The Internal Revenue Service forgives non-profit hospitals from paying billions of dollars in federal taxes if they meet the community benefit standard. This has caused many hospitals that operate on a for-profit basis to voice their concern on how a community benefit is defined, often stating that they provide similar contributions to the community, and should be considered for tax exemptions.
For non-profit hospitals to remain in compliance with their tax-exempt status under section 501(c)(3) of the Federal Internal Revenue Code, they have been required to provide a community benefit to the area in which they serve. To further strengthen compliance, as recent as 2012, new legislation under the Affordable Care Act (ACA) requires hospitals to conduct a Community Health Needs Assessment at least once every three years to identify and address health needs accordingly1. Additionally, in the case of emergency and other necessary medical care, organizations are barred from charging persons eligible for financial assistance more than amounts generally billed to insured patients2.
Non-profit hospitals that fail to comply with the Community Health Needs Assessment standards are subject to a $50,000 fine, as well as jeopardizing their future tax exemption3. There are also some other provisions to the final rule that address how organizations are recognized (e.g., governmental or private) and how enforcement is conducted. Furthermore, as a new administration looks to revamp the current healthcare laws, many organizations are preparing to meet any new standards that may be put in place.
Community Health Needs Assessments and their implementation strategy are currently requiring the most attention. It is very important to have professional resources that are very knowledgeable and understand the requirements involved in the development process. Assessments need to be very comprehensive by examining many factors, include significant inputs from the community, and be accessible, such as2:
- Health needs that arise from social conditions, such as inadequate access to proper housing and nutrition
- Involve government public health agencies, community resources, and health policy leaders
- Published on websites for reference and review
However, recent federal data paints a rather bleak picture despite the significant penalties that are associated with non-compliance. As of 2011, less than 10 percent of non-profit hospital operating expenses were categorized as a community benefit3. The potential for tens of millions of uninsured people in regions across the country as the ACA is scraped, could force hospitals to clamp down on budgeting, especially in the community health need effort area. Hospital Administrators tend to focus on the immediate questions within the hospital environment, such as: How many beds are full? What medical services are being provided? Caring for people before they enter the hospital environment is new territory3.
Communication within these health needs programs is the key for success. Community Health Needs Assessments allow the organizations to comply within government requirements and they also allow the gap between the healthcare delivery system and the community needs to focus in on pertinent information. Not only do Community Health Needs Assessments help identify effective uses of resources, they are also crucial when planning the placement of newly recruited physicians through in-depth mapping and demographic analyses. Assessing staffing needs and physician supply and demand by medical specialty allows organizations to set realistic goals and solve problems proactively.
As uncertainty continues to swirl around which path this new administration will take, the important take away is to be sure the physician resources are available to continue to be proactive in the hospital’s community. The versatility that a Community Health Needs Assessment provides is critical to a variety of issues including performance, resource allocation, and government compliance.