The community benefit from nonprofit hospitals far outweighs the federal revenue forgone due to the tax-exempt status of these nonprofit facilities by an 11-1 ratio, according to a report conducted by Ernst and Young commissioned by the American Hospital Association.
The study presents an analysis of 3,000 nonprofit hospitals' tax forms, community benefit reports and Medicare cost reports from 2013 — the most recent year available — to understand the value nonprofit hospitals bring to their communities.
Here are five insights from the report.
1. The estimated tax-revenue forgone in 2013 totaled $6 billion; however, the hospitals contributed approximately $67.4 billion in community health benefits.
2. The researchers counted the value of community benefit from four items — financial assistance and means-tested government programs, community building activities, Medicare shortfall and bad debt as a result of charity care.
3. Of the $67.4 billion of community benefits, $34.7 billion was in the form of financial assistance, not reimbursed Medicaid costs and other costs for means-tested government programs that were not reimbursed.
4. The additional $32.6 billion reflected the other community benefits.
5. The study comes as the tax-exempt status of nonprofit hospitals has gained more skepticism in recent years and as the Internal Revenue Service revoked an undisclosed hospital's tax-exempt status in August for failure to comply with an ACA rule.