With final Form 990, a brighter spotlight


With the release of the final instructions for filling out the IRS Form 990 last week, we've arguably reached something of a milestone. In theory, from now on the IRS and other watchdog groups should have a much better idea of how not-for-profit hospitals account for their charity care efforts. 

Now, the healthcare industry should face some new challenges. With more standardization between hospitals, it's going to become easier for outsiders to compare charity care levels, both on a regional and national level. (Whether the comparisons are actually legitimate is a separate discussion; the fact remains that people will feel they have the means to do so.)

Expect to see the comparisons go well beyond the IRS level. For one thing, have no doubt that state and federal legislators will go over the Form 990 with a fine-tooth comb, and that hospitals whose profile looks bad will quickly find their tax exemption questioned. On a federal level, I have no doubt that members of Congress--especially Sen. Chuck Grassley--will file legislation addressing whatever gaps they feel they've discovered when looking at troubling national patterns.

Assume that regulatory agencies other than the IRS will use information from the Form 990 to make decisions on critical matters. For example, I'm betting that the FTC will bear levels of charity care in mind when considering the appropriateness of hospital merger transactions--and that the DoJ will consider charity arrangements when looking at deals between doctors and hospitals alleged to involve kickbacks.

And of course, there will be the non-governmental analyses, too. As soon as the data becomes available, expect private healthcare organizations to create a full-scale analysis of the data and point fingers at hospitals that seem to be behind the curve--as well as, we'd hope, praising those that seem to be doing well.

Can non-profit hospitals do anything about all of this? Probably not. But it doesn't hurt to be prepared. From now on, assume that your charity care efforts are more public than ever, and more a source of discussion, speculation and regulatory action, too. Like it or not, you'll be living with a new level of transparency. In coming columns, I'll talk about what some of you are doing about it. - Anne

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