Not-for-profit hospitals get creative in addressing community health needs

Warning sign with the words Taxes ExemptLast year, we reported here and here on the increasing number of not-for profit hospital systems whose tax-exempt status has been challenged in court. A good chunk of the evidence in these cases comes from the IRS, which requires non-profits to declare the value of the “community benefit” they made during the year.

Health Affairs Blog has a good primer on IRS definitions of community benefit. If the sound of that gives you a migraine, however, suffice it to say that IRS definitions are vague. So hospitals have been free to report creatively.

Making matters worse, the IRS has never spent any appreciable time investigating the veracity of hospital claims of community benefit. But that’s about to change, and with the threat of increased scrutiny, a few large hospital systems seem to be asking the right questions: What newer, more creative things can we do to improve population health?  How better can we demonstrate that we’re good stewards of the taxpayers’ money?

The answer involves more than traditional health care. As Modern Healthcare explains,

a number of hospitals and health systems across the country [are] targeting funds to address societal ills such as poverty, violence, hunger, poor nutrition and lack of housing. While not-for-profit hospitals have always been expected to offer programs that improve health or increase healthcare access, that work has traditionally focused on training new doctors, conducting research and providing charity care for the poor and uninsured.

To best achieve community health goals, hospitals generally can’t go it alone. Instead, they partner with philanthropic foundations and community and social service organizations. Such partnerships typically unearth unique community needs. For example, Dignity Health’s St. Francis Memorial Hospital in San Francisco’s crime-ridden Tenderloin district learned that

lack of insurance or access to care was not the biggest public health issue.. . . Instead, the hospital and its foundation decided to focus on reducing injuries from crime and addressing the psychological trauma of living in an unsafe neighborhood.

To address the issue, St. Francis became a major funder of the Safe Passage initiative, in which dozens of community volunteers, in lime green and orange vests, patrol an 11-block stretch where schoolchildren walk to after-school activities.

Meanwhile, in Baltimore, a new mixed-use housing, retail and community space is rising, funded by Ascension Health. And in Silicon Valley, Dignity Health is making grants to entrepreneurs interested tackling community health improvement in low-income neighborhoods.

Where is the money coming from for these programs? Interestingly, in states that have expanded Medicaid, hospital systems have discovered dollars being freed up, as they spend less to care for the uninsured. Ascension, with facilities in 24 states, experienced a decline of 9.3 percent in fiscal 2015 in charity care, allowing it to boost spending on community health initiatives by 6.2 percent to $37 million.

Dignity and Ascension, along with Kaiser Permanente and ProMedica, are demonstrating the possibilities inherent in an enlightened approach to community health, one focusing on population health over more narrow definitions of community health.

Let’s hope the rest of the not-for-profit health sector pays attention.

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