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

When States Mandate Hospital Community Benefit Reports, Provision Increases

GOAL

We examined the variation in community benefit and charity care reporting standards mandated by states to determine whether state-mandated community benefit and charity care reporting is associated with greater provision of these services.

METHODS

We used 2011-2019 data from IRS Form 990 Schedule H for 1,423 nonprofit hospitals to create a sample of 12,807 total observations. Random effects regression models were used to examine the association between state reporting requirements and community benefit spending by nonprofit hospitals. Specific reporting requirements were analyzed to determine whether certain requirements were associated with increased spending on these services.

PRINCIPAL FINDINGS

Nonprofit hospitals in states that required reports spent a higher percentage of total hospital expenditures on community benefits (9.1%, SD = 6.2%) compared to states without these requirements (7.2%, SD = 5.7%). A similar association between the percentage of charity care and total hospital expenditures (2.3% and 1.5%) was found. The greater number of reporting requirements was associated with lower levels of charity care provision, as hospitals allocated more resources to other community benefits.

PRACTICAL APPLICATIONS

Mandating the reporting of specific services is associated with greater provision of certain specific services, but not all. A concern is that when many services must be reported, the provision of charity care might be reduced as hospitals choose to allocate their community benefit dollars to other categories. As a result, policymakers may want to focus their attention on the services they most want to prioritize.

Understanding the relationship between nonprofit hospital community benefit spending and system membership: An analysis of independent hospital acquisitions

The Internal Revenue Service (IRS) requires nonprofit hospitals to report community benefit spending to justify their nonprofit tax exemption. We examined whether nonprofit hospital acquisitions influence the amount and type community benefit spending. We analyzed 2011-2018 data on urban, nonprofit hospitals. The analysis dataset included 57 hospitals that were acquired and a matched control group. We estimated difference-in-differences specifications to measure the effect of acquisitions on total community benefit spending, and three subcategories - clinical, population health, and other spending types. We found that acquisitions led to decreased population health spending (-$0.32 million, p < 0.01) and other spending categories (-$1.5 million, p < 0.05), but no significant change in total or clinical spending. If the acquirer was located out-of-state, total community benefit spending declined by $2.4 million (p < 0.10). Our findings support the need for community benefit spending to be considered, along with quality, efficiency, and prices, when evaluating the welfare impact of acquisitions.

State Regulation and Hospital Community Benefit Spending in Medicaid Expansion States

CONTEXT

Previous studies show that nonprofit hospital spending on charity care declined in Medicaid expansion states. We test whether state community benefit regulations mitigated the decline in charity care spending.

METHODS

We use a fixed effects model to evaluate the association between state regulations and nonprofit hospital community benefit spending and its subcategories as a share of total expenses in Medicaid expansion states. We obtained community benefit spending data from the Internal Revenue Service Form 990 Schedule H filings of 1,738 hospitals in 44 states and the District of Columbia from 2010 to 2017. We determine the stringency of state regulations by comparing the provisions of state and federal requirements based on regulation information compiled by the Hilltop Institute.

FINDINGS

State minimum community benefit requirements are associated with increased community benefit and charity care spending by nonprofit hospitals in Medicaid expansion states.

CONCLUSIONS

States that imposed minimum community benefit requirements on nonprofit hospitals did not experience a decline in charity care spending after Medicaid expansion. The results suggest state minimum community benefit rules may expand the provision of community benefit and charitable care spending.

Title: advancing urban health equity in the United States in an age of health care gentrification: a framework and research agenda

Background

Access to health care has traditionally been conceptualized as a function of patient socio-demographic characteristics (i.e., age, race/ethnicity, education, health insurance status, etc.) and/or the system itself (i.e., payment structures, facility locations, etc.). However, these frameworks typically do not take into account the broader, dynamic context in which individuals live and in which health care systems function.

Purpose

The growth in market-driven health care in the U.S. alongside policies aimed at improving health care delivery and quality have spurred health system mergers and consolidations, a shift toward outpatient care, an increase in for-profit care, and the closure of less profitable facilities. These shifts in the type, location and delivery of health care services may provide increased access for some urban residents while excluding others, a phenomenon we term “health care gentrification.“ In this commentary, we frame access to health care in the United States in the context of neighborhood gentrification and a concurrent process of changes to the health care system itself.

Conclusions

We describe the concept of health care gentrification, and the complex ways in which both neighborhood gentrification and health care gentrification may lead to inequitable access to health care. We then present a framework for understanding health care gentrification as a function of dynamic and multi-level systems, and propose ways to build on existing models of health care access and social determinants of health to more effectively measure and address this phenomenon. Finally, we describe potential strategies applied researchers might investigate that could prevent or remediate the effects of health care gentrification in the United States.

What do nonprofit hospitals reward? An examination of CEO compensation in nonprofit hospitals

Nonprofit hospital chief executive officer (CEO) compensation has received considerable attention in light of nonprofits’ tax-favored status as well as the high costs of hospital care. Past studies have found that hospital financial performance is a significant determinant of CEO pay but nonprofit performance, including quality and charity care, are not. Using post-ACA data, we re-examine whether a variety of hospital performance measures are important determinants of nonprofit hospital CEO compensation. We found mixed evidence with respect to the significance of the association between financial performance and uncompensated care and CEO compensation. Among the other nonprofit performance measures, patient satisfaction was significantly associated with CEO compensation, but other measures were not significant determinants of CEO compensation. Our results suggest nonprofit hospitals balance their financial health against their mission when setting CEO incentives. Additional policy targeting transparency in hospital CEO compensation may be warranted to help policymakers understand the specific factors used by hospital boards to incentivize CEOs.

Nonprofit Hospital Community Benefits: Collaboration With Local Health Departments to Address the Drug Epidemic

BACKGROUND

Nonprofit hospitals (NFPs) are required to provide community benefits, which have been historically focused on provision of medical care, to keep their tax exemption status. To increase hospital investment in community health, the Patient Protection and Affordable Care Act required NFPs to conduct community health needs assessments and address identified needs. Some states have leveraged this provision to encourage collaboration between NFPs and local health departments (LHDs) in local health planning.

OBJECTIVE

The objective of this study was to examine the association of NFP-LHD collaboration in local health planning targeting drug use, with drug-induced mortality.

RESEARCH DESIGN

We conducted difference-in-differences analyses using drug-induced mortality data from 2009 to 2016, encompassing the first 3 years after NFP-LHD collaboration in local health planning specific to drug use. We evaluated drug-induced mortality in 22 counties in which collaboration was required in comparison with that in 198 control counties. We used data collected from implementation strategy reports by NFPs and combined it with data on hospital characteristics, as well as state-level and county-level factors associated with drug-induced mortality.

MEASURES

The primary outcome was county-level drug-induced mortality per 100,000 population.

RESULTS

Counties, in which NFP-LHD collaboration in local health planning was required and in which NFPs and LHDs jointly prioritized drug use, experienced a deceleration in drug-induced mortality of ~8 deaths per 100,000 population compared with the mortality rate they would have experienced without collaboration.

CONCLUSIONS

Collaboration between NFPs and LHDs to address drug use was associated with a deceleration in drug-induced mortality. Policymakers can leverage community benefit regulation to encourage NFP-LHD collaboration in local health planning.

Analysis Suggests Government And Nonprofit Hospitals' Charity Care Is Not Aligned With Their Favorable Tax Treatment

The different tax treatment of government, nonprofit, and for-profit hospitals implies different charity care obligations, with the greatest obligation for government hospitals and the least for for-profit hospitals. Prior research has not examined charity care provision among all three ownership types at the national level. Using 2018 Medicare Hospital Cost Reports, we compared charity care provision across 1,024 government, 2,709 nonprofit, and 930 for-profit hospitals. In aggregate, nonprofit hospitals spent $2.3 of every $100 in total expenses incurred on charity care, which was less than government ($4.1) or for-profit ($3.8) hospitals. No hospital ownership type outperformed the other two types with respect to charity care provision in a majority of hospital service areas containing all three types. Using different kinds of analyses, we also found wide variation in charity care provision within ownership types and a lack of a consistent pattern across ownership types. These results suggest that many government and nonprofit hospitals' charity care provision was not aligned with their charity care obligations arising from their favorable tax treatment. Policy makers may consider initiatives to enhance hospitals' charity care provision, particularly hospitals with government and nonprofit ownership.

Comparing the value of community benefit and Tax-Exemption in non-profit hospitals

Objective

We examined the characteristics of non‐profit hospitals providing more community benefits and charity care than value of their tax exemptions and how this relationship changed between 2011 and 2018.

Data sources

Primary dataset was schedule H Form IRS 990 data. This data was merged with the American Hospital Association, Medicare Hospital Cost Report, and the America Community Survey.

Study design

We measured six categories of tax benefits and 17 types of community benefits. Subtracting the average value of community benefits provided by for‐profit hospitals, we computed incremental community benefit and charity care provided by each non‐profit hospital.

Extraction methods

A nationally representative sample was created of 11 776 non‐profit hospital‐year observations from 1472 unique hospitals over the 2011 to 2018 period was created. Descriptive analyses and random effect logistic regression were used to show associations between hospital characteristics and difference between incremental net community benefits and the value of tax‐exemption.

Principal findings

After adjusting for community benefits provided by for‐profits hospitals, on average, non‐profit hospitals spent 5.9% (CI: 5.8%‐6.0%) of their total expenses on community benefits; 1.3% (CI: 1.2%‐1.3%) on charity care; and received 4.3% (CI: 4.2%‐4.4%) of total expenses in tax exemptions. A total of 38.5% of non‐profit hospitals did not provide more community benefit and 86% did not provide more charity care than the value of their tax exemption. Hospitals with fewer beds, providing residency education and located in high poverty communities were more likely to provide more incremental community benefits and charity care than the value of their tax exemption, while system affiliation had a negative association.

Conclusion

The amount of community benefits and charity care provided by non‐profits varied substantially across non‐profit hospitals. Establishing minimum requirements for non‐profit hospitals or publicly ranking hospitals based on their community benefit or charity care contributions, could encourage greater community benefits and charity care.

Medicaid Expansion and Not-For-Profit Hospitals' Financial Status: National and State-Level Estimates Using IRS and CMS Data, 2011-2016

Several studies have shown that Medicaid expansion has improved hospital financial performance. All of these studies have either used data from the Internal Revenue Service (IRS) or the Centers for Medicare and Medicaid Services (CMS), and none of them has examined the state-level impact of expansion on hospital finances. Using data for not-for-profit hospitals from both IRS and CMS for 2011-2016, we described the difference in costs related to uncompensated care and Medicaid shortfalls. We then estimated the impact of Medicaid expansion on hospitals' financial status nationally and by state. Nationally, the estimated net effect of expansion reduced not-for-profit hospital costs by 2 percentage points based on IRS data and 0.83 percentage points based on CMS data. Across expansion states, the estimated net effects varied widely with approximately a 10-fold difference for hospitals based on IRS data and a 2-fold difference based on CMS data. Future studies should further explore the differences across IRS and CMS data.

The impact of Maryland's payment reforms on hospital community benefit efforts

BACKGROUND

In 2014, Maryland established a global budget policy for all hospitals in the state. Under this policy, hospitals are incentivized to not only provide clinical care services to individual patients but also address the health needs of their broader patient population through prevention efforts and investment in the upstream social and economic factors that determine health.

PURPOSE

To better understand the incentives created for hospitals under this policy, our study assessed whether the implementation of global budgets changed the levels and patterns of Maryland hospitals' investments in community benefits.

APPROACH

Data on hospital community benefit spending from the Internal Revenue Service Form 990 Schedule H for the years 2010-2016 were utilized for this study.

RESULTS

We found that Maryland hospitals' total spending on community benefits decreased under the global budget policy. Unlike hospitals in similar states without a global budget policy, Maryland hospitals did not experience any increases in Medicaid shortfalls between 2014 and 2016. Although Maryland hospitals provided more subsidized health services, their investment in broader community health improvement activities remained unchanged.

CONCLUSION

Our analysis suggests that Maryland hospitals have shifted strategies because of the implementation of the global budget policy. The ability to report community benefit in a way that accurately considers the context and constraints of a state's policies would provide hospitals better means of communicating these efforts to stakeholders.

PRACTICE IMPLICATIONS

Our results suggest that global budgets impact the levels and patterns of hospitals' community benefit investments.

Community Benefit: Policies, Practices, and Opportunities at the Half-Century Mark

In the 50 years since the expansion of the legal definition of charity for tax-exempt hospitals, there have been periodic regulatory actions at the municipal, state, and federal level to quantify charitable contributions and justify the deferral of tax revenues. The movement toward risk-based reimbursement in the last decade creates an incentive for a shift in hospital leadership understanding and approach to community benefit programs and services. The historical interpretation of community benefit as an issue of compliance with legal obligations is being questioned by forward-thinking hospital leaders, in recognition that more strategic resource allocation offers the potential to reduce financial risk associated with preventable emergency department and inpatient utilization. Recent actions in the policy arena to strengthen community benefit practices, as well as policies in related areas such as homelessness and behavioral health, challenge hospitals to strengthen their focus on prevention. At the same time, increased availability of data on health care costs, mapping of health care utilization patterns, and parallel overlays of hospital location, jurisdictional boundaries, and the social determinants of health offer significant potential for informed public dialogue at the regional level that builds an ethic of shared ownership for health across sectors. Local public health agencies can play an important role by establishing baselines, goals, and objectives in communities where health inequities are concentrated within county and municipal jurisdictional boundaries to align and focus the assets of health, community development, and business sector stakeholders.

Patient and Family Engaged Care: An Essential Element of Health Equity

In this paper, we emphasize and explore health equity as an integral component of a culture of patient and family engaged care (PFEC), rather than an isolated or peripheral outcome. To examine the role of PFEC in addressing health inequities, we build on the 2017 NAM Perspectives discussion paper "Harnessing Evidence and Experience to Change Culture: A Guiding Framework for Patient and Family Engaged Care." Informed by both scientific evidence and the lived experience of patients, their care partners, practitioners, and health system leaders, the paper by Frampton et al. introduced a novel Guiding Framework that delineates critical elements that work together to co-create a culture of PFEC, while also depicting a logical sequencing for implementation that facilitates progressive change and improvement toward the Quadruple Aim outcomes of better culture, better care, better health, and lower costs. In this paper, the authors highlight the need to integrate addressing health and health care disparities and improving health equity as core components of the framework to ensure the culture and policy changes necessary to meaningfully engage patients, health system staff, families, and communities.

The Importance of Governmental and Nongovernmental Investments in Public Health and Social Services for Improving Community Health Outcomes

OBJECTIVE

To explore whether health outcomes are influenced by both governmental social services spending and hospital provision of community health services.

DESIGN

We combined hospital provision of community health services data from the American Hospital Association with local governmental spending data from the US Census Bureau. Longitudinal models regressed community health outcomes for 2012-2016 on local government spending on health, social services, and education from 5 years previously, controlling for sociodemographic and hospital marketplace characteristics, spatial autocorrelation, and state-level random effects. For counties with hospitals, models also included county-level data on hospitals' provision of community health services.

SETTING

All analyses were performed at the county level for US counties between 2012 and 2016.

PARTICIPANTS

Complete spending, hospital, and health outcomes data were available for a total of 2379 counties.

MAIN OUTCOME MEASURES

We examined relationships between governmental spending, hospital service provision, and 5 population health outcome measures: years of potential life lost prior to age 75 years per 100 000 population, percentage of population in fair or poor health, percentage of adults who are physically inactive, deaths due to injury per 100 000 population, and percentage of births that are of low birth weight.

RESULTS

Governmental investments in health, social services, and education positively impacted key health outcomes but mainly in counties with 1 or more hospitals present. Hospitals' provision of community health services also had a significant positive impact on health outcomes.

CONCLUSIONS

Hospital provision of community health services and increases in local governmental health and social services spending were both associated with improved health. Collaboration between local governments and hospitals may help ensure that public and private community health resources synergistically contribute to the public's health. Local policy makers should consider service provision by the private sector to leverage the public investments in health and social services.

Nonprofit Hospital Community Benefit in the U.S.: A Scoping Review From 2010 to 2019

Background: U.S. nonprofit hospital community benefit recently underwent significant regulatory revisions. Starting in 2009, the Internal Revenue Service (IRS) required hospitals to submit a new Schedule H that provided greater detail on community benefit activities. In addition, the Affordable Care Act (ACA), which became law in 2010, requires hospitals to conduct community health needs assessments (CHNA) and develop community health implementation plans (CHIP) as a response to priority needs every 3 years. These new requirements have led to greater transparency and accountability and this scoping review considers what has been learned about community benefit from 2010 to 2019.

Methods: This review identified peer-reviewed literature published from 2010 to 2019 using three methods. First, an OvidSP MEDLINE search using terms suggested previously by community benefit researchers. Second, a PubMed search using keywords frequently found in community benefit literature. Third, a SCOPUS search of the most frequently cited articles in this topic area. Articles were then selected based on their relevance to the research question. Articles were organized into topic areas using a qualitative strategy similar to axial coding.

Results: Literature appeared around several topic areas: governance; CHNA and CHIP process, content, and impact; community programs and their evaluation; spending patterns and spending influences; population health; and policy recommendations. The plurality of literature centered on spending and needs assessments, likely because they can draw upon publicly available data. The vast majority of articles in these areas use spending data from 2009 to 2012 and the first cycle of CHNAs in 2013. Policy recommendations focus on accountability for impact, enhancing collaboration, and incentivizing action in areas other than clinical care.

Discussion: There are several areas of community benefit in need of further study. Longitudinal studies on needs assessments and spending patterns would help inform whether organizations have changed and improved operations over time. Governance, program evaluation, and collaboration are some of the consequential areas about which relatively little is known. Gaps in knowledge also exist related to the operational realities that drive community benefit activities. Shaping organizational action and public policy would benefit from additional research in these and other areas.

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

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.

Local Health and Social Services Spending to Reduce Preventable Hospitalizations

Upstream spending on social determinants of health can lead to improved downstream population health outcomes but intermediate steps between these end points are unclear. The purpose of this study was to determine the longitudinal impacts of government spending on hospital visits for potentially preventable conditions. The authors used secondary data sets from 2007-2014 to measure county-level Prevention Quality Indicator (PQI) rates, local government health and social services spending, hospital-provided community health services, and other sociodemographics. Mixed effects models regressed county PQI rates on deviation from mean local government spending from 4 years previously to account for lag between spending and outcomes. Thirty-two states reported PQI data; complete data were available for 1660 counties. Controlling for baseline spending levels, a 1-time $10 per capita increase in social services spending was associated with 1.9 fewer preventable hospitalizations (per 100,000) within 4 years (P < 0.001); $10 increases in public health or education were associated with 1.8 and 2.2 fewer preventable hospitalizations (per 100,000), respectively (P < 0.001). The association between change in spending and change in PQI was larger for acute than for chronic conditions. Additional health and social services spending by local governments can prevent hospitalizations for conditions for which quality outpatient care can potentially prevent the need for hospitalization or for which early intervention can prevent complications or progression of disease. Upstream spending can affect health care utilization and may offer a way to improve health outcomes or reshape the health care cost curve.

Do State Opioid Policies Influence Nonprofit Hospitals' Decisions to Address Substance Abuse in Their Communities?

The U.S. epidemic of opioid abuse calls for broad collaboration between a wide range of health care institutions and the various levels of government. Through the community benefit programs they provide, nonprofit hospitals are well positioned to be key partners in local efforts. Although substance abuse appears on approximately 90% of the most recent community health needs assessments completed by hospitals, many hospitals are not addressing substance abuse in their programmatic efforts. Given wide state variation in policies to combat opioid abuse, we assess whether state leadership to address the opioid crisis influences hospital decisions to invest in substance abuse programs. Our findings suggest that several key state policies are related to hospital investments in substance abuse initiatives. To capitalize on the community benefit responsibilities of local hospitals, policies that provide specific direction for and engagement with local hospitals may increase cooperation and investments to address substance abuse.

Government Health and Social Services Spending Show Evidence of Single-Sector Rather Than Multi-Sector Pursuit of Population Health

Population health improvements can be achieved through work made possible by government spending on health care, public health, and social services. The extent to which spending allocations across these sectors is synergistic with or trade-off against one another is unknown. Achieving a balanced portfolio with multi-sector contributions is key to improving health outcomes. This study tested competing hypotheses regarding achievement of balanced multi-sector resources for health. County-level U.S. Census Bureau data on all local governmental spending measured each county’s average per capita local government spending for public hospitals, public health, social services, and education. American Hospital Association (AHA) Annual Survey data on hospital community health service provision were used to calculate an index of hospital community service provision aggregated to county level by year. County Health Rankings data measured each county’s health outcomes and health factors. Longitudinal mixed-effects regression models (n = 1877 counties) predicted changes in spending for each government spending category based on two sets of predictors (government spending vs community health services and needs) from current and prior year. Models account for average spending in each category and county-, state-, and time-trends. Models showed that spending increases in each of the four spending categories examined (public hospitals, public health, social services, and education) were not associated with changes in spending across other categories in current or prior years. For all categories, an increase from baseline spending levels in Year 1 was always significantly associated with an increase from baseline spending level in that same category in Year 2 (ie, spending stayed above baseline in Year 2). Multi-sector initiatives to health outcomes require funding across sectors, yet there was little evidence to suggest that communities that invest in public hospitals, public health, or other social services see commensurate increases in other areas. Underlying funding decisions may reflect strategic decisions within a community to scale up single sectors, constrained resources for multi-sector scale up, or a host of additional factors not measured here.