On September 25th, the Lown Institute and Johns Hopkins Bloomberg School of Public Health co-hosted a meeting in Washington, DC on hospital tax exemptions and community benefit spending, bringing together key voices to explore a topic that recently has generated high levels of interest. We were pleased to have present an excellent mix of researchers, hospital leaders, congressional staffers, policy experts, payers, and community advocates.
Throughout the day in a series of frank, off-the-record conversations, speakers raised a broad range of considerations that helped clarify this complex (and sometimes murky) arena. What follows are a few of the takeaways that all of us, especially policymakers, need to think about when taking action on hospital community benefit spending and the related issue of financial assistance to patients.
We really need transparency and clarity if we’re going to generate more light than heat
The current community benefit standard does not clearly define expectations for hospitals around their role in improving community health or in preventing medical debt, which is frustrating for both hospitals and other stakeholders. There was near unanimity in calling for improvements to the Form 990 Schedule H (on which hospitals report community benefits) to clarify these expectations, make the data on the form more useful, and incorporate more of what hospitals are actually doing for their communities.
Panelists noted that additional reporting requirements have to be considered carefully, as each new requirement puts some administrative burden on hospitals (who have to report data) and government agencies (who have to enforce these requirements).
Balance between fairness and flexibility
Many panelists made the point that the drive to improve social responsibility needs to account for the variation among hospitals in size, financial health, and capacity. Any new regulations on community benefit cannot be a “one size fits all” plan, and must ensure that hospitals are still financially stable so they can continue to provide needed patient care to communities. For example, Oregon sets community benefit minimum spending thresholds based on individual hospitals’ previous uncompensated care spending and net patient revenue.
First, do no harm. Second, improve health upstream
While hospitals provide many important services to communities, panelists urged policy reforms to focus on two areas in particular: reducing medical debt through better financial assistance policies, followed by the close second of investments in the social drivers of health. Despite increasing emphasis on social factors like housing, employment, and food security at some hospitals, panelists noted that these investments still make up a tiny proportion of hospitals’ overall community benefit spending.
Encouraging inter-agency collaboration
While the IRS is tasked with enforcing the hospital community benefit standard on a federal level, there was general agreement that the agency has too many competing priorities and limited resources that together make it difficult for them to be the sole or even the major agent of change. It was clear that greater collaboration between agencies and between federal and state policymakers will be required to increase the capacity for reform and to bring more public health knowledge into designing new policy measures.
Tackling the disease, not the symptom
The very large gaps between the tax exemptions received and the community benefit investments made illustrates the inappropriateness of using the tax code as a tool to address much larger and complex problems: primarily with hospitals’ business model itself, which incentivizes procedures over prevention, volume over value, and caring for privately-insured patients over others.
While reforms to the community benefit standard could help protect more patients from medical debt and increase community health investments, there was broad recognition that they wouldn’t be a panacea to fix the many other issues in our hospital system.