June 9, 2022
Two new reports analyze 2019 community benefits of tax-exempt hospitals, federal revenue forgone due to tax exemption
When read in conjunction with one another, two new reports that look at the community benefit provided by tax-exempt hospitals allow a comparison between foregone tax revenue and the community benefit provided by these hospitals in their 2019 tax years.
A June 2022 report prepared by the American Hospital Association (AHA) analyzes the community benefits provided by tax-exempt hospitals as reported on Schedule H of their Forms 990. The report finds that tax-exempthospitals provide a broad range of programs benefitting the health of the communities they serve. Community benefits include charity care, Medicaid underpayments, community health improvement programs, health research and education, subsidized health services, bad-debt expense attributable to charity care, Medicare shortfall, contributions to community groups to provide community benefit, related community benefits, and community-building activities.
The report relies on 2019 IRS Form 990, Schedule H responses from tax-exempt hospitals and health systems, the most recent year of Form 990 data available.
EY QUEST report
A second report prepared by Ernst and Young's Quantitative Economics and Statistics (QUEST) group on behalf of the AHA analyzes the federal revenue foregone due to the tax exemption of general tax-exempt hospitals for their tax years beginning in 2019. The analysis focuses on revenue foregone from the federal corporate income tax, the lower cost of tax-exempt bond financing, and the federal unemployment tax.
Tax-exempt hospitals continue to be closely scrutinized at the federal, state, and local levels for the amount and type of benefits they provide to their communities. Accordingly, tax-exempt hospitals should continue to focus on completely and accurately reporting and explaining on Schedule H the benefits they provide to their communities.