Community Benefit Spending Varies for Tax-Exempt Hospitals

Most spent on charity care, patient services; less spent on community health improvement

WEDNESDAY, April 17 (HealthDay News) -- There is considerable variation in the level of community benefit expenditure by tax-exempt hospitals, according to a study published in the April 18 issue of the New England Journal of Medicine.

Noting that the Affordable Care Act requires tax-exempt hospitals to assess and address community needs, Gary J. Young, J.D., Ph.D., from the Center for Health Policy and Healthcare Research in Boston, and colleagues analyzed reports from 1,800 tax-exempt hospitals filed with the Internal Revenue Service for fiscal year 2009, and examined the level and pattern of community benefits provided by hospitals.

During fiscal year 2009, the researchers found that tax-exempt hospitals spent 7.5 percent of their operating expenses on community benefits. The majority of these expenditures (more than 85 percent) were dedicated to charity care and other patient care services. Approximately 5 percent of the remaining community-benefit expenditures were devoted to community health improvements that hospitals undertook directly and the remainder went to education for health professions, research, and contributions to community groups. There was wide variation in the level of benefits provided, with hospitals devoting between about 1 and 20 percent of operating expenses to community benefits. Indicators of community need did not account for this variation.

"In 2009, tax-exempt hospitals varied markedly in the level of community benefits provided, with most of their benefit-related expenditures allocated to patient care services," write the authors.

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