Community benefit is a critical factor in the determination of whether a hospital is granted 501(c)(3) status, which may result in significant savings in income and other taxes. IRC section 501(r) contains requirements for community benefit reporting in the areas of community health needs assessment, financial assistance policy, limitations on the amounts charged to persons covered by the financial assistance policy, and billing and collection practices. Evidence of compliance with IRC section 501(r) is accomplished in part by completing Schedule H of Form 990.

Required

a. Select two not-for-profit hospitals located in your region or state and locate their most recent Form 990 using Guidestar (www.guidestar.org). Using the information found on Schedule H, answer the following questions.

1. What were the hospitals’ total revenues? Total expenses?

2. Part I of Schedule H lists Financial Assistance and Certain Other Community Benefits at Cost. What was the total cost of community benefit reported by each hospital in Part I? How much of that amount was for uncompensated care (referred to as Total Financial Assistance and Means-Tested Government Programs)? Identify the other types of community benefit provided by the hospitals and the associated costs in Part I.

3. Compute the percentage of total community benefit to total revenue and total community benefit to total expenses. Which hospital provides the greater total community benefit as a proportion of total revenue and total expenses?

4. Since 2012, the American Hospital Association (AHA), with Ernst & Young LLP, has reported on the average community benefit provided by exempt hospitals. In May 2019, the AHA reported on the results from the 2016 Schedule H tax filings. The report finds that the average hospital reports a total community benefit to total expenses of 10%. How do the two hospitals you chose compare to the average exempt hospital?

b. From the information you reviewed for the two hospitals, do you feel the hospitals are providing a sufficient level of community benefit? Why or why not?