Problem
What Benefits the Community
Barney Wiseman looked at his hospital's most recent community benefit report. His hospital has been reporting community benefit activities for years, well before the state required all not-for-profit hospitals to report their activities annually to the state attorney general's office. Year after year, Wiseman's department submitted the report, but there has never been any feedback from the state about his hospital's level of community benefit or activities.
Today, though, the community benefit report took on new significance. The big news of the week was from the neighboring state of Illinois, which moved to revoke the property tax exemption status of three hospitals. If Illinois succeeded, these three hospitals would be responsible for property tax which could translate into a new financial burden involving millions of dollars. Illinois had identified these three hospitals when it reviewed the levels of charity care provided by hospitals in the state. The three hospitals had been singled out because they were deemed to be providing only "low" levels of charity care, ranging from 0.96 percent to 1.85 percent of patient care revenue, according to the Illinois Department of Revenue (Japsen 2011).
However, as Wiseman knew, the "appropriate" level of charity care that a not-for-profit hospital should provide had not yet been defined. Hospitals typically provide a range of services that could be considered community benefits, from hosting community health fairs to providing health services that are often unprofitable, such as emergency department services, burn units, and counseling services. In addition, many hospitals are reimbursed by Medicare and Medicaid at levels below the cost of the services they provide; thus, these unreimbursed costs could be seen as part of a benefit to the community. Other activities, such as providing graduate medical education and performing unfunded research, are also typically understood to benefit the broader community hospitals serve. Whether and how to count these activities when evaluating a hospital's community benefits are still unclear.
Wiseman had always thought that his hospital provided care and services well above the "'acceptable" level for community benefits, but the situation in Illinois made him question if it really did. Moreover, Wiseman began to wonderif his current community benefit report adequately accounted for all of the community benefits the hospital provided, well beyond charity care.
Source: McAlearney A, Kovner A, editors. "Health Services Management: a case study approach." 11th ed. Chicago, IL: Health Administration Press; 2018 - Case 56, p.393
Task
A. Who should benefit from a hospital's community benefits? (Who after the hospital's stakeholders, and how do they benefit? )
B. What activities, other than charity care, should be counted as community benefits?
C. What are the implications if a not-for-profit hospital's tax-exempt status is revoked?