INCREASE SCRUTINY

National Association of Higher Educational Facilities Authorities

How Hospitals Can Tell Their Community Benefit Story

There are hundreds of ways is which hospitals give back to their communities, including services that generate little or no revenue, such as emergency, neonatal, and trauma care; free screenings; support of clinics that provide care for the indigent; health and wellness programs; and other initiatives that improve residents’ health. These charitable endeavors meet the healthcare needs of residents, particularly those who otherwise would be unable to afford such services, and enhance quality of life for the entire community. Initiatives such as this fall under the umbrella of community benefit.

But documenting community benefit, and quantifying the community benefit that hospitals provide, is a challenge for many hospitals. Except in states where annual reporting of community benefit is required, there are very few standards for community benefit documentation and communication. And even in states that do have community benefit reporting laws, the requirements vary. The issue of how to document community benefit ÿ and how much is enough ÿ has become critically important as an increasing number of tax-exempt hospitals face challenges to their tax-exempt status. Local and state governments have become more concerned about holding not-for-profit hospitals accountable for their tax-exempt benefits ÿ and a few hospitals have lost some or all of their tax-exempt status as a result of increased scrutiny. On October 25, 2005, the IRS announced it is considering a compliance project to determine, among other things, how hospitals are meeting the community benefit standard for Section 501(c)(3) tax-exempt status. Although the language of the IRS work plan was unclear in regard to the role that community benefit would play in the pending compliance initiative, most observers believe a strong focus on community benefit is likely.

CFOs can enhance community benefit reporting by:

1. Educating managers on what community benefit is, and how to document it.

2. Generating excitement among staff about the community benefit that the organization provides, so that employees will be more likely to document examples.

3. Providing quarterly reminders to staff on the need to document community benefit.

4. Simplifying the way in which managers record this information.

5. Recognizing staff and physicians for exemplary commitment to community benefit initiatives.

Once community benefit information is collected and documented, it’s time to determine the best way of sharing this information with the community. To a degree, this involves tooting your own horn ÿ a concept that is almost foreign for not-for-profit hospitals, where community benefit is integral to their mission. But at a time when some are questioning the return their community is getting from the tax-exempt status bestowed on not-for-profit hospitals, it’s important that the public understand the many ways in which not-for-profit hospitals are giving back to their communities.

There are many ways that not-for-profit hospitals can share the story of community benefit they provide with the communities they serve. They include:

1. Create an annual community benefit report. This report could be a publication unto itself, or it could be incorporated into an organization’s annual report. Be sure to call attention to services that would not be available without the tax-exempt hospital, particularly services that relieve government burden and/or that are unprofitable, yet needed by the community. Trauma centers are one example.

2. Put a human face on the community benefit your system provides. Numbers are important, but so are concrete examples of the ways community benefit has affected individuals. Consider using testimonials from patients, employees, volunteers, and others who have seen the hospital’s community benefit in action and can best explain the impact that the organization is having on quality of life in the community.

3. Make sure the information is easily accessible to board members, senior leadership, and managers, who can then use this information in community presentations. One way to do this is to create a PowerPoint presentation based on the organization’s community benefit data and then send a copy of this to each board member, senior administrator, and manager for use during community presentations. Community groups that might be interested in such a presentation include chambers of commerce, rotary clubs, senior citizen groups, and government entities. Or use the presentation as the basis for a media luncheon.

4. Use paid advertising to reinforce the message of ways in which the hospital is giving back to the community. Local newspaper and radio ads promoting the goodwill of the organization, particularly through testimonials, will help residents identify with the ways in which the health system is enhancing quality of life in their community.

There are many tools available to help record community benefit activity. Utilizing these tools, having a clear understanding of what does and does not count as community benefit, and being focused on a call to improve quality of life, will lead to a successful, well-developed community benefit program.

(Source: Healthcare Financial Management; January 2006)

This site was last updated on 03/09/06 .