What Is Community Benefit?
Most hospitals in the United States operate as non-profit organizations and, as such, are exempt from most federal, state, and local taxes. This exemption is intended to be an acknowledgement of the “community benefit” provided by these institutions. As such, there are federal requirements, managed by the IRS, for how hospitals provide and account for community benefit. It should be noted that tax-paying hospitals also invest significantly in their communities despite not being subject to the same federal requirements.
Historically, the vast majority of community benefit spending by hospitals has been related to charity care – that is, providing patient care services for free or at a reduced charge. That holds true to today, but the scope of community benefit services has been expanded over the years by federal policymakers to now include:
- Free and discounted care to those unable to pay
- Care to Medicaid beneficiaries and other low-income care programs
- Services to improve community health and improve access to health care services
- Programs to advance medical and/or health knowledge
- Initiatives to relieve/reduce the burdens of government agencies
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Community Benefit in Colorado
Colorado hospitals invest substantially in their communities: In 2021, Colorado hospitals invested more than $1.9 billion into the health and wellbeing of Colorado communities. Investments include services to improve community health and address social determinants of health, programs to advance medical knowledge, free and discounted care for those unable to pay, care for Medicaid beneficiaries and other low-income care programs, and more.
Hospitals partner with communities to determine areas of need: As part of non-profit status, hospitals comply with federal IRS requirements for how to provide and account for community benefit. This includes an in-depth process to gather community information, access areas of community need, and develop programs to respond to those identified needs.
Colorado hospitals exceed national averages for community benefit: In 2021, Colorado hospitals provided 11.9 percent of total hospital expenses in community benefit, far exceeding the national average of 9.7 percent.
Hospitals Invest Substantially in Their Communities
In 2021, Colorado hospitals directly invested more than $1.9 billion into the health and wellbeing of their communities.
Assessing Community Needs
State and federal requirements require hospitals both participate in an environmental scan of community health needs and execute a plan to address identified gaps. Hospitals are engaged through three separate programs – Community and Health Neighborhood Engagement (CHNE), Community Health Needs Assessment (CHNA), and Public Health Improvement Plan (PHIP) – that run on three different timeframes. Two of the requirements fall directly on hospitals, while the third requires hospitals to be close participants.