As Congress Turns to Tax Reform, New Report Demonstrates Hospital Community Benefit Dollars Far Exceed the Value of Their Federal Tax Exemption

Contact: Colin Milligan - (202) 638-5491

Jennifer Armstrong Gay - (202) 626-2284

WASHINGTON (October 10, 2017) – The American Hospital Association (AHA) today released a new analysis showing that hospitals’ and health systems’ community benefit activities outweigh the value of their federal tax exemption by a factor of 11 to one. For every dollar invested in hospitals and health systems by means of their federal tax exemption they deliver $11 in benefits back to their communities. The analysis conducted by Ernst and Young (EY) reviewed source materials including IRS Form 990 Schedule H, community benefit reports and Medicare cost reports from nearly 3,000 non-profit general hospitals from across the country.

“Advancing the health and wellness of our patients and the communities we serve is a foundational mission for our nation’s hospitals,” said Rick Pollack, President and CEO, American Hospital Association. “Today, hospitals of all kinds — urban and rural, large and small — are demonstrating the value they provide and solidifying their commitment to making their communities healthier through strengthened community partnerships, health and wellness programs, and outreach activities designed to combat identified community needs.”

In return for being exempt from federal taxes, non-profit hospitals have a special responsibility to deliver a variety of benefits tailored to the particular needs of the communities they serve. Hospitals report publicly on those community benefit activities, which include financial support for the poor as well as a wide range of programs and services designed to meet the current and future health needs of all of those they serve. In addition to free and reduced cost care, hospitals and health systems make up for the gap between Medicare and Medicaid payments and the full costs of care, they also support emergency preparedness for human and manmade disasters, education and training for the next generation of caregivers, clinics for underserved communities, as well as a range of programs aimed at keeping their communities healthy and productive.

According to the report, in 2013 (the most recent year for which information was available) the estimated value, i.e., federal tax revenue foregone due to the tax-exempt status of non-profit hospitals, was $6 billion. In comparison, the benefit tax-exempt hospitals provided to their communities, as reported on IRS Form 990 Schedule Hs is estimated at $67.4 billion.

A link to the report can be found at: https://www.aha.org/advocacy/compliance/tax-exempt-status

About the AHA

The AHA is a not-for-profit association of health care provider organizations and individuals that are committed to the health improvement of their communities. The AHA is the national advocate for its members, which include nearly 5,000 hospitals, health care systems, networks, other providers of care and 43,000 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. For more information, visit the AHA website at www.aha.org.