Community benefits represent 11.6% of nonprofit hospital spending

An average of 11.6 percent of nonprofit hospital expenses go toward community benefits, a look at Schedule H tax forms by Ernst & Young shows, up from 11.3 percent in the previous year's tax returns.

The Schedule H Benchmark Report was prepared for the American Hospital Association based on tax forms filed for tax year 2010. Benefits include free care, Medicaid underpayments, community health improvement programs, health research and education, subsidized services, Medicare shortfalls and other community-building activities, AHA News Now noted.

Direct benefits, including charity care and spending to cover Medicaid underpayments, averaged 5.7 percent of expenses, according to the analysis. Three out of four hospitals reported Medicaid shortfalls in 2010.

"The report demonstrates that, measured in dollars alone, hospitals of every size, type and general location are not only meeting, but are exceeding, the community benefit obligations conferred by their tax-exempt status," AHA President and CEO Rich Umbdenstock says in the statement.

Even with the report, "communities themselves are in the best position to determine whether the benefits provided by their local hospital match their needs and aspirations," he added.

The Ernst & Young report echoes the tact suggested last fall by Becker's Hospital Review to measure community benefit by also highlighting money spent to cover Medicare and Medicaid shortfalls, subsidized healthcare services, medical research and wellness initiatives.

Critics around the country increasingly are questioning whether nonprofit hospitals are providing enough charity care to justify their tax-exempt status.

In California, for example, the Institute for Health and Socio-Economic Policy, the research arm of the California Nurses Association, last year said the state's nonprofit hospitals often deliver less charity care than for-profits.

In Montana, a report last year by University of Montana professor and former hospital CEO Larry White raised questions about hospitals claiming physician-owned clinics as a community benefit. Meanwhile, the state's attorney general noted the approval rate for charity care applications dropped from 93 percent in 2008 to 90 percent in 2010.

To learn more:
- here's the AHA News Now brief
- download the report (.pdf)
- read the Becker's article

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