May 8th, 2014
Editor’s note: In addition to David Kindig, this post is also coauthored by Erik Bakken.
In a recent Health Affairs Blog post, Sara Rosenbaum, Amber Rieke, and Maureen Byrnes discuss how IRS Community Benefit expenditures might be better directed to community building and community health improvement activities instead of primarily being reported as unreimbursed Medicaid expenditures. They cite an estimate from the Northwest Health Foundation “…that were hospitals to shift 20 percent of their community benefit expenditures toward community health improvement efforts, the annual yield would be $2.2 billion in additional funds for prevention…”
This is a significant amount of money. In a similar recent analysis for Wisconsin non-profit hospitals, we estimated the following alternative: a minimum 10 percent of total community benefit would be mandated toward the community health improvement category, with an increasing 2 percent obligation for each 2.5 percent increase in hospital profitability for any hospital over 2.5 percent profitability, up to a maximum of 20 percent profitability.
This scenario would more than triple the amount of community health improvement spending through community benefit provision, from $46 million to $139 million, or 13 percent of total community benefit. We presented this model as just one modest example of the amount of revenue that could be derived from such a regulation, and encourage the development of other scenarios or policy alternatives such as alternative modeling approaches varying the minimum or increasing profitability percentage scenarios.Read the rest of this entry »