Understanding Nonprofit Hospital Community Benefits: A Mixed Methods Approach

Nonprofit hospitals are required to provide "community benefits" in exchange for their tax exemption and they have been required to report on these benefits to the Internal Revenue Service (IRS) via Form 990/Schedule H since 2009. Few studies have focused on the community benefit categories of Community Health Promotion, Contributions to Community Groups, and Community Building Activities (hereafter "Community-Oriented Categories") collectively. Additionally, there is a dearth of research examining why Schedule H was designed as it was and why Community Health Needs Assessments (CHNAs) have not led to greater investment in Community-Oriented Categories. Through an explanatory sequential mixed-methods design, this study seeks to expand on past literature and fill these gaps. In Paper 1, multivariate and univariate multiple regression analyses are used to examine three potential drivers of community benefit spending in fiscal year 2016: organizational-level characteristics, state CHNA policy, and Medicaid expansion. While all three potential drivers were significantly associated with Total Community Benefit Spending, only two organizational-level variables were significantly associated with higher Community-Oriented Categories of spending: log total revenue (beta = 1.09) and profit margin (beta = 2.26). Paper 2 follows up on Paper 1 and uses historical analysis to better understand how Schedule H was created and why it does not hold nonprofit hospitals accountable for certain types of spending. Paper 3 furthers this understanding by analyzing interviews with nonprofit hospital CHNA staff and other key stakeholders in the CHNA/Schedule H reporting processes.