Call for Trump Administration to Allow Tax-exempt Hospitals Bigger Role in Community Health

By revising Internal Revenue Service (IRS) policies on permissible community benefit spending, the Trump Administration could encourage tax-exempt hospitals to be more involved in projects that build healthier communities and residents, according to a new report from researchers at the George Washington University Milken Institute School of Public Health.

Existing IRS policies create uncertainty for hospitals about which types of expenditures are permitted as “community benefit” activities, which are required for nonprofit hospitals to qualify for a tax exemption. The vast majority of community benefit spending currently goes to patient services such as charity care, but researchers point out that activities that improve health more generally carry significant weight toward the health of the community.

The report suggests 3 opportunities where IRS policy could better promote community-wide health improvement, including:

• The IRS could issue guidance confirming that activities designated as community-building efforts that promote local population health could count as community benefit spending. Such activities could include partnering with farmers markets to address obesity or supporting community groups that develop safe and affordable housing.
• IRS policy could to require hospitals to report on the portion of community benefit spending that is linked to local population health needs identified in their community health needs assessments. If an assessment points to childhood asthma as a major community health challenge, for example, a hospital could support programs to reduce asthma triggers at home and school.
• The IRS could issue tax guidance on community-wide health improvement activities that are shown to be effective. Experts in health, nutrition, education, the environment, and other areas could provide support for such guidance.

According to researchers, public interest in adopting a more inclusive community benefit policy is high. In 2011 alone, taxpayers invested almost $25 billion to support tax-exempt hospitals nationwide.

“The public has an enormous stake in policies that broaden and clarify the scope of permissible community benefit activities,” said the report’s lead author Sara Rosenbaum, JD. “This interest can be measured in the tens of billions of taxpayer dollars that support tax-exempt hospitals.”

—Jolynn Tumolo

Reference:

Strategy for the Trump administration to expand the role of tax-exempt hospitals [press release]. Washington, DC: EurekAlert!; December 1, 2016.