Trump administration could increase role of community hospitals in pop health through revised tax policies, researchers say

A new report has issued a call to action for the incoming Trump Administration to expand the role of tax-exempt hospitals in improving their communities' overall health through policy opportunities including expanding the list of accepted activities, greater transparency in community benefit reporting, and issuing new tax guidance on improvement activities.

The report, funded by the The Kresge Foundation and the Robert Wood Johnson Foundation, assessed the current status of community benefit policy in the United States and analyzed the most up-to-date hospital Community Hospital Needs Assessments, which non-profit hospitals must conduct every three years.

Researchers found that 72 percent of hospitals identified obesity, 68 percent identified mental health and 62 percent identified diabetes as major health challenges in their communities. However, currently hospitals are allotting most of their community benefit spending to patient services, including charity care.  While hospitals are looking to branch out to provide activities that improve the overall health of the community, existing IRS policies create uncertainty for them when it comes to the conditions under which many initiatives that could improve overall community health will actually count as a community benefit activity, the report said.

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At a time when the future of affordable insurance is uncertain, hospitals will continue to invest the great majority of their community benefit obligations in financial assistance for those in need. But with relatively minor adjustments, the IRS can considerably strengthen hospitals' potential role as community health improvement actors, said Sara Rosenbaum, Health Law and Policy professor at the George Washington University Milken Institute School of Public Health and lead author of the new report.

Authors laid out three U.S. tax policy opportunities that would help hospitals focus on community-wide health improvement. First, the IRS could designate community building efforts but that also promote population health as allowable community benefit spending.

The report cited examples like partnering with farmers markets to address obesity, or providing support to community organizations that develop safe and affordable housing.

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"Existing IRS policy leaves hospitals uncertain about the range of 'community building' efforts that go beyond their walls and that qualify as community health improvement spending," the report said.

The IRS could also enhance transparency surrounding community benefit reporting by creating a link between community health priorities documented through the community health needs assessment process and their community-benefit spending allocations. The IRS could consider a policy requiring hospitals to report on the percentage of their community benefit spending that is linked to community-wide health needs identified through the CHNA process.

"For example, if a CHNA identifies childhood asthma as a major community health problem, a hospital could help support programs whose purpose is to reduce asthma triggers in homes and schools," the report said.

Finally, the IRS could work with government experts to issue tax guidance on effective community-wide health improvement activities, potentially getting guidance and support from an "interagency group" of a wide variety of experts in fields like nutrition, education, the environment, transportation,and housing.

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Best of all, the prescribed changes wouldn't require new legislation, said Maureen Byrnes, co-author and a Lead Research Scientist at the Milken Institute SPH.

"The IRS could use its broad authority to define community benefit to encourage hospitals to grow as leaders in the area of population health.  Such a reform would require no additional appropriations and could be a major win for public health," Byrnes said.

Twitter: @BethJSanborn