AHA says hos­pi­tals de­vote 11.3% of ex­penses to com­mu­nity ben­e­fit

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U.S. tax-ex­empt hos­pi­tals de­voted an av­er­age of 11.3% of their ex­penses to ben­e­fit­ting their com­mu­ni­ties, based on an anal­y­sis of dis­clo­sures the In­ter­nal Rev­enue Ser­vice re­quired for the first time in 2009, ac­cord­ing to the Amer­i­can Hospi­tal As­so­ci­a­tion. An ex­clu­sive anal­y­sis by Mod­ern Health­care (Dec. 19, 2011, p. 6) us­ing the same kinds of not-for-profit hospi­tal tax forms found that the me­dian health­care provider de­voted 5.87% of its to­tal ex­penses to pro­vid­ing com­mu­nity ben­e­fits, us­ing the nar­rower def­i­ni­tion of “com­mu­nity ben­e­fit” es­poused by the In­ter­nal Rev­enue Ser­vice. The AHA’S find­ings in­clude cat­e­gories of spend­ing that are not con­sid­ered com­mu­nity ben­e­fits by the IRS, such as op­er­at­ing losses on Medi­care ben­e­fi­cia­ries and un­paid bills by pa­tients who would have qual­i­fied for free or dis­counted care but didn’t ap­ply for it. AHA of­fi­cials have long ar­gued those ex­penses should be counted to­ward the “com­mu­nity ben­e­fit” work that not-for-profit hos­pi­tals are re­quired to per­form in or­der to jus­tify their ex­emp­tions from taxes. “This re­port demon­strates that hos­pi­tals are not only meet­ing but are ex­ceed­ing the com­mu­nity ben­e­fit obli­ga­tions con­ferred by their tax-ex­empt sta­tus,” AHA Pres­i­dent and CEO Richard Umb­den­stock said in state­ment ac­com­pa­ny­ing the re­port, com­piled by Ernst & Young based on in­for­ma­tion from roughly 900 hos­pi­tals. The Mod­ern Health­care anal­y­sis—which in­cluded tax-form data from 1,807 sys­tems and hos­pi­tals—found that the me­dian hospi­tal de­voted 1.52% of ex­penses to char­ity care, and an­other 3.02% for Med­i­caid pa­tients whose costs of care were not cov­ered by their re­spec­tive state pro­grams, for a me­dian to­tal of 4.54% of ex­penses de­voted to means-tested care. The AHA study found that the av­er­age—not me­dian—fig­ure for the same means-tested care was 5.7%, ac­cord­ing to their anal­y­sis of hos­pi­tals tax forms.

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