What Should We Expect? A Comparison of the Community Benefit and Projected Government Support of Maryland Hospitals

Abstract

Designation as a tax-exempt, not-for-profit entity carries with it specific tax benefits. In exchange for tax exemptions, not-for-profit entities are expected to provide benefits to their communities. To evaluate whether hospitals provide community benefits (CBs) equivalent to the financial subsidies and advantages extended to them, tax liabilities and financial support were projected for all Maryland acute care hospitals between 2010 and 2012 and in the aggregate over the 3 years of this study. A comparison was then made between the provision of CBs and the financial support that governments provide to the hospitals. The results indicate that hospitals provide significantly and substantially more CBs than the material financial support they receive. Even after modeling changes in CB activities and the associated tax liabilities that may result from transitioning to taxable status, the benefits that hospitals provide to the communities they serve continue to exceed the potential government tax revenues.

Nonprofit Hospital Community Benefit in the U.S.: A Scoping Review From 2010 to 2019

“…Using 2012 data, Herring and colleagues suggest there is variation as to whether individual hospital's community benefit spending exceeds their tax benefit, with 62% providing more than they receive (78). An analysis by Turner et al drew a similar conclusion with 2010-2012 data from Maryland, finding that hospitals provide more through community benefit than they would provide through taxes (79). However, given that Maryland has its own state-level CB requirements, these results may not hold in other states.…”

When Tax-Exempt Nonprofits Detract Value from Society

“…• Tax-exempt nonprofits provide more community benefits than the financial support they receive (Turner et al 2016), yet there is no differential financial performance (Colombo, 2006), given tax exemptions.…”

Engaging communities in creating health: Leveraging community benefit

“…The passage of the Patient Protection and ACA (Patient Protection and ACA, 2010) has further decreased the need for charity care in hospitals as health insurance exchanges and expansion of Medicaid increased insurance coverage, thus creating an opportunity for greater investment in population-focused community benefit activities. Recent literature indicates that, although the tax benefit on nonprofit status for hospitals is large (Rosenbaum, Kindig, Bao, Byrnes, & O'Laughlin, 2015), some nonprofit hospitals are making financial investments in their communities equal to or greater than the financial gains received by maintaining their tax-exempt status (Coyne et al, 2014;Turner, Broom, Goldner, & Lee, 2016). However, relatively few community benefit resources are directed to community health improvement, as compared with individual subsidies for direct care (IRS, 2015;Singh, Young, Lee, Song, & Alexander, 2015;Singh, Bakken, Kindig and Young, 2016;Young, Chou, Alexander, Lee, & Raver, 2013).…”