In recent years, hospital community benefit efforts have drastically evolved and now can encompass more personnel, responsibility, and interaction – both inside and outside of the hospital. The effectiveness of a hospital community benefit program can have far-reaching consequences – from improving health outcomes in the community to maintaining an organization’s tax-exempt status.
Crowe observation
The IRS has increased its focus on Section 501(r) compliance, which has increased scrutiny of community benefit practices.
It is important for not-for-profit hospitals to have a comprehensive written community benefit policy, which can provide the following benefits:
- Clarity and consistency: A written policy can provide clarity and consistency in the approach to community benefit initiatives across the organization.
- Framework for decision-making: A written policy establishes a clear framework for decision-making, resource allocation, and program implementation, reducing ambiguity and promoting uniformity in community benefit efforts.
- Alignment with mission and values: A written policy helps align community benefit activities with the mission, vision, and values of the organization. It serves as a guiding document to reflect the organization’s commitment to improving community health and well-being, which helps align community benefit initiatives with the organization’s overall goals and objectives.
- Tax compliance: Tax-exempt hospitals are required to provide community benefit and to measure and report such benefit as part of their compliance with federal and state standards for maintaining tax-exempt status. A comprehensive written policy helps an organization consistently meet the legal requirements for tax-exempt status.
- Strategic resource allocation: A written policy enables strategic resource allocation for community benefit initiatives. It helps the organization identify and prioritize the most pressing health needs of the community, allocate resources effectively, and maximize the impact of community benefit programs.
- Stakeholder engagement and collaboration: A written policy facilitates stakeholder engagement and collaboration. It provides a framework for partnering with community organizations, government agencies, and other healthcare providers, which fosters collaboration and more effectively uses resources to address community health needs.
- Accountability and transparency: A written policy promotes accountability and transparency in community benefit activities. It establishes mechanisms for tracking, measuring, and reporting the impact of community benefit programs, helping the organization be accountable to the community, regulatory bodies, and other stakeholders.
- Continuous improvement: A written policy allows for continuous improvement of community benefit initiatives. It provides a basis for regular evaluation, assessment, and revision of programs based on feedback, emerging community needs, and changing healthcare trends, ensuring that the health system’s community benefit efforts remain relevant and impactful.
Looking ahead
A comprehensive written policy helps organizations meet their community benefit obligations and provides a foundation for continuous improvement. Organizations that do not have a written community benefit policy should consult with their tax adviser to create one. Organizations with a written community benefit policy should work with their tax adviser to evaluate their current policy and procedures and identify areas for improvement.
