scholarly journals Comparing the Value of Nonprofit Hospitals’ Tax Exemption to Their Community Benefits

2018 ◽  
Vol 55 ◽  
pp. 004695801775197 ◽  
Author(s):  
Bradley Herring ◽  
Darrell Gaskin ◽  
Hossein Zare ◽  
Gerard Anderson
Keyword(s):  
Hospital Cost ◽  
Internal Revenue Service ◽  
Nonprofit Hospitals ◽  
Community Benefit ◽  
American Hospital ◽  
Internal Revenue ◽  
Community Benefits ◽  
Annual Survey ◽  
Tax Exempt ◽  
Total Community

The tax-exempt status of nonprofit hospitals has received increased attention from policymakers interested in examining the value they provide instead of paying taxes. We use 2012 data from the Internal Revenue Service (IRS) Form 990, Centers for Medicare and Medicaid Services (CMS) Hospital Cost Reports, and American Hospital Association’s (AHA) Annual Survey to compare the value of community benefits with the tax exemption. We contrast nonprofit’s total community benefits to what for-profits provide and distinguish between charity and other community benefits. We find that the value of the tax exemption averages 5.9% of total expenses, while total community benefits average 7.6% of expenses, incremental nonprofit community benefits beyond those provided by for-profits average 5.7% of expenses, and incremental charity alone average 1.7% of expenses. The incremental community benefit exceeds the tax exemption for only 62% of nonprofits. Policymakers should be aware that the tax exemption is a rather blunt instrument, with many nonprofits benefiting greatly from it while providing relatively few community benefits.

Charitable Hospital Accountability: A Review and Analysis of Legal and Policy Initiatives

1998 ◽  
Vol 26 (2) ◽  
pp. 116-137 ◽  
Author(s):  
Alice A. Noble ◽  
Andrew L. Hyams ◽  
Nancy M. Kane
Keyword(s):  
Local Authorities ◽  
Nonprofit Hospitals ◽  
Community Benefit ◽  
State Legislation ◽  
American Hospital ◽  
Early American ◽  
Community Benefits ◽  
Tax Exempt ◽  
Nonprofit Hospital ◽  
State And Local

Hospitals long ago shed their role as alms houses for the poor. What vestiges remain of the early American hospital are the tax-exempt, nonprofit hospital form and a general perception that hospitals, as charitable institutions, owe a duty to their communities. The appropriateness of the nonprofit hospital tax exemption has long been debated, and many theories have been advanced to justify the tax exemption of nonprofit hospitals. In a growing number of jurisdictions, however, state and local authorities have gone beyond the theoretical debate and are challenging the tax exemption of their nonprofit hospitals. For various reasons, efforts are afoot to capture greater community benefit from nonprofit hospitals.At the heart of such challenges is the debate over the nature and extent of the duty charitable institutions owe to their communities. A demand is growing for nonprofit hospitals to earn their tax exemptions by benefiting their communities in concrete ways. Some have been stripped of their tax-exempt status by local authorities or pressured to make payments in lieu of taxes. A number of states have recently implemented initiatives in an attempt to make hospitals more accountable for their community benefits. Many hospitals are responding to this heightened scrutiny in a proactive way, by voluntarily documenting community benefits. A number of nonprofit hospitals and hospital associations are cooperating with—or even sponsoring—state legislation in this area.

scholarly journals Charity Care and Community Benefit in Non-Profit Hospitals: Definition and Requirements

2021 ◽  
Vol 58 ◽  
pp. 004695802110281
Author(s):  
Hossein Zare ◽  
Matthew Eisenberg ◽  
Gerard Anderson
Keyword(s):  
Descriptive Analysis ◽  
Charity Care ◽  
Community Benefit ◽  
Policy Makers ◽  
American Hospital ◽  
American Hospital Association ◽  
Non Profit ◽  
Gini Coefficients ◽  
Community Benefits ◽  
Total Community

Policymakers are using different ways to measure the community benefit provided by non-profit hospitals because different policy makers have different policy objectives. We compare 3 commonly used measures of community benefit; examine the correlation across the 3 measures; examine how the distribution of community benefits varies across non-profit hospitals; and compare the factors associated with the level of community benefit for each definition. The main dataset for this study is the Schedule H of IRS Form 990 data for 2017. We merged this data with the 2017 American Hospital Association (AHA), the 2017 CMS Hospital Cost Report, and the 2018 American Community Survey data. The final sample consists of 1904 non-profit hospitals. We define 3 measures of community benefit: (1) Total community benefits: combining all 17 possible measures in the 990 data; (2) Total community benefits less unreimbursed Medicaid care because it reflects a policy choice made by the state; and (3) only charity care. We also subdivided the community benefits into individual and service-based benefit. Gini Coefficients and descriptive analysis show the distribution of 3 types of community benefit measures. On average, hospitals spent 8.1% of their expenses on all community benefits; 4.3% on community benefits less unreimbursed Medicaid; and 1.7% on charity care. The provision of charity care showed more variation (Gini coefficient) than the other 2 measures. Different hospital and geographic characteristics were associated with each definition, suggesting that different types of hospitals place emphasis on different community benefits. When policy makers choose among different definitions of community benefit, they should consider what incentives they want to instill.

The Accountability of Nonprofit Hospitals: Lessons from Maryland's Community Benefit Reporting Requirements

2009 ◽  
Vol 46 (2) ◽  
pp. 122-139 ◽  
Author(s):  
Bradford H. Gray ◽  
Mark Schlesinger
Keyword(s):  
Data Capture ◽  
Internal Revenue Service ◽  
Charity Care ◽  
Nonprofit Hospitals ◽  
Community Benefit ◽  
Internal Revenue ◽  
Reporting Requirements ◽  
New Community

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.

Transparency, Compliance, and Filing Burden—Principles for the Revised Form 990

2009 ◽  
Vol 7 (1) ◽  
pp. 133-151 ◽  
Author(s):  
Pamela C. Smith ◽  
Donna J. Shaver
Keyword(s):  
Income Tax ◽  
Historical Context ◽  
Tax Compliance ◽  
Internal Revenue Service ◽  
Internal Revenue ◽  
Tax Exempt ◽  
Guiding Principles ◽  
Legislative Changes ◽  
Transparency And Accountability

ABSTRACT: The Internal Revenue Service (IRS) has significantly revised Form 990, “Return of Organization Exempt from Income Tax.” The informational return has not been substantively modified in 30 years. The IRS states the redesign of the return was based on three guiding principles: (1) enhancing transparency, (2) promoting tax compliance, and (3) minimizing the burden on the filing organization. This paper outlines the historical context of legislative changes concerning transparency and accountability within the tax exempt sector. It also outlines the major revisions to Form 990 and argues that they meet the underlying goals established by the IRS to enhance the overall accountability within the sector.

Charity Care Characteristics and Expenditures Among US Tax-Exempt Hospitals in 2016

2020 ◽  
Vol 110 (4) ◽  
pp. 492-498 ◽  
Author(s):  
Christopher W. Goodman ◽  
Amber Flanigan ◽  
Janice C. Probst ◽  
Allan S. Brett
Keyword(s):  
Affordable Care Act ◽  
Web Sites ◽  
Health Care Services ◽  
Internal Revenue Service ◽  
Charity Care ◽  
Community Benefit ◽  
Care Services ◽  
Tax Exempt ◽  
Potential Benefits ◽  
Eligibility Requirements

Objectives. To examine content of financial assistance polices (FAPs) among US tax-exempt hospitals and determine whether restrictive policies were associated with reduced charity care spending. Methods. Using hospital tax filings with the Internal Revenue Service in 2016 and FAPs obtained from hospital Web sites, we examined characteristics of FAPs and associated expenditures for charity care in a representative sample of 170 tax-exempt hospitals. We identified common eligibility requirements and used them to define restrictiveness of FAPs. Results. FAPs were characterized by various ways to exclude patients, a patchwork of coverage for typical health care services, and wide-ranging discounts. FAP expenditures were lowest among restrictive hospitals in states that expanded Medicaid as part of the Affordable Care Act and highest among nonrestrictive hospitals in nonexpansion states. FAP expenses did not differ by hospital restrictiveness alone. Conclusions. Standardizing common eligibility requirements among FAPs carries potential benefits with regard to optimizing charity care for community benefit and achieving at least some level of equity; however, further policy efforts must account for additional restrictions, charges, and exclusions to be effective.

The Church of Scientology: Legitimacy through Perception Management

2014 ◽  
Vol 7 (3) ◽  
pp. 613-630
Author(s):  
Max Halupka
Keyword(s):  
Public Sector ◽  
Internal Revenue Service ◽  
Legal Recognition ◽  
The Public ◽  
Internal Revenue ◽  
Tax Exempt ◽  
Perception Management ◽  
The Church

AbstractIn 1967 the Church of Scientology's tax-exempt status was revoked on the basis that it failed to meet the criteria outlined in section 501(c)(3) of the Internal Revenue Service. Between its loss, and eventual reacquisition in 1993, the Church of Scientology employed a number of political based tactics in an attempt to legitimize itself to the public sector. This article explores these tactics in relation to the religion's use of perception management. The article argues that the processes of both legal recognition and legitimization draw upon each other in a new faith's transition to mainstream theology. In this, the Church employed perception management in attempt to influence both processes. In exploring this, the paper contributes to our understanding of role that public legitimacy plays in a new faith's development.

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

2018 ◽  
Vol 43 (2) ◽  
pp. 229-269 ◽  
Author(s):  
Simone R. Singh ◽  
Gary J. Young ◽  
Lacey Loomer ◽  
Kristin Madison
Keyword(s):  
Community Health ◽  
State Level ◽  
Health Needs ◽  
Charity Care ◽  
Nonprofit Hospitals ◽  
Community Benefit ◽  
Minimum Income ◽  
Needs Assessments ◽  
Community Benefits ◽  
Eligibility Standards

Abstract 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.

scholarly journals Strategic reporting by nonprofit hospitals: an examination of bad debt and charity care

2021 ◽  
Author(s):  
Amanda Beck ◽  
Collin Gilstrap ◽  
Jordan Rippy ◽  
Brian Vansant
Keyword(s):  
Cost Of Debt ◽  
Charity Care ◽  
Nonprofit Hospitals ◽  
Social Good ◽  
Hospital Managers ◽  
Community Benefits ◽  
Stakeholder Pressure ◽  
Tax Exempt ◽  
Using Data ◽  
Bad Debt

AbstractIn this paper, we examine bad debt and charity care reporting by nonprofit hospitals around bond issuance. Given the tax advantages afforded to nonprofit hospitals, including the ability to issue tax-exempt debt, hospital managers encounter stakeholder pressure to provide community benefits. When nonprofits issue debt, they also face economic pressure to meet creditors’ financial performance expectations. We document a reporting strategy that allows nonprofit hospitals to reduce the cost of bond debt while simultaneously alleviating regulators’ and community members’ concerns about inadequate provision of charity care. Using data from public bond issues for California nonprofit hospitals, we find that hospital managers shift costs from bad debt expense to charity care in periods prior to a public bond issuance and that the strategy is associated with a lower cost of debt. Our results inform those relying on accounting measurements to infer nonprofit hospitals’ social good provisions and financial health.

scholarly journals Is Federal Tax-Exemption Policy for Nonprofit Hospitals Moving to a Clearer Quid pro Quo Basis?

2012 ◽  
Vol 3 (1) ◽  
Author(s):  
Beaufort B. Longest
Keyword(s):  
Tax Policy ◽  
Income Tax ◽  
Corporate Income Tax ◽  
Internal Revenue Service ◽  
Tax Policies ◽  
Nonprofit Hospitals ◽  
Internal Revenue ◽  
Exemption Policy ◽  
Income Tax Policy ◽  
Modern Era

The question of whether federal tax-exemption policy for nonprofit hospitals is moving to a clearer and more robust quid pro quo basis is examined. The question is important because heretofore the basis for federal exemption has been vague and fluid. Utilizing a quid pro quo rationale for federal tax-exemption of nonprofit hospitals as a framework, the chronological record of policy in this area is organized into three major periods: (1) A Simple Quid pro Quo: Early Federal Tax Policies for Nonprofit Hospitals; (2) A Changing Quid pro Quo: The Modern Era of Federal Tax Policy for Nonprofit Hospitals; and (3) An Emergent, Clearer Quid pro Quo: Recent Congressional Activism on Exemption Policy, including relevant provisions of the ACA. The article concludes with discussion of continuing vagueness and ambiguity in federal corporate income tax policy for nonprofit hospitals. The importance of enhanced clarity and specificity in the information upon which policy in this area is based is discussed, as are actions needed by Congress and the Internal Revenue Service to accomplish improved exemption policy.

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