The majority of hospitals and clinics are tax exempt organizations.  In return for that tax expenditure, they are expected to provide explicit benefits to their community.  Both federal and state law regulate the terms of those benefits.  Community benefits are typically defined as services and resources provided by a healthcare institution, for which they receive no reimbursement, that address the needs and concerns of a community’s uninsured and underserved populations.

Catholic Healthcare Association, through its Guide for Planning and Reporting Community Benefit, (a revision of CHA's Social Accountability Budget), has taken leadership nationally to assist hospitals and communities to understand the investments made by tax-exempt hospitals in charity care, community health and other social goods.  This budget serves as a template for reporting community benefits and is an example of clarity and transparency that enhances the relationship of these providers with their patients and communities.

The Advancing the State of the Art in Community Benefit demonstration program is working with a diverse group of 70 hospitals in California, Texas, Arizona, and Nevada to develop and implement a series of uniform standards to make optimal use of limited charitable resources to address unmet health-related needs.

The program’s work is designed to shift traditional views about nonprofit hospitals' community benefit contributions from a focus on uncompensated costs (i.e., charity care) to one that considers community benefit contributions as returns on the investments by public and community stakeholders.

The program is administered through the Public Health Institute in Oakland, California.

Scrutiny of Community Benefit: The U.S. Senate Finance Committee has been investigating non-profit (tax-exempt) hospitals’ provision of charity care to determine whether they are providing uncompensated care commensurate with the value of their tax exemptions. The Committee requested detailed information from non-profit hospitals about this issue, held public hearings, and directed staff to develop a discussion draft that recommends the establishment of quantitative legal standards regarding non-profit hospitals’ provision of uncompensated care. In the words of ranking Committee member Senator Charles Grassley of Iowa, “While many non-profit hospitals do good work, too many non-profit hospitals get big tax breaks but provide small benefits to those in need.

Internal Revenue Service Redesign of reporting form 990 and Schedule H relating to non-profit hospitals.  The IRS reporting form is an attempt to standardize reporting tax-exempt hospitals’ community benefit obligations.  The Internal Revenue Service action cam after their inquiries had found that nonprofit hospitals did not use consistent definitions of uncompensated care and varied widely in the amount of uncompensated care they provided.  The proposed revisions require explicit description of the amount of uncompensated care and other investments in community health.

The tax expenditures resulting from tax exemptions granted to non-profits hospitals represent resources around which a community could/should plan.  Current standards for quantifying and reporting community benefit lead to tremendous variation and make it difficult to ascertain the resources available to address unmet community need.

Public good leading to new social contracts