Four in 10 nonprofit hospitals are putting their tax-exempt status at risk, JAMA study finds

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Forty percent of nonprofit hospitals fall short of meeting the community health needs assessment (CHNA) requirements put in place in the Patient Protection and Affordable Care Act, according to a JAMA Network Open study published earlier this week.

The study says that by not fulfilling these mandates, a significant portion of nonprofit hospitals put their tax-exempt status at risk.

In a cross-sectional study of 500 randomly selected nonprofit hospitals in the U.S., just 60% of them had both a CHNA and corresponding implementation strategies that were publicly available online.

Further, many of these hospitals were also missing documents needed to fulfill the requirements, such as evaluation of impact descriptions and explanations of the resources they made available to address the health needs they identified.

It also identified a number of discrepancies between what hospitals were reporting and what was available online. For instance, 99% said they had completed a CHNA, yet only 84% of these CHNAs were identified online.

WHY THIS MATTERS

Under the ACA and enforced by the IRS, nonprofit hospitals must complete a CHNA every three years, develop an implementation plan, fulfill specific documentation requirements and make it all publicly available.

These rules were adopted to make sure nonprofit hospitals create community benefits with the money they save from being tax-exempt.

This analysis, however, indicates that many hospitals are not meeting those orders.

"The ACA sought to ensure that hospitals fulfill their obligations to their communities," the researchers said in the study.  "However, many CHNAs and implementation strategies are not available at all, and those that are accessible do not provide the required information regarding how hospitals are assessing and addressing community health needs. There is much work to be done, and federal policy makers have an opportunity to improve hospitals' accountability and transparency."

THE LARGER TREND

This is far from the first time nonprofit hospitals' community contributions have been called into question.

In July, the Lown Institute found that 72% of nonprofit hospitals spend less on charity care than they receive in tax breaks, resulting in $17 billion of unrealized community investment.

Despite these reports, the American Hospital Association argued that nonprofit hospitals are doing more than their fair share. It cited data from 2016 that shows tax-exempt hospitals provided $95 billion in total benefits to their communities compared to the $9 billion tax break they got the same year.

"On top of delivering around-the-clock care to all who come to us, hospitals and health systems of all types are providing a wide range of comprehensive benefits, activities and services tailored to meet the specific needs of their patients and communities," AHA President and CEO Rick Pollack said at the time. "These new reports clearly quantify the significant benefit tax-exempt hospitals and health systems provide to their communities." 

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Email the writer: mhackett@himss.org