Community Health Needs Assessment in Nonprofit Hospitals

The Community Health Needs Assessment (CHNA), under the Patient Protection and Affordable Care Act, holds nonprofit hospitals accountable for pursuing charitable activities within their communities. The CHNA was established in response to congressional concerns that nonprofit hospitals were not contributing sufficiently to community needs despite their tax-exempt status, valued at $24.6 billion in 2011.¹ Nonprofit hospitals are required to complete a CHNA every three years to identify major local health needs, and in addition, they must submit an implementation plan that describes how the hospital will address specific issues.² But with several years having passed since the program was fully implemented in 2016, it is clear that much work remains to be done to ensure hospitals fulfill their responsibilities to their communities.¹  

Only 60 percent of nonprofit hospitals examined in a recent study had both a CHNA and corresponding implementation strategy available online, though 99 percent of hospital had reported to the Internal Revenue Service, which enforces the law, that they had conducted a CHNA and adopted an implementation strategy. These findings, by Yale School of Medicine researchers, demonstrate that transparency between hospitals and their communities remains to be improved. Furthermore, a quarter of CHNAs did not describe the resources they could rely upon to address the health needs identified, a requirement of the report.³ 

Some analyses suggest that nonprofit hospitals provide benefits to their communities that far exceed the value of their federal tax exemptions. A study of hospital expenditures in 2016 valued community contributions at $95 billion, or 13.7 percent of total expenses, according to the American Hospital Association (AHA). Half of this total was constituted by expenditures for financial assistance for patients and the absorption of losses from Medicaid and other government programs, the AHA stated.⁴ 

But recent studies have emphasized that many nonprofits are not spending as much on charitable activities as their tax exemptions suggest they may be able to. The Lown Institute calculated “fair share deficits” for private nonprofit hospitals by comparing each hospital’s spending to the value of its tax exemption. It found that 72 percent of the 2,391 hospitals examined had a fair share deficit, with that deficit ranging from a few thousand dollars to $261 million. Hospitals with the greatest community benefit spending deficits included top institutions like the Cleveland Clinic and Massachusetts General Hospital. In total, the Lown Institute estimated that there is a “fair share deficit” of $17 billion.⁵ 

While the CHNA was designed to ensure that hospitals are committed to pursuing charitable activities, it may not produce a substantial change in hospital spending patterns. While the CHNA encourages hospitals to identify local health needs, and, by requiring rigorous transparency, helps patients understand these needs as well, it may have little effect on charity care policies because hospitals are not required to change their policies in response to the findings of their assessments.¹ Conducting a CHNA is a comprehensive and cumbersome process, and the effectiveness of the policy remains to be determined.²

References 

1. Nikpay SS, Ayanian JZ. Hospital charity care: effects of new community-benefit requirements. N Engl J Med. 2015;373(18):1687-1690. doi:10.1056/NEJMp1508605 

2. Community Health Needs Assessment deadline extended. Withum. Published July 21, 2020. https://www.withum.com/resources/community-health-needs-assessment-deadline-extended/ 

3. Lopez L, Dhodapkar M, Gross CP. US nonprofit hospitals’ community health needs assessments and implementation strategies in the era of the patient protection and affordable care act. JAMA Netw Open. 2021;4(8):e2122237. doi:10.1001/jamanetworkopen.2021.22237  

4. Tax-exempt hospitals provided $95 billion in total benefits to their communities. American Hospital Association. https://www.aha.org/press-releases/2019-05-22-new-analysis-tax-exempt-hospitals-provided-95-billion-total-benefits  

5. Toleos A. Most U.S. nonprofit hospitals neglect community investment obligation, analysis reveals. Lown Institute. Published July 12, 2021. https://lowninstitute.org/press-release-most-us-nonprofit-hospitals-neglect-community-investment-obligation-analysis-reveals/