Erik Bakken1, David A Kindig. 1. University of Wisconsin-Madison Population Health Institute, Robert Wood Johnson Foundation Health and Society Scholars Program Madison, WI 53726, USA. ebakken@wisc.edu
Abstract
CONTEXT: The Affordable Care Act is drawing increased attention to the Internal Revenue Service (IRS) Community Benefit policy. To qualify for tax exemption, the IRS requires nonprofit hospitals to allocate a portion of their operating expenses to certain "charitable" activities, such as providing free or reduced care to the indigent. OBJECTIVE: To determine the total amount of community benefit reported by Wisconsin hospitals using official IRS tax return forms (Form 990), and examine the level of allocation across allowable activities. DESIGN: Primary data collection from IRS 990 forms submitted by Wisconsin hospitals for 2009. MAIN OUTCOME MEASURE: Community benefit reported in absolute dollars and as percent of overall hospital expenditures, both overall and by activity category. RESULTS: For 2009, Wisconsin hospitals reported $1.064 billion in community benefits, or 7.52% of total hospital expenditures. Of this amount, 9.1% was for charity care, 50% for Medicaid subsidies, 11.4% for other subsidized services, and 4.4% for Community Health Improvement Services. CONCLUSION: Charity care is not the primary reported activity by Wisconsin hospitals under the IRS Community Benefit requirement. Opportunities may exist for devoting increasing amounts to broader community health improvement activities.
CONTEXT: The Affordable Care Act is drawing increased attention to the Internal Revenue Service (IRS) Community Benefit policy. To qualify for tax exemption, the IRS requires nonprofit hospitals to allocate a portion of their operating expenses to certain "charitable" activities, such as providing free or reduced care to the indigent. OBJECTIVE: To determine the total amount of community benefit reported by Wisconsin hospitals using official IRS tax return forms (Form 990), and examine the level of allocation across allowable activities. DESIGN: Primary data collection from IRS 990 forms submitted by Wisconsin hospitals for 2009. MAIN OUTCOME MEASURE: Community benefit reported in absolute dollars and as percent of overall hospital expenditures, both overall and by activity category. RESULTS: For 2009, Wisconsin hospitals reported $1.064 billion in community benefits, or 7.52% of total hospital expenditures. Of this amount, 9.1% was for charity care, 50% for Medicaid subsidies, 11.4% for other subsidized services, and 4.4% for Community Health Improvement Services. CONCLUSION: Charity care is not the primary reported activity by Wisconsin hospitals under the IRS Community Benefit requirement. Opportunities may exist for devoting increasing amounts to broader community health improvement activities.