Press Release

AHA Statement on IRS Report on Community Benefit from Non-Profit Hospitals

Contact:
Alicia Mitchell - (202) 626-2339
Elizabeth Lietz - (202) 626-2284

Washington D.C.

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Rich Umbdenstock
President and CEO

February 12, 2009

Today's IRS report reaffirms that hospitals of all types are providing a healthy mix of care and services to the communities they serve.  While the report has its limitations, it highlights how hospitals across the country are meeting their mission of caring for communities.

Despite a questionnaire that was poorly worded and incomplete – as even the IRS has acknowledged – the average community benefit totaled 9 percent of hospital revenues.  However, the survey provides an incomplete picture.  For example, 80 percent of the hospitals surveyed did not report Medicaid underpayments.  And, hospitals weren't even asked for the amount they spend to keep costly and critical community services, such as trauma, long-term and neonatal care available to their communities.  

In addition, there are good reasons for real variation in how hospitals meet their community benefit obligations.  A hospital in rural Iowa serves a very different community than one in New York City and the programs and services they offer should be different.

The same kind of flaws that led to undercounting community benefit led to over-counting  executive compensation.  But at the same time, the IRS found the overwhelming majority of hospital leaders follow the IRS' own rules for assuring that compensation is fair and reasonable.  That protocol includes reviews of objective market data by independent community board members.

America's hospitals are committed to reliable and accurate transparency so that the communities they serve have more information about them.  Today's report does not fulfill that goal nor will it be of use for policymakers because it is so seriously flawed.   We believe the IRS' new Schedule H will provide more reliable and updated information about the benefit hospitals provide to their community.   In these tough economic times, it's even more important that hospitals are able to tailor their services to best meet the unique and changing needs of their communities. 

About AHA

The AHA is a not-for-profit association of health care provider organizations and individuals that are committed to the improvement of health in their communities. The AHA is the national advocate for its members, which includes more than 5,000 member hospitals, health systems and other health care organizations, and 38,000 individual members. Founded in 1898, the AHA provides education for health care leaders and is a source of information on health care issues and trends.