Results from 2013 Tax-Exempt Hospitals' Schedule H Community Benefit Reporting

Introduction

Hospitals provide benefits to their communities in a multitude of ways, a portion of which is captured by the IRS Form 990 Schedule H. They not only provide financial assistance and absorb underpayments from means-tested government programs such as Medicaid, but also incur losses due to unreimbursed Medicare expenses and bad debt expenses that are attributable to financial assistance. In addition, they offer programs and activities to:

  • Improve community and population health
  • Underwrite medical research and health professions education
  • Subsidize high cost essential health services

Ernst & Young LLP (EY) assisted the American Hospital Association (AHA) in reviewing over 1,300 member hospitals’ Form 990 Schedule Hs for tax year 2013. This is the fifth year for which EY assisted the AHA in reviewing member hospitals’ Form 990 Schedule Hs. This report presents information for the 2013 tax year.

Table 1 shows selected community benefit items. In 2013, the hospitals’ and systems’ reported total community benefits of 11.7 percent of their total hospital expenses, 6.0 percentage points of which resulted from expenditures for financial assistance and absorbing losses from Medicaid and other means-tested programs.1

Table 1. Financial assistance and community benefit

(average percent of total expense)

Type of Benefit 2013
Financial assistance, unreimbursed Medicaid, and other unreimbursed costs from means-tested government programs 6.0
Total Benefits to the Community 11.7

Source: EY calculations.

This summary of 2013 Schedule Hs reports the financial costs incurred by hospitals and systems in providing these community benefits, but does not measure the overall tangible and intangible benefits of improving their communities' health and economic well-being. Hospitals provided the Internal Revenue Service (IRS) with detailed descriptions of their community benefit programs as part of their filing. These descriptions often tell the hospitals' story beyond what can be found from the financial information alone.


1. The percentages are based on the hospitals' actual reported costs, not charges.

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