The Significance of Definitions in Determining the Level of Community Benefits for Nonprofit Hospitals

Context: The American Hospital Association determined that in 2022 nonprofit hospitals spent $129 billion on community benefits. This is more than the entire budget for the US public health service. Different organizations estimate different amounts of community benefit spending depending on their definition of community benefit.

Methods: We used Schedule H from Internal Revenue Service (IRS) Form 990 data between 2019 and 2022 to determine the value of 17 components of community benefit and bad debt in nonprofit organizations. Using the descriptive analysis, this paper discusses the pros and cons of including certain categories of community benefit and suggests modifications to the definitions.

Findings: In 2022, nonprofit hospitals spent $94 billion on all 17 categories of community benefit. This expenditure included $21 billion in services that benefited the patient directly, $33 billion on services that benefited the community, and $41 billion on Medicaid shortfall. Hospitals also spent $26 billion on bad debt.

Conclusions: The value of community benefits varies significantly based on the definition used, even when the same data set is analyzed. Greater agreement on what community benefit means is necessary to ensure compliance with regulations regarding community benefit spending. This approach could involve coordination among the IRS, Centers for Medicare and Medicaid Services, and public health authorities to enhance accountability when working with hospital associations.