Understanding the Current Policy Challenges around Hospital Community Benefit Accountability

This entry is part 10 of 11 in the series Nov 2023

Community benefit reporting is intended to promote nonprofit hospital accountability, but current policies reduce transparency.

Though a longstanding concept in the world of nonprofit hospitals, community benefit has emerged as a key topic in health care policy in recent decades. Our article, “Hospital Community Benefit Reporting: How Group Reporting Practices Limit Accountability,” considers the policies around community benefit reporting requirements, a recent factor in the broader discussion of community benefit. For the better part of the last century, hospitals who receive tax-exempt status have been expected to invest in their communities in lieu of the tax payments they would otherwise be making. Only in the last 15 years, however, has a formal process for reporting these community benefit expenditures to the federal government been established. The 2008 introduction of Form 990 Schedule H by the Internal Revenue Service created a regulative expectation for hospitals to document and categorize their efforts. Two years later, the passage of the 2010 Patient Protection and Affordable Care Act included a mandate that nonprofit hospitals conduct community health needs assessments (CHNAs) and make these assessments public. These two efforts were a substantial shift toward holding nonprofit hospitals accountable for the community efforts they had long been obligated to conduct by establishing requirements for hospitals to create public documents about these efforts. As well, these documents have the potential to be a rich source of data for health services researchers and public policy makers. Our own team represents backgrounds in health administration, sociology, and public health, with interests in what information these documents have to offer about organizational decisions, policy efficacy, and community health efforts.

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Currently, and perhaps antithetically to the idea of transparency, the regulative language regarding community benefit reporting allows hospitals to do this reporting at a system level. Given the prevalence of hospital systems and the number of communities a system may find itself serving, this practice has the potential to greatly dilute the ability to use these documents to understand the ways in which hospitals are directing resources within communities. Though hospital systems will still appropriately categorize the nature of their spending, when the expenditures of multiple hospitals are aggregated, there is no way to determine how hospitals are directing funds toward local needs.

The question that prompted this study is: how prevalent is this practice of group reporting, and which hospitals are most likely to utilize it? By drawing upon a decade’s worth of community benefit reporting and data on the nation’s hospitals, we identified that over 40% of hospitals have participated in group reporting practices, with most hospitals doing so consistently throughout the decade, and the largest hospitals being most likely to do so. While we recognize that some hospitals may view group reporting practices as an efficiency, the high prevalence of the practice essentially means that nearly half of all hospitals are not providing a clear indication of how their efforts are reaching their community members. This raises the question of whether this policy is having the effect it was intended to and how it could be adapted to be more effective. A key idea that comes out of the analysis is that, whether or not the federal government wishes to take steps to improve reporting transparency, states have the ability to implement community benefit policies that decrease group reporting practices.

For policy makers and researchers interested in greater transparency in community benefit, “Hospital Community Benefit Reporting: How Group Reporting Practices Limit Accountability,” provides a baseline understanding of the challenges in achieve that transparency under current regulation. As researchers, we seek to further understand these challenges and how they can best be addressed.

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Berkeley Franz is Associate Professor of Community-based Health at the Ohio University Heritage College of Osteopathic Medicine. Her research focuses on health disparities, population health, and substance use, and she currently leads two NIDA-funded studies focused on increasing access to opioid use disorder services in underserved communities. 

Simone Singh is an Associate Professor of Health Management and Policy at the University of Michigan School of Public Health. Trained in accounting and finance, her work has advanced our understanding of nonprofit hospitals’ community benefit investments and contributed to the scholarship and practice of public health finance.

Neeraj Puro is an Assistant Professor at Florida Atlantic University in the Health Administration program. His research focuses on hospital financial performance, overlapping professions in healthcare and quality of care. He has published in the Sociology of Health and Illness, Journal of Rural Health, SSM-Population Health, PLoS One, and other journals.

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