned from one community can be adapted and applied to benefit other regions facing similar challenges. By focusing on the alignment of hospitals’ investments with community needs and employing rigorous quality metrics, policymakers can drive meaningful change in community health outcomes.

The continuous evaluation and improvement of community-building activities will pave the way for evidence-based approaches that address the root causes of health disparities and promote sustainable, long-term improvements in community well-being.

To learn more, read our research report, “Trends in the Provision of Community-Building Activities by Nonprofit Hospitals, 2010-2019” in the July 2023 issue of the JPHMP.

Figure: Nonprofit Hospitals’ Spending on Community-Building Activities as a Percentage of Total Operating Expenditures by Bed Size, 2010-2019

Source: Trends in the Provision of Community-Building Activities by Nonprofit Hospitals, 2010-2019 Journal of Public Health Management and Practice29(4):503-506, July/August 2023.

Reference: Franz B, Cronin CE, Yeager VA, Burns A, Singh SR. Overview of the Most Commonly Identified Public Health Needs and Strategies in a Nationally Representative Sample of Nonprofit Hospitals. Med Care Res Rev. 2023 Jun;80(3):342-351. doi: 10.1177/10775587221135365. Epub 2022 Nov 14. PMID: 36377207.

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