The Impact of IRS Tax Policy on Hospital Community Benefit Activities

Valerie A. Yeager, Alva O. Ferdinand, Nir Menachemi

Research output: Contribution to journalArticlepeer-review

Abstract

The Internal Revenue Service (IRS) recently introduced tax code revisions requiring stricter oversight of community benefit activities (CBAs) conducted by tax-exempt, not-for-profit hospitals. We examine the impact of this tax requirement on CBAs among these hospitals relative to for-profit and government hospitals that were not subject to the new policy. We employed a quasi-experimental, difference-in-difference study design using a longitudinal observational approach and used secondary data collected by the American Hospital Association (years 2006-2010 including 20,538 hospital year observations). Findings show a significant increase in the reporting of 7 of the 13 CBAs among tax-exempt, not-for-profit hospitals compared with other hospitals after the policy change. Examples include partnering to conduct community health assessments (b = 0.035, p =.002) and using capacity assessments to identify unmet community health needs (b = 0.041, p =.001). Recent tax revisions are associated with increases in reported CBAs among tax-exempt, not-for-profit hospitals. As the debate continues regarding tax exemption status for not-for-profit hospitals, policy makers should expand efforts for enhanced accountability.

Original languageEnglish (US)
Pages (from-to)167-183
Number of pages17
JournalMedical Care Research and Review
Volume76
Issue number2
DOIs
StatePublished - Apr 1 2019

Keywords

  • community benefit activities
  • health policy
  • hospital tax policy
  • not-for-profit hospitals

ASJC Scopus subject areas

  • Health Policy

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