- Hospitals could have a greater impact on improving the health of their communities if the IRS expands the scope of what qualifies as community benefit spending for tax exemptions, a new report suggests.
- Tax exempt hospitals still provide most of their community benefit spending through charity care, but more population health efforts are needed to tackle the top health challenges affecting their communities.
Hospitals should have a moral obligation to spend more of their community spending dollars on population health efforts, though these could also help them reduce costs, according to co-author Maureen Byrnes, lead research scientist at Milken Institute School of Public Health at the George Washington University.
Byrnes and her co-authors found that for 72% of U.S. hospitals, obesity is the top health challenge of their communities, for 68% of hospitals it's mental health, and for 62% it's diabetes. Hospitals are already increasingly providing patient services outside their walls. They have addressed community housing, partnered with the education community and made environmental health improvements, according to Byrnes.
The researchers highlight the IRS could use the following opportunities in existing policies to give hospitals more flexibility over tax-exempt spending:
- Community building efforts that promote population health on a community-wide basis can be treated as community benefit spending;
- A link between community health priorities and community-benefit spending allocations can be created; and
- Tax guidance on effective community-wide health improvement activities can be issued to hospitals.
There is no minimum in the amount of community spending dollars required for tax exemption, however. Hospitals planning to up their community benefits may have to take another look at their budget so that the amount spent won't lead to price increases. The Mayo Clinic is increasing prices by 4% in Wisconsin on Jan. 1 to offset the $16.3 million it expects to spend in charity care this year, WEAU reports.