The community benefit of nonprofit hospitals during 2019 was $98.5 billion more than the $12.4 billion in revenue forgone because of the organizations’ tax exemption. The benefit tax-exempt hospitals provided to their communities, as reported on the Form 990 Schedule H, is estimated to be $110.9 billion, almost nine times greater than the value of tax revenue forgone.
Those estimates are part of the study by accounting and advisory firm Ernst & Young LLP (EY) on behalf of the American Hospital Association in Chicago.
EY analyzed the federal revenue forgone due to the tax-exemption of nonprofit hospitals as well as the community benefits they provide. This study presents estimates for 2019, the most recent year for which community benefit information is available for nonprofit hospitals based on Medicare hospital cost reports for approximately 2,500 nonprofit general hospitals.
The analysis does not account for other nonprofit specialty hospitals, such as psychiatric or long-term acute care, according to the study’s authors. Three tax provisions that provide a federal exemption for nonprofit hospitals are analyzed by EY: federal corporate income tax-exemption; tax-exempt bond financing; and, federal unemployment tax-exemption.
The data was gleaned from reported numbers on financial assistance and means tested government programs and other benefits; community building activities; Medicare shortfalls; and, bad debt attributable to charity care.
“For the past two and a half years, our nation has seen firsthand how America’s hospitals and health systems have cared for their patients and provided essential services to their communities in times of an unprecedented public health crisis. In addition to providing critical care, hospitals and health systems of all sizes, types and locations deliver a wide range of tailored benefits, activities, services, programs and research to meet the varied health needs of those they serve,” said AHA President and CEO Rick Pollack. “Today’s analysis shows that advancing health in their communities remains the North Star for America’s hospitals and health systems.”
The AHA also released the Schedule H tax year 2019 benchmark reports. This year, the AHA contracted with GuideStar by Candid in New York City to create a file of all Schedule H forms electronically submitted by hospitals to the Internal Revenue Service (IRS). Tax year 2019 offers the most recent comprehensive filed information available. Using the GuideStar database, as well as AHA annual survey data, the association’s staff prepared benchmark reports for various types of tax-exempt hospitals and health systems for access to comprehensive, up-to-date information regarding the level and type of community benefits provided across tax-exempt hospitals.
A copy of the full report is available here … https://bit.ly/3mClcgc